United Rentals Announces Pricing of Private Offering of $1.1 Billion of 6.125% Senior Notes due 2034
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Insights
The pricing of a $1.1 billion senior notes offering by United Rentals (North America), Inc. is a significant financial event, indicating a strategic move to raise capital for acquisitions and other corporate purposes. The use of the proceeds to finance the acquisition of Yak Access, LLC suggests a targeted growth strategy, which could potentially expand United Rentals' service offerings and market presence.
The 6.125% interest rate on the notes, due in 2034, reflects the current interest rate environment and the company's creditworthiness. Investors should compare this rate with those of other corporate bonds and the broader market to assess the investment's attractiveness. The senior unsecured guarantee by United Rentals, Inc. and its domestic subsidiaries provides an additional layer of security for investors, which is reflected in the bond's pricing.
The use of an asset-based revolving credit facility in conjunction with the note offering is a common financial strategy that provides flexibility in terms of liquidity management. However, it is important to monitor the company's leverage and interest coverage ratios post-acquisition to assess the impact on its financial health.
The offering's structure, utilizing Rule 144A and Regulation S, allows United Rentals to access capital from qualified institutional buyers and certain international investors without the broader requirements of a public offering. This approach often expedites the capital-raising process but limits the potential investor base to those who meet specific criteria.
It is crucial for potential investors to understand that the senior notes have not been registered under the Securities Act or any state securities laws and are therefore subject to restrictions on their transferability. This lack of registration necessitates a reliance on exemptions for the sale and purchase of these securities, which can affect their liquidity and marketability.
The cautionary note that the offering may not be consummated on its proposed terms or at all is a standard disclaimer, but it also underscores the inherent uncertainty in such financial transactions. This uncertainty can influence investor sentiment and market dynamics surrounding the company's securities.
The decision by United Rentals to acquire Yak Access, LLC is indicative of strategic moves within the equipment rental industry to consolidate and diversify services. The market impact of such acquisitions can be significant, potentially altering competitive dynamics and customer offerings. It is essential to evaluate the strategic fit of Yak Access within United Rentals' portfolio and the potential for synergies that could drive revenue growth and operational efficiencies.
Market response to the senior notes offering will also provide insight into investor confidence in United Rentals' growth strategy and financial stability. The credit market's reception of the notes, particularly in terms of demand and yield spread over comparable securities, will be a telling indicator of the market's view on the company's future prospects and risk profile.
URNA’s obligations under the Notes will be guaranteed on a senior unsecured basis by URI and certain of URNA’s domestic subsidiaries.
Aggregate net proceeds from the sale of the Notes are expected to be approximately
URNA is offering the Notes (and the related guarantees) pursuant to an exemption under the Securities Act of 1933, as amended (the “Securities Act”). The initial purchasers of the Notes will offer the Notes only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act or outside
This news release is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No assurance can be made that the offering of Notes will be consummated on its proposed terms or at all.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. Forward-looking statements involve significant risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. No forward-looking statement, including any such statement concerning the completion of the proposed acquisition, can be guaranteed, and actual results may differ materially from those projected. United Rentals undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the equipment rental industry, and other legal, regulatory and economic developments. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe harbor provisions of the PSLRA. Actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those described in the SEC reports filed by United Rentals, as well as (1) the length of time necessary to consummate the proposed transaction may be longer than anticipated; (2) problems that may arise in successfully integrating the businesses of United Rentals and Yak, including, without limitation, problems associated with the potential loss of any key employees of Yak; (3) the proposed transaction may involve unexpected costs, including, without limitation, the exposure to any unrecorded liabilities or unidentified issues that we failed to discover during the due diligence investigation of Yak or that are not covered by insurance, as well as potential unfavorable accounting treatment and unexpected increases in taxes; (4) our business may suffer as a result of uncertainty surrounding the proposed transaction, any adverse effects on our ability to maintain relationships with customers, employees and suppliers, or the inherent risk associated with entering a geographic area or line of business in which we have no or limited experience; (5) we may not achieve the benefits we expect from the transaction, including with respect to revenue, earnings and free cash flow, the matting business and the industries we are targeting may not experience the growth or levels of investment we expect, we may not be able to realize expected tax benefits, and we may not be able to achieve anticipated synergies; and (6) the industry may be subject to future risks that are described in the “Risk Factors” sections of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC by United Rentals. United Rentals gives no assurance that it will achieve its expectations and does not assume any responsibility for the accuracy and completeness of the forward-looking statements.
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of United Rentals described in the “Risk Factors” sections of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. All forward-looking statements included in this document are based upon information available to United Rentals on the date hereof; and United Rentals assumes no obligations to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in the world. The company has an integrated network of 1,504 rental locations in
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Elizabeth Grenfell
Vice President, Investor Relations
O: (203) 618-7125
investors@ur.com
Source: United Rentals, Inc.
FAQ
What is the purpose of United Rentals, Inc.'s (URI) $1.1 billion offering of 6.125% Senior Notes due 2034?
Who guarantees the Notes issued by United Rentals, Inc. (URI)?
How much are the expected net proceeds from the sale of the Notes?
Under what exemption are the Notes being offered?
What is the intended use of the net proceeds from the offering of the Notes?
