Greenwich, Conn.-based United Rentals on Friday sold $1.375 billion of notes in two parts, the largest sale in the junk bond market since October, according to a Reuters news report.
The company said it sold $1 billion of senior notes due 2012 yielding 6.50 percent and $375 million of senior subordinated notes due 2014 yielding 7 percent. Proceeds will be used to help refinance a portion of the company’s outstanding debt. Banc of America Securities, Credit Suisse First Boston, Citigroup Global Markets and J.P. Morgan managed the sale. Earlier last week United announced its intention to refinance a substantial portion of its outstanding debt over the next several weeks. The refinancing is being undertaken to take advantage of current market opportunities that should allow the company to reduce its interest expense and extend the maturities of a substantial portion of its debt.
As part of the refinancing, the company said it would replace its existing senior secured credit facility with a new secured credit facility and refinance outstanding senior and subordinated notes and funds available under the new secured credit facility, which it began Friday. The debt the company is refinancing includes $640 million of term loans; all borrowings under the company’s revolving credit facility; $860 million principal amount of 10 ¾ percent senior notes due 2008; $300 million principal amount of 9 ¼ senior subordinated notes due 2009; and $250 million principal amount of 9 percent senior subordinated notes due 2009.
The company also announced that, as part of the refinancing, it has commenced a cash tender offer and consent solicitation for all of its outstanding 10 ¾ percent senior notes due 2008.
The tender offer and consent solicitation is made upon the terms and conditions in the offer to purchase and consent solicitation statement and related consent and letter of transmittal dated January 16, 2004. The tender offer will expire at midnight (EST) on February 13, 2004, unless extended or terminated. The consent solicitation will expire at 5:00 p.m. on January 30, 2004, unless extended.
Standard & Poor’s Ratings Services last week affirmed its ‘BB’ corporate credit rating on United Rentals and affirmed other ratings. At the same time it assigned a ‘BB-’ senior unsecured debt rating to the company’s proposed offering of $1 billion senior unsecured notes due 2012.
S&P also assigned its ‘B+’ subordinated debt rating to the company’s proposed offering of $375 million senior notes due 2014.
It assigned its ‘BB’ senior secured bank loan rating and ‘2’ recovery rating to the company’s amended and restated $1.55 billion senior secured credit facility due in seven years, indicating a substantial likelihood of recovery of principal in a default scenario. Together, proceeds will be used to refinance outstanding obligations under its existing bank facility and certain senior unsecured and subordinated notes.
RER 100.
