19.01.2011

Acme completes recapitalisation

US based Acme Lift, which claims to be the world’s largest wholesale rental/re-rent company has completed a $77 million recapitalisation.

The company which is headquartered in Mesa, Arizona, specialises in the provision of large JLG aerial lifts and telehandlers to ‘retail rental’ companies. It suffered during the downturn as it struggled with its high gearing and debt burden. However it now says that with its restructuring and expanded capital base it is in a position to enlarge its fleet and support future growth in an improving market.

Acme, which had also brought in a new investor – Bryan Rich - in mid-2009, negotiated the debt restructurings with its existing lenders and recapitalised the company with a new $50 million senior asset-based credit facility, an $8.7 million non-amortizing second lien loan, $3.5 million in subordinated notes and $15 million in preferred equity. to provide an expanded capital base to support future growth in an improving market.

The company says that the recapitalisation has streamlined its debt facilities, dramatically reduced debt service requirements and interest expense, while improving its financial flexibility. The new facilities, provided by Wells Fargo, also provides Acme Lift with significant untapped financing capacity to capitalise on anticipated opportunities, as rental companies look for additional equipment demand picks up in uncertain times.

Acme’s chief executive Woody Weld said: “We are pleased with the completion of this important recapitalisation. Our solid capital base will support improved product offerings and capabilities for our customers, our growth and continued expansion into and penetration of key geographic markets.”
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Woody Weld

The leveraged recapitalization will bolster Acme Lift’s presence and its ability to quickly respond to the needs of its rental customers with improved operational support and capabilities and an expanded line-up of new articulating and telescoping boom lifts and large-capacity telehandlers.

New York based Lampert Debt Advisors advised Acme on the restructuring, while ICM Capital Markets, was the placement agent for the transaction. Lampert also invested $15 million in Acme Lift through an investment affiliate.

Lampert’s founder Randy Lampert, said: “We believe financial strength and access to capital will be a key competitive strength for Acme Lift. This set of transactions is designed to position it at the forefront of the re-rental industry. We believe the transaction will serve to extend and expand its leadership position. We are happy to have played an instrumental role in placing Acme Lift in a stronger financial position for the future and to enter into this partnership with Woody Weld and his management team through this investment.”

Vertikal Comment

The re-rent business is in essence a combination of short term financing and a service provider. It helps growing rental companies add to their fleet at peak times without taking on any long term commitments and provides specialist – usually larger- models to companies in markets where they do not have year regular demand for such products or it can provide extra machines for a specific one off contract.

Given that the greatest call on a re-rent provider is to top up a fleet during busy times, a relatively small fall in demand has a much more severe impact on such re-rent providers as its machines are of course the first to be laid off. Although a focus on specialist equipment can help limit this.
However the period when business begins to recover after a recession can provide the richest pickings or re-renters and this recession will provide more than usual.

Most industry ‘experts’ agree that the major challenge over the next two to four years not be finding work for the equipment, but will sourcing the finance new equipment and even to replace older units. Re-rent companies that are sufficiently well funded will therefore be able to step into the breach and will be sought out by both rental companies and manufacturers.

The timing of this restructuring could hardly be better

Note: Byran Rich is no longer associated in any way with Acme.