03.11.2020

Ahern bond discussions

Rumours have been circulating in the past week regarding the possible refinancing of Ahern Rentals bonds, culminating in an article by Bloomberg news.bloomberg.com.

The article suggests that some holders of the company’s $550 million of bonds due in 2023 were considering signing non-disclosure agreements which prevented them trading the bonds, before they had access to confidential details of any proposition. It also claimed that holders of around two thirds of the notes had sent a letter to Ahern asking about payments/dividends paid while the company is under financial strain, due to the current crisis.

Ahern has now issued a full statement on the matter which is published in full below:

“In an article published by Bloomberg on October 27, 2020, it was reported that some bondholders of Ahern Rentals, Inc. ("Ahern Rentals") had received a refinancing proposal by Ahern Rentals, and that Ahern Rentals’ law firm, Stoel Rives LLP ("Stoel Rives"), sent a debt plan to Willkie Farr & Gallagher, counsel for a group of bondholders. Neither of these statements is true as no refinancing proposal or debt plan was sent to any bondholder or Willkie Farr & Gallagher.”

“Stoel Rives and Willkie Farr & Gallagher were discussing a possible non-disclosure agreement (NDA) in response to a letter Willkie Farr & Gallagher sent to Ahern Rentals in August which described the concerns of certain bondholders with dividends and loan investments made by Ahern Rentals that were disclosed in Ahern Rentals’ 2020 quarterly reports to bondholders. The dividends and investments were made in compliance with the indenture governing the bonds and Ahern Rentals’ credit facility. Discussions concerning an NDA were terminated by Ahern Rentals after the Bloomberg article was published.”

“While Ahern Rentals has been adversely affected by Covid-19, management believes that the effects to date have not had a material impact on the Company’s financial strength, and the Company continues to invest in the growth and health of its business. For example, the reduction in total revenue in the third quarter of 2020 as compared to the same period for 2019 was just eight percent.”

Vertikal Comment

The actions mentioned above had apparently triggered concerns that Ahern would go through a similar process as it had in 2011 when it used a voluntary chapter 11 petition in order to restructure over $500 million of debt. The move followed a default on interest payments earlier in the year and refusal by some bondholders to extend maturity dates. However it was seen by Ahern as a move by some bondholders, including Platinum Equity, to take control of the business at a knock down price. That time Ahern saw off any challengers and emerged from Chapter 11 in 2013 to promptly snap up Snorkel.

No matter what actually occurred last month, the situation this time round is entirely different, and from the Ahern statement unlikely to go any further.