Herc Holdings Announces Proposed Private Offering of $500 Million of Senior Unsecured Notes
Herc Holdings announced a proposed private offering of $500 million in senior unsecured notes due 2029. These notes will be offered to qualified institutional buyers in the U.S. and internationally, exempt from registration under the Securities Act of 1933. The proceeds will be used to repay part of the company's existing debt under its revolving credit agreement and to cover related fees and expenses. The notes will bear interest payable semi-annually and will be guaranteed by Herc Holdings' domestic subsidiaries. The specific terms will be determined at the time of pricing.
- Proposed private offering of $500 million in senior unsecured notes, providing additional liquidity.
- Notes due in 2029, offering a long-term financing solution.
- Interest payable semi-annually, ensuring predictability of cash outflows.
- Notes guaranteed by current and future domestic subsidiaries, including Herc Rentals, increasing security.
- Notes are senior unsecured obligations, potentially posing higher risk compared to secured debt.
- Proceeds earmarked for debt repayment, indicating existing high levels of indebtedness.
- Offering exempt from registration under the Securities Act, limiting market participation.
Insights
Herc Holdings' announcement to offer $500 million in senior unsecured notes is a significant financial move. Senior unsecured notes are debt securities that are not backed by collateral, meaning they carry a higher risk compared to secured debt. The proceeds will be used to repay part of the company's existing debt under its senior secured asset-based revolving credit agreement. This strategy can be seen as a way to refinance existing debt at potentially more favorable terms.
This can have important implications for Herc Holdings’ balance sheet. By issuing unsecured notes, the company might be aiming to improve liquidity and manage its debt maturity profile. However, it also implies a commitment to periodic interest payments, which could impact cash flow.
From a retail investor’s perspective, the success of this offering will depend on the interest rates set at pricing and the overall demand from institutional buyers. If the notes are issued with a lower interest rate than the existing debt, it could signal confidence in the company’s creditworthiness and potentially lower financing costs in the long run. However, if the interest rate is high, it might indicate higher perceived risk, which could be concerning.
Overall, this refinancing move reflects a proactive approach to managing the company’s capital structure, but the final terms and investor reception will be key to understanding its true impact.
The decision by Herc Holdings to issue senior unsecured notes reflects a broader trend in the market where companies are leveraging current economic conditions to optimize their debt profiles. This type of financial maneuvering can be seen as strategic, especially if interest rates are currently low. By opting for unsecured notes, Herc Holdings likely aims to maintain operational flexibility, as these do not encumber specific assets as collateral.
Investors should consider the broader macroeconomic environment, including interest rates and market liquidity. If market conditions are favorable, Herc Holdings may secure financing at a competitive rate, thereby reducing overall cost of capital. However, this move also suggests that the company acknowledges existing leverage and is seeking ways to manage it proactively.
For retail investors, the issuance of such notes can be a double-edged sword. On one hand, it demonstrates the company's ability to access capital markets, which can be a positive sign of financial health and confidence. On the other hand, the additional debt obligation, albeit unsecured, must be carefully monitored for its impact on future earnings and cash flow.
The notes will be senior unsecured obligations of the Company, and interest will be payable semi-annually in arrears. The notes will be guaranteed on a senior unsecured basis, subject to limited exceptions, by the Company’s current and future domestic subsidiaries, including Herc Rentals Inc.
The net proceeds from the sale of the notes are expected to be used to repay a portion of the indebtedness outstanding under the Company’s senior secured asset-based revolving credit agreement and to pay related fees and expenses.
The notes will be offered and sold to qualified institutional buyers in
The notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in
This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the notes or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.
About Herc Holdings Inc.
Founded in 1965, Herc Holdings Inc., which operates through its Herc Rentals Inc. subsidiary, is a full-line rental supplier with 412 locations across
All references to “Herc Holdings” or the “Company” in this press release refer to Herc Holdings Inc. and its subsidiaries, unless otherwise indicated.
Forward-Looking Statements
This press release includes forward-looking statements as that term is defined by the federal securities laws, including statements concerning our business plans and strategy, projected profitability, performance or cash flows, future capital expenditures, our growth strategy, including our ability to grow organically and through M&A, anticipated financing needs, business trends, our capital allocation strategy, liquidity and capital management, exploring strategic alternatives for Cinelease, including the timing of the review process, the outcome of the process and the costs and benefits of the process, and other information that is not historical information. Forward looking statements are generally identified by the words "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "looks," and future or conditional verbs, such as "will," "should," "could" or "may," as well as variations of such words or similar expressions. All forward-looking statements are based upon our current expectations and various assumptions and there can be no assurance that our current expectations will be achieved. They are subject to future events, risks and uncertainties - many of which are beyond our control - as well as potentially inaccurate assumptions that could cause actual results to differ materially from those in the forward-looking statements. Further information on the risks that may affect our business is included in filings we make with the Securities and Exchange Commission from time to time, including our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and in our other SEC filings. We undertake no obligation to update or revise forward-looking statements that have been made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240603587837/en/
Leslie Hunziker
Senior Vice President,
Investor Relations, Communications & Sustainability
Leslie.hunziker@hercrentals.com
239-301-1675
Source: Herc Holdings Inc.
FAQ
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