NationsRent Files For Bankruptcy Protection

Jan. 1, 2002
FT. LAUDERDALE, Fla. In a decision most rental industry observers saw as inevitable, NationsRent last month filed a voluntary petition under Chapter 11

FT. LAUDERDALE, Fla. — In a decision most rental industry observers saw as inevitable, NationsRent last month filed a voluntary petition under Chapter 11 of the U.S. bankruptcy code to restructure the company's debt, which totals close to $1.2 billion. The company will continue to operate as usual, with lenders providing as much as $55 million of debtor-in-possession financing to fund continuing operations. Fleet Bank was chosen as lead DIP lender, subject to court approval.

NationsRent announced that chairman and CEO James Kirk has agreed to step down. The company immediately began a search for an interim president and chief restructuring officer as well as a permanent CEO. Kirk agreed to remain with the company to aid transition until the new president and CRO is chosen.

The bankruptcy petition was filed with the U.S. Bankruptcy Court for the District of Delaware.

NationsRent was founded in September 1998 by Kirk, founder of the environmental construction firm OHM; former OHM executive Gene Ostrow, and H. Family Investments, a company controlled by the son of billionaire Wayne Huizenga. Expected to rival United Rentals as a leading rental industry consolidator, the company went public in August 1998. However, the stock rarely went much higher than its $8 per share IPO price and the company soon became highly leveraged.

Still, NationsRent grew to 230 branches in 27 states, including 40 rental departments inside Lowe's home-improvement centers. Although never seriously challenging United for industry dominance, it reached No. 4 on the RER 100, based on 2000 rental volume of $546.4 million.

The Fort Lauderdale, Fla.-based firm lists assets of $1.585 billion, debts of $1.197 billion, and an unsecured claim of $175 million for 10 percent senior subordinated notes due 2008. Other unsecured claims include 21 for senior subordinated notes that total $165 million and 20 claims for subordinated promissory notes that total $76.6 million.

Among those holding at least five percent of NationsRent's voting equities are Kirk; Don O'Neal, former owner of A-1 Rents, NationsRent's largest rental company acquisition; Investcorp SA; DB Capital Investors LP; J.P. Morgan Capital Corp; and 60 Wall Street Fund LP.