Alta Equipment Group Announces Proposed Private Offering of $500 Million of Senior Secured Second Lien Notes
Alta Equipment Group (NYSE: ALTG) announced a proposed private offering of $500 million in senior secured second lien notes due 2029. This offering, subject to market conditions, will be guaranteed by all domestic subsidiaries and secured by a second lien on nearly all company assets. Concurrently, the company plans to amend and extend its existing credit facilities, replacing them with a new $520 million asset-based revolving credit facility and a $90 million floor plan facility, both due 2029. The proceeds will be used to refinance existing facilities, redeem outstanding notes, and for general corporate purposes. The offering aims to be leverage neutral and targets qualified institutional buyers and non-U.S. persons per Rule 144A and Regulation S under the Securities Act.
- Proposed $500 million note offering to secure additional funding.
- New credit facilities extend maturity dates to 2029, increasing financial stability.
- Offering aims to be leverage neutral, maintaining current leverage ratios.
- Proceeds will refinance existing debt, potentially lowering interest costs.
- High debt levels could raise concerns about financial risk.
- Redemption of existing notes incurs costs related to premium and accrued interest.
- Dependence on market conditions could affect the success of the offering.
- Notes offered only to qualified institutional buyers, limiting market liquidity.
Insights
Alta Equipment Group's announcement of a
Firstly, these actions suggest that Alta is looking to extend its debt maturity profile by using the proceeds to refinance its existing debt, which includes
However, investors should be cautious of the second lien status of the new notes. Second lien debt is subordinate to first lien debt, meaning that in the case of liquidation or bankruptcy, second lienholders are paid after first lienholders. This generally implies higher risk, which is why these notes might offer a higher yield to attract investors.
The refinancing is expected to be leverage neutral, meaning it should not significantly alter the company's debt-to-equity ratio. This is an important consideration for investors concerned with potential increases in financial risk due to higher leverage.
Leverage neutral refinancing indicates that while the principal amount of debt remains the same, the extended maturities could offer the company greater financial flexibility. Any change in the interest rate environment or the company’s operational performance could impact the risk associated with the new debt obligations.
From a market perspective, this move by Alta Equipment Group can be viewed as a strategic effort to optimize its capital structure amid evolving market conditions. The refinancing of existing debt can effectively reduce immediate financial pressure and provide the company with improved flexibility to navigate economic uncertainties.
Refinancing existing debt often signals a company's intent to take advantage of more favorable lending conditions, whether it be lower interest rates or better terms overall. For Alta, the extended maturity timeline to 2029 aligns with a longer-term operational strategy, allowing more time to execute growth plans or manage transitional phases in the business cycle.
It’s also worth noting that the company is utilizing a mix of debt instruments, including the senior secured second lien notes and asset-based revolving credit facilities. This diversification can help spread risk and potentially lower the overall cost of capital.
LIVONIA, Mich., May 20, 2024 (GLOBE NEWSWIRE) -- Alta Equipment Group Inc. (NYSE: ALTG) (“Alta” or the “Company”), today announced that it intends to offer, subject to market and other conditions,
The notes and the related guarantees will be offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act. The offer and sale of the notes and the related guarantees have not been registered under the Securities Act or the securities laws of any state or other jurisdiction and may not be offered or sold absent registration or an applicable exemption from the registration requirements under the Securities Act and any applicable securities laws of any state or other jurisdiction.
This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any of the notes, nor shall there be any sale of the notes in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This press release is being issued pursuant to and in accordance with Rule 135(c) under the Securities Act.
This press release does not constitute a notice of redemption with respect to the Existing Notes.
Forward Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Alta’s actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside Alta’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: supply chain disruptions, inflationary pressures resulting from supply chain disruptions or a tightening labor market; negative impacts on customer payment policies and adverse banking and governmental regulations, resulting in a potential reduction to the fair value of our assets; the performance and financial viability of key suppliers, contractors, customers, and financing sources; economic, industry, business and political conditions including their effects on governmental policy and government actions that disrupt our supply chain or sales channels; fluctuations in interest rates; the market price for our equipment; collective bargaining agreements and our relationship with our union-represented employees; our success in identifying acquisition targets and integrating acquisitions; our success in expanding into and doing business in additional markets; our ability to raise capital at favorable terms; the competitive environment for our products and services; our ability to continue to innovate and develop new business lines; our ability to attract and retain key personnel, including, but not limited to, skilled technicians; our ability to maintain our listing on the New York Stock Exchange; the impact of cyber or other security threats or other disruptions to our businesses; our ability to realize the anticipated benefits of acquisitions or divestitures, rental fleet and other organic investments or internal reorganizations; federal, state, and local government budget uncertainty, especially as it relates to infrastructure projects and taxation; currency risks and other risks associated with international operations; and other risks and uncertainties indicated from time to time in the section entitled “Risk Factors” in Alta’s annual report on Form 10-K and other filings with the U.S. Securities and Exchange Commission. Alta cautions that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements, which speak only as of the date made. Alta does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based.
About Alta Equipment Group Inc.
Alta owns and operates one of the largest integrated equipment dealership platforms in North America. Through our branch network, the Company sells, rents, and provides parts and service support for several categories of specialized equipment, including lift trucks and other material handling equipment, heavy and compact earthmoving equipment, crushing and screening equipment, environmental processing equipment, cranes and aerial work platforms, paving and asphalt equipment, other construction equipment and allied products. Alta has operated as an equipment dealership for 40 years and has developed a branch network that includes over 85 total locations across Michigan, Illinois, Indiana, Ohio, Pennsylvania, Massachusetts, Maine, Connecticut, New Hampshire, Vermont, Rhode Island, New York, Virginia, Nevada and Florida and the Canadian provinces of Ontario and Quebec. Alta offers its customers a one-stop-shop for their equipment needs through its broad, industry-leading product portfolio.
Contacts
Investors:
Kevin Inda
SCR Partners, LLC
kevin@scr-ir.com
(225) 772-0254
Media:
Glenn Moore
Alta Equipment
glenn.moore@altg.com
(248) 305-2134
FAQ
What is Alta Equipment Group's proposed offering announced on May 20, 2024?
What will the proceeds from Alta Equipment Group's $500 million note offering be used for?
How will Alta Equipment Group's new credit facilities impact its financial stability?
What is the significance of the offering being leverage neutral for Alta Equipment Group?
Who can participate in Alta Equipment Group's $500 million note offering?
