17.02.2011

Ahern defaults

Las Vegas based Ahern Rentals has said that it was unable to make a $10.9 million interest payment due on Tuesday of this week.

The interest was due on Ahern's $238 million worth of 9.25 percent Second Priority Senior Secured Notes due 2013.

Ahern said that it entered into a forbearance agreement with a majority of the revolving lenders under its credit agreement and that, subject to conditions, the lenders have agreed to take no action as a result of any default under the credit agreement that arises from non-payment of interest on the notes or specified other events that could result in a default through Aug. 21st.

Chief executive Don Ahern said: "Our decision is an important first step in extending the maturity of our credit agreement. We are engaged in discussions with the lenders under our credit agreement and the holders of a majority of the outstanding principal of our notes aimed at addressing the maturity of our credit agreement, and our decision to not make the payment was done with their support.”

“The decision was part of our strategy to extend the maturity date of the revolving portion of our credit agreement, and with $33.5 million of availability on our revolver, we have sufficient liquidity to meet our commitments to our employees, customers and vendors,"

"After a few very difficult years due to the recession in the United States, we have been experiencing a significant improvement in all areas of our business, particularly during the past six months, with a significant increase in our utilisation levels and improving pricing. Ahern provides a valuable service for its customers and the discussions with our lenders and note holders do not affect our commitment to continuing to offer customers highly reliable and quality equipment and service. It is business as usual and we anticipate no impact on our employees, customers and vendors."

Ahern is heavily indebted, having built up over $600 million of debt and liabilities during the recession, as it continued to expand its branch network in order to reduce dependence on the depressed Las Vegas market. Ahern rents aerial lifts and telehandlers from 71 locations in the USA.