Ahern Rentals today said it has priced an offering of $420 million aggregate principal amount of 9.5-percent senior secured notes due 2018. The notes will mature on June 15, 2018, unless they are repurchased or redeemed earlier. The company is conducting the offering in connection with its expected exit from Chapter 11 bankruptcy under a reorganization plan, which also contemplates that the company will enter into a new secured credit facility and that existing shareholders will make an equity contribution of $5 million to the company.
The net proceeds from the offering will be placed in escrow pending the company’s exit from bankruptcy. Ahern Rentals intends to use the net proceeds from the offering, along with borrowings under the new credit facility and the equity contribution, to repay its existing debtor-in-possession loan and its existing term loan, and to redeem outstanding senior secured notes due 2013.
Any remaining proceeds will be used for other general corporate purposes. The sale of the notes is expected to be completed on June 7, 2013, subject to market and other customary conditions. The notes are being offered to qualified institutional buyers.
Ahern Rentals and its bondholders have reached an agreement to enable the company to exit Chapter 11 bankruptcy and avoid a possible shutdown over competing restructuring plans. According to papers filed recently with the U.S. Bankruptcy Court in Reno, Nev., Ahern Rentals said its bankruptcy-exit financing has allowed it to improve payment terms for bondholders owed about $268 million.
The amended plan, which the bankruptcy judge will consider at a hearing scheduled for June 5, calls for the bondholders to receive immediate payment of $268 million in cash and the chance to receive another $25 million if Ahern Rentals changes hands within two years of emerging from Chapter 11. The bondholders would also receive $10 million to cover the legal fees they incurred in the bankruptcy case, which began when Ahern Rentals filed for Chapter 11 bankruptcy protection in December 2011.
Ahern Rentals is No. 6 on the RER 100.
