Ahern Rentals Inc. has nearly completed a bankruptcy financing plan that will refinance all of its approximately $600 million in debt and continue the family ownership of the past six decades.
At a Thursday hearing in Reno, U.S. Bankruptcy Court Judge Bruce Beesley approved a $325 million credit line furnished by several banks, headed by Bank of America, that will not only pay off the financing that carried the company through Chapter 11 proceedings but also provide working capital once it returns to regular commerce.
Barring a last-minute glitch, Beesley is expected this morning to approve a separate $415 million loan that would cover all the rest of the company’s debt. To go ahead with the deal, lender Jefferies Finance LLC required Don Ahern, who owns 97 percent of the construction-equipment lessor, to contribute $5 million of his own money.
As a result, Ahern Rentals will avoid what was shaping up to be a hard-fought court battle for control of the company next month. Instead, the company now will enjoy unanimous support for its reorganization plan, backed by a written commitment from one group of lenders that sought to take control.
The hearing on the reorganization plan, set for June 6, now could wrap up in minutes instead of taking a couple of weeks.
“We are about there,” said Daniel Connolly, an attorney for the lenders that sought the takeover. “We started (Thursday) at about the 35-yard line and now we are on about the three-yard line.”
He requested delaying overnight the approval of the Jefferies loan because of technical issues. They loomed large because New York-based investment bankers will receive a $20 million fee as soon as Beesley signs his order and before Jefferies actually puts up a single dollar.
According to Ahern attorney William Noall, Jefferies will launch a “road show” next week to stimulate investor interest. The Jefferies commitment takes the form of what is called a bridge loan facility, which would cover any shortfall between what outsiders contribute and the $415 million commitment. This loan, however, will allow Ahern Rentals to drop another one lined up with Husky Finance Holdings for $145 million.
Ahern Chief Financial Officer Howard Brown did not return calls seeking comment.
In previous proposals, Ahern Rentals had sought to repay only a portion in cash of the nearly $268 million owed to a set of lenders that stood third in line among the company’s three major debt groups. This prompted the lenders, led by Los Angeles-based takeover specialist Tom Gores, to file their own plan to seize control of the company as repayment.
Don Ahern initially resisted, complaining in interviews that Gores and his allies had bought their positions at steep discounts and would break up the company. But after several court decisions went against him, Ahern switched direction and rounded up the financing to pay off everyone at face value.
After enduring heavy losses when commercial construction took a dive in 2008, leaving Ahern Rentals unable to cover its debt, executives have said the company is now profitable again because of cost-cutting, changing its equipment mix and an improving economy.
Contact reporter Tim O’Reiley at
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