LAS VEGAS — Ahern Rentals, North America's largest independent equipment rental company last month filed a voluntary petition for Chapter 11 reorganization in the United States Bankruptcy Court for the District of Nevada, in Reno, Nev. The company said it has reached an agreement with existing lenders for debtor-in-possession financing with about $50 million of availability, pending bankruptcy court approval.
The company filed for Chapter 11 because it was unable to extend the maturity of its revolving credit facility, which had a maturity date of Aug. 21, 2011. Since the maturity, the bank has continued to fund the company and negotiate the extension of the revolving credit facility without the necessity of a bankruptcy filing. While the company's financial performance continues to improve, it has been forced to seek bankruptcy protection to address the maturity of the credit facility, despite the fact that about 90 percent of the company's lenders would have consented to an extension.
Ahern Rentals intends to continue its business operations throughout the administration of the Chapter 11 and to honor all of its existing customer, vendor and employee commitments without interruption. Subject to bankruptcy court approval, the company will use the DIP financing to meet its working capital needs during the reorganization process.
“We anticipate there being no interruption to our operations,” said CEO Don Ahern. “With our DIP facility, we will have sufficient liquidity to meet our commitments to our customers, vendors and employees. We have been experiencing a significant improvement in our business, with a substantial increase in our utilization levels and improved margins. The company provides a valuable service for its customers, and we do not expect the bankruptcy filing to affect our margins. We do not expect the bankruptcy filing to affect our ability to continue to offer customers highly reliable and quality equipment and service. It is business as usual, and we anticipate no impact to our customers, vendors and employees.”
Shortly after the filing, a U.S. Bankruptcy Court judge allowed Ahern Rentals to begin using a $350 million bankruptcy loan, primarily to pay off debt, Dow Jones News Services reported. Judge Bruce Beesley of U.S. Bankruptcy Court in Reno, Nev., approved Ahern Rentals' request to borrow $20 million on the loan before a final hearing is held early in 2012. The loan is coming from a group of existing lenders. The restructuring plan and related documents and agreements will be subject to approval by the bankruptcy court.
Ahern Rentals' bankruptcy counsel is Gordon Silver and its financial advisors are Oppenheimer & Co. and The Seaport Group.
Based in Las Vegas, Ahern Rentals is No. 7 on the RER 100.