Neff Corp. to Go Private

Aug. 1, 2003
MIAMI Neff Corp. filed a form with the Securities and Exchange Commission recently to deregister its common stock and suspend its reporting obligations,

MIAMI — Neff Corp. filed a form with the Securities and Exchange Commission recently to deregister its common stock and suspend its reporting obligations, thus taking the company private. The Miami-based rental company said it expects its deregistration to become effective within 90 days of the filing.

CEO Juan Carlos Mas said the company's board of directors decided to go private because it believes the advantages of continuing as a public company are outweighed by the disadvantages. In addition to time and cost savings, Mas said, going private will allow the company to focus attention and resources on implementing its business plan and improving operating results.

In other Neff news, Standard & Poor's Ratings Services recently placed its ratings on Neff Corp., including its CCC corporate credit rating, on CreditWatch with positive implications following the company's recent announcement that it had repurchased about $80 million face value of its subordinated notes for about $50 million. The transaction reduced Neff's debt to about $250 million.

“The rating action followed several events that are considered positive,” said S&P's credit analyst John Sico. The events include Neff making its June 1 interest payment on the subordinated notes; the company reaching an agreement with its lenders to amend certain terms of its revolving credit facility; and the company receiving a waiver of certain defaults under its credit facility.

The company also announced the repurchase of its senior subordinated notes, which were repurchased during the second quarter for $47.7 million, in an aggregate principal amount of $81.1 million. The company recognized a gain on debt extinguishments of $35.0 million.

Prior to the repurchase, Neff amended the terms of its senior revolving credit facility to permit the repurchase. The amendment to the company's senior revolving credit facility modified certain financial covenants in the credit facility and permanently waived all existing defaults.

“This transaction has provided us the opportunity to make a substantial reduction to our total debt and our debt servicing costs,” said CEO Juan Carlos Mas. “Taking into consideration the free cash flow from operations and our repurchase of these notes at a substantial discount, we have been able to reduce our outstanding debt by $41.2 million and will reduce our cash interest payments by over $8.3 million per annum. During the remainder of 2003, we will continue to generate free cash flow and remain focused on reducing our outstanding debt. We continue to explore all opportunities for expense reduction and will remain disciplined in regards to our capital expenditures.”

Miami-based Neff Rentals is No. 10 on the RER 100 with 72 locations in 16 states.