Thursday, 29 December 2011 - 21:24
Ahern Rentals Can Start Borrowing On Its Bankruptcy Loan
By Joseph Checkler Of DOW JONES DAILY BANKRUPTCY REVIEW
A judge said equipment renter Ahern Rentals Inc. can begin tapping a $350 million bankruptcy loan from its big-bank lenders, mostly to pay off some of its debt.
Judge Bruce Beesley of U.S. Bankruptcy Court in Reno, Nev., last week approved Ahern's request to borrow $20 million on the loan before a final hearing is held early next year. Loaning Ahern the money is a group of the family-owned company's existing lenders, including Bank of America Corp. (BAC).
Ahern filed for Chapter 11 protection last week to restructure its new debt. The company said that if it receives Beesley's final approval of the $350 million loan, it will use $252 million of the money to pay off a revolving loan.
The company had sought a restructuring outside the court system in the past year and received support for a one-year extension of the maturity date of the $350 million revolving loan from the majority of its creditors. But three revolving lenders refused to sign on to the deal, according to court papers, and when the loan matured earlier this month, Ahern was forced to file for bankruptcy.
Ahern has struggled for several years to cope with the sharp drop in construction activity in the Las Vegas area, one of the hardest hit during the economic downturn. The company has more than $600 million in total debt, it said in court papers last week.
Ahern has seen an uptick in revenue this year to $329.8 million thus far, compared with $284.2 million in 2009, the year of their last annual earnings report filed with the Securities and Exchange Commission. However, it has not been able to service its debt as it missed two interest payments, totaling $22 million, to its second-lien noteholders in the past year.
Ahern Rentals, which has said it expects no disruption in its business, was founded in 1953 by John P. Ahern. His son Don, who owns 97% of the company, built it into the seventh-largest equipment renter in the country, according to trade publication Rental Equipment Register.
Distressed-debt investor Mark Wattles, the founder of the Hollywood Video movie-rental chain and current chairman of the Ultimate Electronics consumer electronics chain, sits on Ahern's board of directors.
Ahern rents out heavy construction equipment like fork lifts, boom lifts and backhoes as well as merchandise like compressors and generators.
While the company's operations originally focused on the southwestern U.S., it has sought to branch out as a result of the downturn. The company has opened more than 20 new branches in recent years, and its 74 locations are spread among 22 states.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler; Dow Jones Newswires; 212-416-2152; email@example.com
--Patrick Fitzgerald contributed to this article.
(END) Dow Jones Newswires
December 29, 2011 13:24 ET (18:24 GMT)
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