FORT LAUDERDALE, Fla. — The U.S. Bankruptcy Court for the District of Delaware last month confirmed NationsRent's consensual plan of reorganization, thus setting the stage for the Fort Lauderdale, Fla.-based rental firm to emerge from Chapter 11 bankruptcy protection.
Once the emergence is finalized, the Baupost Group and Phoenix Rental Partners will control two-thirds of the voting common stock of the reorganized company. A new board of directors will succeed the company's current board of directors. Bryan Rich and Douglas Suliman will be co-chairmen of the company and Jeff Putman will be CEO. Other directors will be former Multiquip CEO Irv Levine, and Thomas Blumenthal, Andrew Hines and Greg Rosenbaum.
Rich told RER he expected the deal to close in early to mid-June.
“We see this as a promise of a new beginning for the employees, the customers and the partners of NationsRent,” said incoming CEO Putman. “Our goal is to build upon the considerable strengths of this enterprise and to make a positive contribution to the industries and communities that we serve.”
To facilitate the plan of reorganization, NationsRent obtained a commitment of $150 million of senior secured financing from a syndicate of lenders, in addition to a commitment from the Baupost Group for $80 million of new capital.
NationsRent, No. 6 on the RER 100, has 249 locations in 26 states, including 81 rental departments in Lowe's Home Improvement stores.
In other news, the company continued to struggle in the first quarter of 2003, although its net loss of $22.5 million was down considerably from its net loss of $31 million in the first quarter of 2002, according to documents filed in May with the Securities and Exchange Commission.
Total revenue decreased 6.2 percent year over year from $98.6 million in 1Q02 to $92.6 this year, while rental revenue dropped 6.9 percent from $91.3 million in last year's first quarter to $85 million this year.
During the quarter, NationsRent opened rental departments in eight Lowe's Home Improvement stores, bringing its total to 78. The company now has 81 such departments and plans to open about 19 more this year.
“Rental revenue was negatively impacted in 2003 by the weak economy in general and particularly in the continuing weakness in non-residential construction activity which has negative impacted rental rates and deployment, severe winter weather in certain of our regions in 2003, and a reduction in average rental fleet size for the three months ended March 31, 2003, compared to the same period in 2002,” company officials noted.
Net income/expenses resulting from the reorganization of the company as a result of its Chapter 11 filing were $(7.3) million for the first quarter, including a gain of $7.5 million related to the settlement of operating leases and a gain of $3.2 million related to the settlement of debt.
The filing adds that gross profit was negatively affected by the decrease in rental revenue, an increase in repairs and maintenance expenses as a result of an increase in the average age of the company's fleet, an increase in fuel expense because of higher fuel prices, an increase in labor costs because of openings in Lowe's stores and higher insurance costs.
