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TABLE OF CONTENTS
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-201927
The information in this preliminary prospectus supplement relates to an effective registration statement under the Securities Act of 1933, but is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Preliminary Prospectus Supplement |
SUBJECT TO COMPLETION DATED FEBRUARY 22, 2017 |
PROSPECTUS SUPPLEMENT
(To prospectus dated March 12, 2015)
United Rentals (North America), Inc.
$250,000,000 5.875% Senior Notes due 2026
$250,000,000 5.500% Senior Notes due 2027
Issue Price for Reopened 2026 Notes: % plus accrued interest from September 15, 2016
Issue Price for Reopened 2027 Notes: % plus accrued interest from February 15, 2017
We are offering $250,000,000 of 5.875% Senior Notes due 2026, which we refer to as the "reopened 2026 notes," and $250,000,000 of 5.500% Senior Notes due 2027, which we refer to as the "reopened 2027 notes."
Reopened 2026 notes. The reopened 2026 notes will have identical terms, be fungible with and be part of a single series of senior debt securities with the $750,000,000 principal amount of 5.875% Senior Notes due 2026, which we refer to as the "original 2026 notes," issued on May 13, 2016. We refer to the reopened 2026 notes and original 2026 notes together as the "2026 notes." The outstanding aggregate principal amount of the 2026 notes, after issuance of the reopened 2026 notes, will be $1 billion. We will pay interest on the reopened 2026 notes semi-annually in cash in arrears on March 15 and September 15 of each year, starting on March 15, 2017. The 2026 notes will mature on September 15, 2026. We may redeem some or all of the 2026 notes on or after September 15, 2021, at the redemption prices set forth in this prospectus supplement, plus accrued and unpaid interest, if any, to the redemption date. We also may redeem some or all of the 2026 notes at any time prior to September 15, 2021, at a price equal to 100% of the aggregate principal amount of the 2026 notes to be redeemed, plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date. In addition, at any time on or prior to September 15, 2019, we may redeem up to 40% of the aggregate principal amount of the 2026 notes with the net cash proceeds of certain equity offerings at a redemption price equal to 105.875% of the aggregate principal amount of the 2026 notes plus accrued and unpaid interest, if any, to the redemption date.
Reopened 2027 notes. The reopened 2027 notes will have identical terms, be fungible with and be part of a single series of senior debt securities with the $750,000,000 principal amount of 5.500% Senior Notes due 2027, which we refer to as the "original 2027 notes," issued on November 7, 2016. We refer to the reopened 2027 notes and original 2027 notes together as the "2027 notes" (and, together with the 2026 notes, the "notes"). The outstanding aggregate principal amount of the 2027 notes, after issuance of the reopened 2027 notes, will be $1 billion. We will pay interest on the reopened 2027 notes semi-annually in cash in arrears on February 15 and August 15 of each year, except that the last payment of interest will be made on May 15, 2027. The first such interest payment will be made on August 15, 2017. The 2027 notes will mature on May 15, 2027. We may redeem some or all of the 2027 notes on or after May 15, 2022, at the redemption prices set forth in this prospectus supplement, plus accrued and unpaid interest, if any, to the redemption date. We also may redeem some or all of the 2027 notes at any time prior to May 15, 2022, at a price equal to 100% of the aggregate principal amount of the 2027 notes to be redeemed, plus a make-whole premium and accrued and unpaid interest, if any, to the redemption date. In addition, at any time on or prior to May 15, 2020, we may redeem up to 40% of the aggregate principal amount of the 2027 notes with the net cash proceeds of certain equity offerings at a redemption price equal to 105.50% of the aggregate principal amount of the 2027 notes plus accrued and unpaid interest, if any, to the redemption date.
The reopened notes will be our senior unsecured obligations and will rank equally in right of payment with all of our existing and future senior indebtedness, effectively junior to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness and senior in right of payment to any of our existing and future subordinated indebtedness. Our obligations under the reopened notes will be guaranteed on a senior unsecured basis by our parent company, United Rentals, Inc. and, subject to limited exceptions, our current and future domestic subsidiaries. The guarantees will rank equally in right of payment with all of the guarantors' existing and future senior indebtedness, effectively junior to any existing and future secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness and senior in right of payment to any existing and future subordinated indebtedness of the guarantors.
Our foreign subsidiaries will not be guarantors. The reopened notes will be issued only in registered form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
For a more detailed description of the reopened notes, see "Description of the Reopened 2026 Notes" and "Description of the Reopened 2027 Notes."
The reopened notes offered by this prospectus supplement will not be listed on any securities exchange. Currently, there is no public market for the notes.
Investing in the reopened notes involves risks. See "Risk Factors" beginning on page S-21 of this prospectus supplement and "Item 1ARisk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein.
|
Public Offering Price(1)(2) |
Underwriting Discount and Commissions |
Proceeds, before expenses, to us(1)(2) |
|||
---|---|---|---|---|---|---|
Per 5.875% Senior Note due 2026 |
% | % | % | |||
Total |
$ | $ | $ | |||
Per 5.500% Senior Note due 2027 |
% | % | % | |||
Total |
$ | $ | $ | |||
Total |
$ | $ | $ |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The reopened notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company for the accounts of its participants on or about , 2017.
Joint Book-Running Managers
Wells Fargo Securities | BofA Merrill Lynch | Morgan Stanley | ||
Barclays | Citigroup | Deutsche Bank Securities | ||
J.P. Morgan | MUFG | Scotiabank |
Co-Managers |
||||
BMO Capital Markets |
PNC Capital Markets LLC |
SunTrust Robinson Humphrey |
The date of this prospectus supplement is February , 2017
We are responsible for the information contained and incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. This prospectus supplement and the accompanying prospectus are an offer to sell only the reopened notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement and the accompanying prospectus is current only as of their respective dates.
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of reopened notes and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part, the accompanying prospectus, gives more general information, some of which may not apply to this offering. If the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information contained in this prospectus supplement.
Unless otherwise indicated or the context otherwise requires, (1) the term "URNA" refers to United Rentals (North America), Inc., the issuer of the notes, and not to its parent or any of its subsidiaries, (2) the term "Holdings" refers to United Rentals, Inc., the parent of URNA and a guarantor of the notes, and not to any of its subsidiaries, and (3) the terms "United Rentals," "we," "us," our," "our company" or "the Company" refer to Holdings and its subsidiaries.
We are responsible for the information contained and incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. We are not,
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and the underwriters are not, making an offer to sell the reopened notes in any jurisdiction where the offer or sale is not permitted or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. You should not assume that the information in this prospectus supplement, the accompanying prospectus or any document incorporated by reference herein is accurate or complete as of any date other than the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). You may read and copy any documents filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Our filings with the SEC are also available to the public through the SEC's Internet website at http://www.sec.gov.
We also make available on our Internet website, free of charge, our annual, quarterly and current reports, including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is http://www.unitedrentals.com. The information contained on our website is not incorporated by reference into this document.
We have filed with the SEC a registration statement on Form S-3 relating to the reopened notes offered by this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus are parts of the registration statement and do not contain all of the information in the registration statement. Whenever a reference is made in this prospectus supplement or the accompanying prospectus to a contract or other document of ours, please be aware that the reference is only a summary and that you should refer to the exhibits that are a part of the registration statement and the documents incorporated by reference herein for a copy of that contract or other document. You may review a copy of the registration statement at the SEC's Public Reference Room in Washington, D.C., as well as through the SEC's Internet website listed above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC's rules allow us to "incorporate by reference" the documents that we file with the SEC. This means that we can disclose important information to you by referring you to those documents. Any information referred to in this way is considered part of this prospectus supplement from the date we file that document. Any reports filed by us with the SEC after the date of this prospectus supplement will automatically update and, where applicable, supersede any information contained in this prospectus supplement.
We incorporate by reference into this prospectus supplement the following documents or information filed by us with the SEC (other than, in each case, documents (or portions thereof) or information deemed to have been furnished and not filed in accordance with SEC rules and regulations):
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We will provide, free of charge, to each person, including any beneficial owner, to whom this prospectus supplement is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be incorporated by reference into this prospectus supplement, excluding exhibits to those documents, unless such exhibits are specifically incorporated by reference into those documents. You can request those documents from United Rentals, Inc. at 100 First Stamford Place, Suite 700, Stamford, Connecticut, 06902, Attention: Corporate Secretary, telephone number (203) 618-7342.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "seek," "on-track," "plan," "project," "forecast," "intend" or "anticipate," or the negative thereof or comparable terminology, or by discussions of strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.
Factors that could cause our actual results to differ materially from those projected include, but are not limited to, the following:
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For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report, as well as to our subsequent filings with the SEC. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.
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We obtained the industry, market and competitive position data used throughout this prospectus supplement and in the documents incorporated by reference herein from our own internal estimates and research, as well as from industry publications and research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these publications, studies and surveys is reliable, we have not independently verified industry, market and competitive position data from third-party sources. While we believe our internal business research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.
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This summary highlights information contained elsewhere in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference. This summary does not contain all the information you should consider before investing in the reopened notes. You should read this entire prospectus supplement and the accompanying prospectus, including the information incorporated by reference in this prospectus supplement and the accompanying prospectus, including the financial data and related notes, before making an investment decision.
United Rentals is the largest equipment rental company in the world. Our customer service network consists of 887 rental locations in the United States and Canada as well as centralized call centers and online capabilities. We offer approximately 3,200 classes of equipment for rent to construction and industrial companies, manufacturers, utilities, municipalities, homeowners, government entities and other customers. In 2016, we generated total revenue of $5.8 billion, including $4.9 billion of equipment rental revenue.
As of December 31, 2016, our fleet of rental equipment included approximately 440,000 units. The total original equipment cost of our fleet ("OEC"), based on the initial consideration paid, was $9.0 billion at December 31, 2016. The fleet includes:
In addition to renting equipment, we sell new and used equipment as well as related parts and service, and contractor supplies.
Our principal executive offices are located at 100 First Stamford Place, Suite 700, Stamford, Connecticut, 06902, and our telephone number is (203) 618-7342.
On January 25, 2017, we entered into a definitive merger agreement (the "NES Merger Agreement") with NES Rentals Holdings II, Inc. ("NES"), pursuant to which we have agreed to acquire NES in an all cash transaction (the "NES Acquisition"). Holders of NES common stock will each receive a pro rata share of the base consideration of $965 million, which is subject to the terms and conditions in the NES
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Merger Agreement, including customary purchase price adjustments (including adjustments for NES's existing debt) and adjustments for rental fleet sales and purchases. The merger and related fees and expenses will be funded through available cash, drawings on current debt facilities and the proceeds of the reopened notes offered by this prospectus supplement.
NES is one of the ten largest general equipment rental companies in the United States, specializing in providing aerial equipment to approximately 18,000 customers across the industrial and non-residential construction sectors. Based in Chicago, NES has 73 branches and approximately 1,100 employees, with a concentration in the eastern half of the United States. In 2016, NES generated $369 million of total revenue, $79.5 million of net income and $155.4 million of adjusted EBITDA. As of December 31, 2016, NES had approximately $900 million of fleet at original equipment cost. See below for a discussion of NES's EBITDA and adjusted EBITDA and a reconciliation of NES's EBITDA and adjusted EBITDA to net income.
The addition of NES's branch footprint will increase our density in strategically important markets, including the East Coast, Gulf States and the Midwest. The combined operations are expected to strengthen our relationships with local and strategic accounts in the construction and industrial sectors. This is expected to enhance cross-selling opportunities and drive revenue synergies. The combined operations are also expected to create meaningful opportunities for cost synergies in areas such as corporate overhead, operational efficiencies and purchasing.
The proposed merger is subject to Hart-Scott-Rodino antitrust clearance and other customary conditions. We expect the merger to close early in the second quarter of 2017.
EBITDA for NES represents the sum of net income, benefit for income taxes, interest expense, depreciation of rental equipment and non-rental depreciation. Adjusted EBITDA for NES represents EBITDA plus the gain on the sale of equity interest. EBITDA and adjusted EBITDA are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission and, accordingly, should not be considered as alternatives to net income or as indicators of operating performance. Management believes that EBITDA and adjusted EBITDA, when viewed with NES's results under U.S. generally accepted accounting principles ("GAAP") and the accompanying reconciliations, provide useful information about NES's operating performance. NES's definitions of EBITDA and adjusted EBITDA may differ from the definitions used by other companies and may not be comparable to similarly titled measures used by other companies, including United Rentals. The table below provides a reconciliation between NES's net income and NES's EBITDA and adjusted EBITDA for the year ended December 31, 2016 (amounts are in millions):
Net income |
$ | 79.5 | ||
Benefit for income taxes |
(51.9 | ) | ||
Interest expense |
37.6 | |||
Depreciation of rental equipment |
95.5 | |||
Non-rental depreciation |
2.1 | |||
| | | | |
EBITDA |
162.8 | |||
Gain on the sale of equity interest(1) |
(7.4 | ) | ||
| | | | |
Adjusted EBITDA |
155.4 | |||
| | | | |
| | | | |
| | | | |
The NES financial information has not been compiled or examined by our independent registered public accounting firm, nor has our independent registered public accounting firm performed any procedures with respect to this financial information or expressed any opinion or any form of assurance on
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such financial information. We caution investors not to place undue reliance on the NES financial information.
For the past several years, we have executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies. In particular, we have focused on customer segmentation, customer service differentiation, rate management, fleet management and operational efficiency.
In 2017, we expect to continue our disciplined focus on increasing our profitability and return on invested capital. In particular, our strategy calls for:
We believe that we benefit from the following competitive advantages:
Large and Diverse Rental Fleet. Our large and diverse fleet allows us to serve large customers that require substantial quantities and/or wide varieties of equipment. We believe our ability to serve such customers should allow us to improve our performance and enhance our market leadership position.
We manage our rental fleet, which is the largest and most comprehensive in the industry, utilizing a life-cycle approach that focuses on satisfying customer demand and optimizing utilization levels. As part of this life-cycle approach, we closely monitor repair and maintenance expense and can anticipate, based on our extensive experience with a large and diverse fleet, the optimum time to dispose of an asset. Our fleet age, which is calculated on an OEC-weighted basis, was 45.2 months at December 31, 2016.
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Significant Purchasing Power. We purchase large amounts of equipment, contractor supplies and other items, which enables us to negotiate favorable pricing, warranty and other terms with our vendors.
National Account Program. Our national account sales force is dedicated to establishing and expanding relationships with large companies, particularly those with a national or multi-regional presence. National accounts are generally defined as customers with potential annual equipment rental spend of at least $500,000 or customers doing business in multiple states. We offer our national account customers the benefits of a consistent level of service across North America, a wide selection of equipment and a single point of contact for all their equipment needs. National accounts are a subset of key accounts, which are our accounts that are managed by a single point of contact. Establishing a single point of contact for our key accounts helps us provide customer service management that is more consistent and satisfactory. During the year ended December 31, 2016, 45 percent of our equipment rental revenue was derived from national accounts, and 70 percent of our equipment rental revenue was derived from accounts, including national accounts and other key accounts, that are managed by a single point of contact.
Operating Efficiencies. We benefit from the following operating efficiencies:
Information Technology Systems. We have a wide variety of information technology systems, some proprietary and some licensed, that supports our operations. Our information technology infrastructure facilitates our ability to make rapid and informed decisions, respond quickly to changing market conditions and share rental equipment among branches. We have an in-house team of information technology specialists that supports our systems.
Our information technology systems are accessible to management, branch and call center personnel. Leveraging information technology to achieve greater efficiencies and improve customer service is a critical element of our strategy. Each branch is equipped with one or more workstations that are electronically linked to our other locations and to our data center. Rental transactions can be entered at these workstations and processed on a real-time basis.
Our information technology systems:
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We have a fully functional back-up facility designed to enable business continuity for our core rental and financial systems in the event that our main computer facility becomes inoperative. This back-up facility also allows us to perform system upgrades and maintenance without interfering with the normal ongoing operation of our information technology systems.
Strong Brand Recognition. As the largest equipment rental company in the world, we have strong brand recognition, which helps us to attract new customers and build customer loyalty.
Geographic and Customer Diversity. We have 887 rental locations in 49 U.S. states and every Canadian province and serve customers that range from Fortune 500 companies to small businesses and homeowners. We believe that our geographic and customer diversity provides us with many advantages including:
Strong and Motivated Branch Management. Each of our full-service branches has a manager who is supervised by a district manager. We believe that our managers are among the most knowledgeable and experienced in the industry, and we empower them, within budgetary guidelines, to make day-to-day decisions concerning branch matters. Each regional office has a management team that monitors branch, district and regional performance with extensive systems and controls, including performance benchmarks and detailed monthly operating reviews.
Employee Training Programs. We are dedicated to providing training and development opportunities to our employees. In 2016, our employees enhanced their skills through approximately 500,000 hours of training, including safety training, sales and leadership training, equipment-related training from our suppliers and online courses covering a variety of relevant subjects.
Risk Management and Safety Programs. Our risk management department is staffed by experienced professionals directing the procurement of insurance, managing claims made against the Company, and developing loss prevention programs to address workplace safety, driver safety and customer safety. The department's primary focus is on the protection of our employees and assets, as well as protecting the Company from liability for accidental loss.
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The Offering of the Reopened 2026 Notes
Issuer |
United Rentals (North America), Inc. | |
Reopened 2026 Notes Offered |
$250 million aggregate principal amount of 5.875% Senior Notes due 2026. |
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Total Aggregate Amount of 2026 Notes Outstanding Upon Completion of this Offering |
$1 billion (of which $750 million was issued on May 13, 2016). |
|
Maturity |
September 15, 2026. |
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Interest |
5.875% per annum, payable semi-annually in cash in arrears on March 15 and September 15. The next interest payment date is March 15, 2017. Interest will accrue from September 15, 2016. |
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Ranking |
The reopened 2026 notes will be senior unsecured obligations of URNA and will rank equally in right of payment with all of URNA's existing and future senior indebtedness, effectively junior to any of URNA's existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and senior in right of payment to any of URNA's existing and future subordinated indebtedness. |
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As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under our senior secured asset-based revolving credit facility (the "ABL Facility") to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the reopened 2026 notes would have ranked: |
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equally in right of payment with $4.8 billion principal amount of URNA's other senior unsecured obligations, comprised of: |
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$475 million principal amount of 75/8% Senior Notes due 2022, |
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$925 million principal amount of 61/8% Senior Notes due 2023, |
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$850 million principal amount of 53/4% Senior Notes due 2024, |
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$800 million principal amount of 51/2% Senior Notes due 2025, |
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$750 million principal amount of original 2026 notes, and |
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$1 billion principal amount of 51/2% Senior Notes due 2027, including the $250 million reopened 2027 notes to be issued concurrently with the reopened 2026 notes; |
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effectively junior to $3.2 billion of URNA's secured obligations, comprised of: |
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|
$2.074 billion of URNA's outstanding borrowings under the ABL Facility (excluding $286 million of additional borrowing capacity, net of outstanding letters of credit of $36 million), |
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$1 billion principal amount of 45/8% Senior Secured Notes due 2023, |
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URNA's guarantee obligations in respect of $103 million of the outstanding borrowings of the subsidiary guarantors under the ABL Facility, |
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$53 million in capital leases, and |
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URNA's guarantee obligations in respect of $8 million of capital leases of the subsidiary guarantors; and |
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effectively junior to: |
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$568 million of indebtedness of URNA's special purpose vehicle in connection with the accounts receivable securitization facility, |
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$3 million of capital leases of Holdings, and |
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$7 million of capital leases of URNA's subsidiaries that are not guarantors. |
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Most of URNA's U.S. receivable assets have been sold to a special purpose vehicle in connection with the accounts receivable securitization facility (the accounts receivable in the collateral pool being the lenders' only source of payment under that facility). See "Capitalization." |
|
Guarantees |
The reopened 2026 notes will be guaranteed on a senior unsecured basis by Holdings and, subject to limited exceptions, URNA's current and future domestic subsidiaries. The guarantees will be senior unsecured obligations of the guarantors and will rank equally in right of payment with all of the existing and future senior unsecured indebtedness of the guarantors, effectively junior to any existing and future secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness, and senior in right of payment to all existing and future subordinated indebtedness of the guarantors. The reopened 2026 notes will not be guaranteed by URNA's foreign or unrestricted subsidiaries or any foreign subsidiary holding company or any subsidiary of a foreign subsidiary, unless URNA determines otherwise. During any period when the 2026 notes are rated investment grade by both Standard & Poor's Ratings Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") or, in certain circumstances, another nationally recognized statistical rating agency selected by URNA, provided at such time no default under the 2026 Indenture (as defined below) has occurred and is continuing, URNA may request to release the guarantee of any subsidiary guarantor. |
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|
As of December 31, 2016, on an as adjusted basis after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the guarantees would have ranked: |
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equally in right of payment with $4.8 billion of the guarantors' other senior unsecured obligations, comprised of the guarantors' guarantee obligations in respect of: |
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$475 million principal amount of 75/8% Senior Notes due 2022, |
|
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$925 million principal amount of 61/8% Senior Notes due 2023, |
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$850 million principal amount of 53/4% Senior Notes due 2024, |
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$800 million principal amount of 51/2% Senior Notes due 2025, |
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$750 million principal amount of original 2026 notes, and |
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$1 billion principal amount of 51/2% Senior Notes due 2027, including the $250 million reopened 2027 notes to be issued concurrently with the reopened 2026 notes; |
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effectively junior to $3.2 billion of the guarantors' secured obligations, comprised of: |
|
|
the guarantors' guarantee obligations in respect of $2.074 billion of URNA's outstanding borrowings under the ABL Facility, |
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$103 million of the outstanding borrowings of the subsidiary guarantors under the ABL Facility, |
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the guarantors' guarantee obligations in respect of $1 billion principal amount of 45/8% Senior Secured Notes due 2023, |
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the guarantors' guarantee obligations in respect of $53 million in URNA's capital leases, |
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$3 million of capital leases of Holdings, and |
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$8 million of capital leases of the subsidiary guarantors; and |
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effectively junior to: |
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$568 million of indebtedness of URNA's special purpose vehicle in connection with the accounts receivable securitization facility, and |
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$7 million of capital leases of URNA's subsidiaries that are not guarantors. |
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|
The non-guarantor subsidiaries of URNA accounted for $223 million, or 8%, of our adjusted EBITDA for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $510 million, or 9%, of our total revenues for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $1.893 billion, or 16%, of our total assets, and $698 million, or 7%, of our total liabilities, at December 31, 2016. |
|
Optional Redemption |
URNA may, at its option, redeem some or all of the 2026 notes at any time on or after September 15, 2021 at the redemption prices listed under "Description of the Reopened 2026 NotesOptional Redemption," plus accrued and unpaid interest, if any, to the redemption date. |
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At any time prior to September 15, 2021, URNA may redeem some or all of the 2026 notes at a price equal to 100% of the aggregate principal amount of the 2026 notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any, to the redemption date. |
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In addition, at any time on or prior to September 15, 2019, URNA may, at its option, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2026 notes with the net cash proceeds of certain equity offerings, at a price equal to 105.875% of the aggregate principal amount of the 2026 notes redeemed plus accrued and unpaid interest, if any, to the redemption date. See "Description of the Reopened 2026 NotesOptional Redemption." |
|
Change of Control |
If we experience specific kinds of change of control events, we must offer to repurchase the 2026 notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See "Description of the Reopened 2026 NotesChange of Control." |
S-9
Certain Covenants |
The indenture (the "2026 Indenture") governing the 2026 notes contains certain covenants applicable to URNA and its restricted subsidiaries, including limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and (9) designations of unrestricted subsidiaries. Each of these covenants is subject to important exceptions and qualifications. In addition, many of the restrictive covenants will not apply to us during any period when the 2026 notes are rated investment grade by both S&P and Moody's or, in certain circumstances, another rating agency selected by us, provided at such time no default under the 2026 Indenture has occurred and is continuing. See "Description of the Reopened 2026 NotesCertain Covenants" and "Description of the Reopened 2026 NotesConsolidation, Merger, Sale of Assets, etc." |
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Use of Proceeds |
We anticipate that we will receive approximately $246 million in net proceeds from the sale of the reopened 2026 notes, after underwriting discounts and commissions and payment of estimated fees and expenses. We expect to use these net proceeds, together with net proceeds from the sale of the reopened 2027 notes and additional borrowings of approximately $523 million under the ABL Facility, to finance the NES Acquisition and to pay related fees and expenses. See "Use of Proceeds." |
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Pending the payment of the purchase price for the NES Acquisition, the net proceeds from this offering will be applied to reduce borrowings under the ABL Facility. We expect to then borrow under the ABL Facility to fund the NES Acquisition. |
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In the event the NES Acquisition is not consummated, the net proceeds from this offering that were used to repay borrowings under the ABL Facility may be reborrowed for general corporate purposes. |
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For information regarding our outstanding senior indebtedness, including maturity and applicable interest rates, see "Capitalization", note 11 to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report, which is incorporated by reference herein. |
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Book-Entry Form |
The reopened 2026 notes will be issued in book-entry form and will be represented by one or more global securities registered in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). Beneficial interests in the reopened 2026 notes will be evidenced by, and transfers will be effected only through, records maintained by participants in DTC. |
S-10
No Public Trading Market Listing |
The original 2026 notes are not listed on any securities exchange or any automated dealer quotation system, and we do not intend to list the reopened 2026 notes on any national securities exchange or automated dealer quotation system. The underwriters have advised us that they currently intend to continue to make a market in the 2026 notes. However, they are not obligated to do so and any market making with respect to the 2026 notes may be discontinued without notice. Accordingly, we cannot assure you that a liquid market for the 2026 notes will be maintained. |
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Trustee |
Wells Fargo Bank, National Association. |
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Governing Law |
The reopened 2026 notes and the 2026 Indenture under which they will be issued will be governed by the laws of the State of New York. |
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Risk Factors |
Investing in the reopened 2026 notes involves risks. You should carefully consider the information under the section titled "Risk Factors" beginning on page S-21 and all other information contained or incorporated by reference in this prospectus supplement prior to investing in the reopened 2026 notes. In particular, we urge you to carefully consider the information set forth in the section titled "Risk Factors" and in "Item 1ARisk Factors" of our Annual Report for a description of certain risks you should consider before investing in the reopened 2026 notes. |
S-11
The Offering of the Reopened 2027 Notes
Issuer |
United Rentals (North America), Inc. | |
Reopened 2027 Notes Offered |
$250 million aggregate principal amount of 5.500% Senior Notes due 2027. |
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Total Aggregate Amount of 2027 Notes Outstanding Upon Completion of this Offering |
$1 billion (of which $750 million was issued on November 7, 2016). |
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Maturity |
May 15, 2027. |
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Interest |
5.500% per annum, payable semi-annually in cash in arrears on February 15 and August 15, except that the last payment of interest will be made on May 15, 2027. The next interest payment date is August 15, 2017. Interest will accrue from February 15, 2017. |
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Ranking |
The reopened 2027 notes will be senior unsecured obligations of URNA and will rank equally in right of payment with all of URNA's existing and future senior indebtedness, effectively junior to any of URNA's existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and senior in right of payment to any of URNA's existing and future subordinated indebtedness. |
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As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under our senior secured asset-based revolving credit facility (the "ABL Facility") to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the reopened 2027 notes would have ranked: |
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equally in right of payment with $4.8 billion principal amount of URNA's other senior unsecured obligations, comprised of: |
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$475 million principal amount of 75/8% Senior Notes due 2022, |
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$925 million principal amount of 61/8% Senior Notes due 2023, |
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$850 million principal amount of 53/4% Senior Notes due 2024, |
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$800 million principal amount of 51/2% Senior Notes due 2025, |
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$1 billion principal amount of 57/8% Senior Notes due 2026, including the $250 million reopened 2026 notes to be issued concurrently with the reopened 2027 notes, and |
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$750 million principal amount of original 2027 notes; |
S-12
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effectively junior to $3.2 billion of URNA's secured obligations, comprised of: |
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$2.074 billion of URNA's outstanding borrowings under the ABL Facility (excluding $286 million of additional borrowing capacity, net of outstanding letters of credit of $36 million), |
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$1 billion principal amount of 45/8% Senior Secured Notes due 2023, |
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URNA's guarantee obligations in respect of $103 million of the outstanding borrowings of the subsidiary guarantors under the ABL Facility, |
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$53 million in capital leases, and |
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URNA's guarantee obligations in respect of $8 million of capital leases of the subsidiary guarantors; and |
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effectively junior to: |
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$568 million of indebtedness of URNA's special purpose vehicle in connection with the accounts receivable securitization facility, |
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$3 million of capital leases of Holdings, and |
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$7 million of capital leases of URNA's subsidiaries that are not guarantors. |
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Most of URNA's U.S. receivable assets have been sold to a special purpose vehicle in connection with the accounts receivable securitization facility (the accounts receivable in the collateral pool being the lenders' only source of payment under that facility). See "Capitalization." |
S-13
Guarantees |
The reopened 2027 notes will be guaranteed on a senior unsecured basis by Holdings and, subject to limited exceptions, URNA's current and future domestic subsidiaries. The guarantees will be senior unsecured obligations of the guarantors and will rank equally in right of payment with all of the existing and future senior unsecured indebtedness of the guarantors, effectively junior to any existing and future secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness, and senior in right of payment to all existing and future subordinated indebtedness of the guarantors. The reopened 2027 notes will not be guaranteed by URNA's foreign or unrestricted subsidiaries or any foreign subsidiary holding company or any subsidiary of a foreign subsidiary, unless URNA determines otherwise. During any period when the 2027 notes are rated investment grade by both Standard & Poor's Ratings Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") or, in certain circumstances, another nationally recognized statistical rating agency selected by URNA, provided at such time no default under the 2027 Indenture (as defined below) has occurred and is continuing, URNA may request to release the guarantee of any subsidiary guarantor. |
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As of December 31, 2016, on an as adjusted basis after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the guarantees would have ranked: |
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equally in right of payment with $4.8 billion of the guarantors' other senior unsecured obligations, comprised of the guarantors' guarantee obligations in respect of: |
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$475 million principal amount of 75/8% Senior Notes due 2022, |
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$925 million principal amount of 61/8% Senior Notes due 2023, |
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$850 million principal amount of 53/4% Senior Notes due 2024, |
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$800 million principal amount of 51/2% Senior Notes due 2025, |
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$1 billion principal amount of 57/8% Senior Notes due 2026, including the $250 million reopened 2026 notes to be issued concurrently with the reopened 2027 notes, and |
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$750 million principal amount of original 2027 notes; |
S-14
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effectively junior to $3.2 billion of the guarantors' secured obligations, comprised of: |
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the guarantors' guarantee obligations in respect of $2.074 billion of URNA's outstanding borrowings under the ABL Facility, |
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$103 million of the outstanding borrowings of the subsidiary guarantors under the ABL Facility, |
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the guarantors' guarantee obligations in respect of $1 billion principal amount of 45/8% Senior Secured Notes due 2023, |
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the guarantors' guarantee obligations in respect of $53 million in URNA's capital leases, |
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$3 million of capital leases of Holdings, and |
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$8 million of capital leases of the subsidiary guarantors; and |
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effectively junior to: |
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$568 million of indebtedness of URNA's special purpose vehicle in connection with the accounts receivable securitization facility, and |
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$7 million of capital leases of URNA's subsidiaries that are not guarantors. |
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The non-guarantor subsidiaries of URNA accounted for $223 million, or 8%, of our adjusted EBITDA for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $510 million, or 9%, of our total revenues for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $1.893 billion, or 16%, of our total assets, and $698 million, or 7%, of our total liabilities, at December 31, 2016. |
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Optional Redemption |
URNA may, at its option, redeem some or all of the 2027 notes at any time on or after May 15, 2022 at the redemption prices listed under "Description of the Reopened 2027 NotesOptional Redemption," plus accrued and unpaid interest, if any, to the redemption date. |
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At any time prior to May 15, 2022, URNA may redeem some or all of the 2027 notes at a price equal to 100% of the aggregate principal amount of the 2027 notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any, to the redemption date. |
S-15
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In addition, at any time on or prior to May 15, 2020, URNA may, at its option, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2027 notes with the net cash proceeds of certain equity offerings, at a price equal to 105.50% of the aggregate principal amount of the 2027 notes redeemed plus accrued and unpaid interest, if any, to the redemption date. See "Description of the Reopened 2027 NotesOptional Redemption." |
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Change of Control |
If we experience specific kinds of change of control events, we must offer to repurchase the 2027 notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See "Description of the Reopened 2027 NotesChange of Control." |
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Certain Covenants |
The indenture (the "2027 Indenture") governing the 2027 notes contains certain covenants applicable to URNA and its restricted subsidiaries, including limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and (9) designations of unrestricted subsidiaries. Each of these covenants is subject to important exceptions and qualifications. In addition, many of the restrictive covenants will not apply to us during any period when the 2027 notes are rated investment grade by both S&P and Moody's or, in certain circumstances, another rating agency selected by us, provided at such time no default under the 2027 Indenture has occurred and is continuing. See "Description of the Reopened 2027 NotesCertain Covenants" and "Description of the Reopened 2027 NotesConsolidation, Merger, Sale of Assets, etc." |
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Use of Proceeds |
We anticipate that we will receive approximately $246 million in net proceeds from the sale of the reopened 2027 notes, after underwriting discounts and commissions and payment of estimated fees and expenses. We expect to use these net proceeds, together with net proceeds from the sale of the reopened 2026 notes and additional borrowings of approximately $523 million under the ABL Facility, to finance the NES Acquisition and to pay related fees and expenses. See "Use of Proceeds." |
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Pending the payment of the purchase price for the NES Acquisition, the net proceeds from this offering will be applied to reduce borrowings under the ABL Facility. We expect to then borrow under the ABL Facility to fund the NES Acquisition. |
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In the event the NES Acquisition is not consummated, the net proceeds from this offering that were used to repay borrowings under the ABL Facility may be reborrowed for general corporate purposes. |
S-16
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For information regarding our outstanding senior indebtedness, including maturity and applicable interest rates, see "Capitalization", note 11 to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report, which is incorporated by reference herein. |
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Book-Entry Form |
The reopened 2027 notes will be issued in book-entry form and will be represented by one or more global securities registered in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). Beneficial interests in the reopened 2027 notes will be evidenced by, and transfers will be effected only through, records maintained by participants in DTC. |
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No Public Trading Market Listing |
The original 2027 notes are not listed on any securities exchange or any automated dealer quotation system, and we do not intend to list the reopened 2027 notes on any national securities exchange or automated dealer quotation system. The underwriters have advised us that they currently intend to continue to make a market in the 2027 notes. However, they are not obligated to do so and any market making with respect to the 2027 notes may be discontinued without notice. Accordingly, we cannot assure you that a liquid market for the 2027 notes will be maintained. |
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Trustee |
Wells Fargo Bank, National Association. |
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Governing Law |
The reopened 2027 notes and the 2027 Indenture under which they will be issued will be governed by the laws of the State of New York. |
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Risk Factors |
Investing in the reopened 2027 notes involves risks. You should carefully consider the information under the section titled "Risk Factors" beginning on page S-21 and all other information contained or incorporated by reference in this prospectus supplement prior to investing in the reopened 2027 notes. In particular, we urge you to carefully consider the information set forth in the section titled "Risk Factors" and in "Item 1ARisk Factors" of our Annual Report for a description of certain risks you should consider before investing in the reopened 2027 notes. |
Because, pending the payment of the purchase price for the NES Acquisition, we intend to use the net proceeds from this offering to temporarily repay indebtedness owed to the underwriters and certain affiliates of the underwriters who are lenders under the ABL Facility as described under "Use of Proceeds," there is a "conflict of interest" as that term is defined in the rules of the Financial Industry Regulatory Authority, Inc. ("FINRA"). Accordingly, this offering is being made in compliance with FINRA Rule 5121. J.P. Morgan Securities LLC is assuming the responsibility of acting as the qualified independent underwriter in preparing this prospectus supplement, in pricing the offering and conducting due diligence. No underwriter having a conflict of interest under FINRA Rule 5121 will sell to a discretionary account any security with respect to which the conflict exists, unless the member has received specific written approval of the transaction from the account holder and retains documentation of the approval in its records.
S-17
Summary Historical Financial Information of United Rentals
The following table sets forth our summary historical financial data for the periods, and as of the dates, indicated. The summary consolidated financial information for the years ended December 31, 2016, 2015 and 2014 and as of December 31, 2016 and 2015 has been derived from our audited consolidated financial statements and the notes to those statements and other information included in our Annual Report, which is incorporated by reference herein. The summary consolidated financial information as of December 31, 2014 has been derived from our audited consolidated financial statements and the notes to those statements and other information included in our Annual Report for the year ended December 31, 2015, which is not incorporated by reference herein. Our consolidated financial statements included in our Annual Report have been audited by Ernst & Young LLP, our independent registered public accounting firm, as set forth in their report thereon, which is incorporated by reference herein.
In April 2014, we acquired certain assets of the following four entities: National Pump & Compressor, Ltd., Canadian Pump and Compressor Ltd., GulfCo Industrial Equipment, LP and LD Services, LLC (collectively "National Pump"). The results of National Pump's operations have been included in our consolidated financial statements since the acquisition date. The financial data below do not reflect or give pro forma effect to the NES Acquisition.
Our historical financial data is not necessarily indicative of our future performance. Because the data in this table is only a summary and does not provide all of the data contained in our financial statements, the information should be read in conjunction with the sections titled "Use of Proceeds" and "Capitalization" in this prospectus supplement, "Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes thereto in our Annual Report. For more information about how to obtain copies of our Annual Report, see "Where You Can Find More Information" on page S-ii of this prospectus supplement.
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Year Ended December 31, | |||||||||
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2016 | 2015 | 2014 | |||||||
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(in millions, except ratios) |
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Income statement data: |
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Total revenues |
$ | 5,762 | $ | 5,817 | $ | 5,685 | ||||
Total cost of revenues |
3,359 | 3,337 | 3,253 | |||||||
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Gross profit |
2,403 | 2,480 | 2,432 | |||||||
Selling, general and administrative expenses |
719 | 714 | 758 | |||||||
Merger related costs |
| (26 | ) | 11 | ||||||
Restructuring charge |
14 | 6 | (1 | ) | ||||||
Non-rental depreciation and amortization |
255 | 268 | 273 | |||||||
| | | | | | | | | | |
Operating income |
1,415 | 1,518 | 1,391 | |||||||
Interest expense, net |
511 | 567 | 555 | |||||||
Other income, net |
(5 | ) | (12 | ) | (14 | ) | ||||
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Income before provision for income taxes |
909 | 963 | 850 | |||||||
Provision for income taxes |
343 | 378 | 310 | |||||||
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Net income |
$ | 566 | $ | 585 | $ | 540 | ||||
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Balance sheet data: |
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Total assets |
$ | 11,988 | $ | 12,083 | $ | 12,129 | ||||
Total debt |
7,790 | 8,162 | 7,962 | |||||||
Total stockholders' equity |
1,648 | 1,476 | 1,796 | |||||||
Other financial data: |
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Adjusted EBITDA(1) |
$ | 2,759 | $ | 2,832 | $ | 2,718 |
S-18
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Year Ended December 31, | |||||||||
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2016 | 2015 | 2014 | |||||||
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(in millions, except ratios) |
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Ratio of earnings to fixed charges |
3.0x | 3.0x | 2.6x |
The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA:
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Year Ended December 31, | |||||||||
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2016 | 2015 | 2014 | |||||||
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(in millions) |
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Net income |
$ | 566 | $ | 585 | $ | 540 | ||||
Provision for income taxes |
343 | 378 | 310 | |||||||
Interest expense, net |
511 | 567 | 555 | |||||||
Depreciation of rental equipment |
990 | 976 | 921 | |||||||
Non-rental depreciation and amortization |
255 | 268 | 273 | |||||||
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EBITDA |
2,665 | 2,774 | 2,599 | |||||||
Merger related costs(1) |
| (26 | ) | 11 | ||||||
Restructuring charge(2) |
14 | 6 | (1 | ) | ||||||
Stock compensation expense, net(3) |
45 | 49 | 74 | |||||||
Impact of the fair value mark-up of acquired RSC fleet(4) |
35 | 29 | 35 | |||||||
| | | | | | | | | | |
Adjusted EBITDA |
$ | 2,759 | $ | 2,832 | $ | 2,718 | ||||
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S-19
The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA:
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Year Ended December 31, | |||||||||
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2016 | 2015 | 2014 | |||||||
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(in millions) |
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Net cash provided by operating activities |
$ | 1,953 | $ | 1,995 | $ | 1,801 | ||||
Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA: |
||||||||||
Amortization of deferred financing costs and original issue discounts |
(9 | ) | (10 | ) | (17 | ) | ||||
Gain on sales of rental equipment |
204 | 227 | 229 | |||||||
Gain on sales of non-rental equipment |
4 | 8 | 11 | |||||||
Merger related costs(1) |
| 26 | (11 | ) | ||||||
Restructuring charge(2) |
(14 | ) | (6 | ) | 1 | |||||
Stock compensation expense, net(3) |
(45 | ) | (49 | ) | (74 | ) | ||||
Loss on extinguishment of debt securities and amendment of ABL Facility |
(101 | ) | (123 | ) | (80 | ) | ||||
Changes in assets and liabilities |
101 | 194 | 182 | |||||||
Excess tax benefits from share-based payment arrangements |
58 | 5 | | |||||||
Cash paid for interest |
415 | 447 | 457 | |||||||
Cash paid for income taxes, net |
99 | 60 | 100 | |||||||
| | | | | | | | | | |
EBITDA |
2,665 | 2,774 | 2,599 | |||||||
Add back: |
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Merger related costs(1) |
| (26 | ) | 11 | ||||||
Restructuring charge(2) |
14 | 6 | (1 | ) | ||||||
Stock compensation expense, net(3) |
45 | 49 | 74 | |||||||
Impact of the fair value mark-up of acquired RSC fleet(4) |
35 | 29 | 35 | |||||||
| | | | | | | | | | |
Adjusted EBITDA |
$ | 2,759 | $ | 2,832 | $ | 2,718 | ||||
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| | | | | | | | | | |
S-20
Investing in the reopened notes involves risks. You should carefully consider the risks described below and the risk factors incorporated by reference herein, as well as the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, before you invest in the reopened notes. Certain risks related to us and our business are contained in the section titled "Item 1ARisk Factors" and elsewhere in our Annual Report, which is incorporated by reference in this prospectus supplement and the accompanying prospectus (and in any of our annual or quarterly reports for a subsequent year or quarter that we file with the SEC and that are so incorporated). See "Where You Can Find More Information" on page S-ii of this prospectus supplement and in the accompanying prospectus for information about how to obtain a copy of these documents. The risks and uncertainties described below and incorporated by reference into this prospectus supplement and the accompanying prospectus are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks actually occurs, our business, financial condition and results of operations could be materially affected. In that case, the value of the reopened notes could decline substantially.
Risks Relating to Our Indebtedness
Our significant indebtedness exposes us to various risks.
At December 31, 2016, on a pro forma basis after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," our total indebtedness was approximately $8.8 billion. Our substantial indebtedness could adversely affect our business, results of operations and financial condition in a number of ways by, among other things:
S-21
A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest expense and our debt service obligations. At December 31, 2016, on a pro forma basis after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom, we had $2.7 billion of indebtedness that bears interest at variable rates, representing 31% of our total indebtedness.
To service our indebtedness, we will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.
We depend on cash on hand and cash flows from operations to make scheduled debt payments. To a significant extent, our ability to do so is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not be able to generate sufficient cash flow from operations to repay our indebtedness when it becomes due and to meet our other cash needs. If we are unable to service our indebtedness and fund our operations, we will have to adopt an alternative strategy that may include:
Even if we adopt an alternative strategy, the strategy may not be successful and we may continue to be unable to service our indebtedness and fund our operations.
We may not be able to refinance our indebtedness on favorable terms, if at all. Our inability to refinance our indebtedness, including the reopened notes, could materially and adversely affect our liquidity and our ongoing results of operations.
Our ability to refinance indebtedness will depend in part on our operating and financial performance, which, in turn, is subject to prevailing economic conditions and to financial, business, legislative, regulatory and other factors beyond our control. In addition, prevailing interest rates or other factors at the time of refinancing could increase our interest expense. A refinancing of our indebtedness could also require us to comply with more onerous covenants and further restrict our business operations. Our inability to refinance our indebtedness or to do so upon attractive terms could materially and adversely affect our business, prospects, results of operations, financial condition and cash flows, and make us vulnerable to adverse industry and general economic conditions.
We may be able to incur substantially more debt and take other actions that could diminish our ability to make payments on our indebtedness, including the reopened notes, when due, which could further exacerbate the risks associated with our current level of indebtedness.
Despite our indebtedness level, we may be able to incur substantially more indebtedness in the future. We are not fully restricted under the terms of the indentures or agreements governing our current indebtedness from incurring additional debt, securing existing or future debt, recapitalizing our debt or
S-22
taking a number of other actions, any of which could diminish our ability to make payments on our indebtedness when due and further exacerbate the risks associated with our current level of indebtedness.
If new debt is added to our or any of our existing and future subsidiaries' current debt, the related risks that we now face could intensify.
If we are unable to satisfy the financial and other covenants in certain of our debt agreements, our lenders could elect to terminate the agreements and require us to repay the outstanding borrowings, or we could face other substantial costs.
The only financial covenant that currently exists under the ABL Facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL Facility, the fixed charge coverage ratio covenant under the ABL Facility will only apply in the future if specified availability under the ABL Facility falls below 10 percent of the maximum revolver amount under the ABL Facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL Facility size may be included when calculating specified availability under the ABL Facility. As of December 31, 2016, specified availability under the ABL Facility exceeded the required threshold and, as a result, the maintenance covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL Facility, to the extent the ratio is applicable under the ABL Facility. If we are unable to satisfy these or any of the other relevant covenants, the lenders could elect to terminate the ABL Facility and/or the accounts receivable securitization facility and require us to repay outstanding borrowings. In such event, unless we are able to refinance the indebtedness coming due and replace the ABL Facility, accounts receivable securitization facility and/or the other agreements governing our debt, we would likely not have sufficient liquidity for our business needs and would be forced to adopt an alternative strategy as described above. Even if we adopt an alternative strategy, the strategy may not be successful and we may not have sufficient liquidity to service our debt and fund our operations. Future debt arrangements we enter into may contain similar provisions.
Restrictive covenants in certain of the agreements and instruments governing our indebtedness may adversely affect our financial and operational flexibility.
In addition to financial covenants, various other covenants in the ABL Facility, accounts receivable securitization facility and the other agreements governing our debt impose significant operating and financial restrictions on us and our restricted subsidiaries. Such covenants include, among other things, limitations on: (i) liens; (ii) sale-leaseback transactions; (iii) indebtedness; (iv) mergers, consolidations and acquisitions; (v) sales, transfers and other dispositions of assets; (vi) loans and other investments; (vii) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (viii) dividends, other payments and other matters affecting subsidiaries; (ix) transactions with affiliates; and (x) issuances of preferred stock of certain subsidiaries. Future debt agreements we enter into may include similar provisions.
These restrictions may also make more difficult or discourage a takeover of us, whether favored or opposed by our management and/or our Board of Directors.
Our ability to comply with these covenants may be affected by events beyond our control, and any material deviations from our forecasts could require us to seek waivers or amendments of covenants or alternative sources of financing, or to reduce expenditures. We cannot guarantee that such waivers, amendments or alternative financing could be obtained or, if obtained, would be on terms acceptable to us.
A breach of any of the covenants or restrictions contained in these agreements could result in an event of default. Such a default could allow our debt holders to accelerate repayment of the related debt, as well
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as any other debt to which a cross-acceleration or cross-default provision applies, and/or to declare all borrowings outstanding under these agreements to be due and payable. If our debt is accelerated, our assets may not be sufficient to repay such debt, including the reopened notes.
The amount of borrowings permitted under our ABL Facility may fluctuate significantly, which may adversely affect our liquidity, results of operations and financial position.
The amount of borrowings permitted at any time under our ABL Facility is limited to a periodic borrowing base valuation of the collateral thereunder. As a result, our access to credit under our ABL Facility is potentially subject to significant fluctuations depending on the value of the borrowing base of eligible assets as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value. The inability to borrow under our ABL Facility may adversely affect our liquidity, results of operations and financial position.
We rely on available borrowings under the ABL Facility and the accounts receivable securitization facility for cash to operate our business, which subjects us to market and counterparty risk, some of which is beyond our control.
In addition to cash we generate from our business, our principal existing sources of cash are borrowings available under the ABL Facility and the accounts receivable securitization facility. If our access to such financing was unavailable or reduced, or if such financing were to become significantly more expensive for any reason, we may not be able to fund daily operations, which would cause material harm to our business or could affect our ability to operate our business as a going concern. In addition, if certain of our lenders experience difficulties that render them unable to fund future draws on the facilities, we may not be able to access all or a portion of these funds, which could have similar adverse consequences.
Risks Relating to the Reopened Notes
None of URNA's foreign subsidiaries, unrestricted subsidiaries, subsidiaries that are foreign subsidiary holding companies or subsidiaries of foreign subsidiaries will be guarantors with respect to the reopened notes, unless URNA determines otherwise, therefore, any claims you may have in respect of the reopened notes will be structurally subordinated to the liabilities of those subsidiaries.
None of URNA's foreign subsidiaries, unrestricted subsidiaries or subsidiaries that are foreign subsidiary holding companies or subsidiaries of foreign subsidiaries will guarantee the reopened notes, unless URNA determines otherwise. If any of such non-guarantor subsidiaries becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its indebtedness and its trade creditors generally will be entitled to payment on their claims from the assets of such subsidiary before any of those assets would be made available to us. Consequently, your claims in respect of the reopened notes will be structurally subordinated to all of the existing and future liabilities, including trade payables, of URNA's non-guarantor subsidiaries. The indentures governing the notes do not prohibit URNA from having subsidiaries that are not guarantors in the future.
The non-guarantor subsidiaries accounted for approximately 9% of our total revenues for the year ended December 31, 2016. As of December 31, 2016, the non-guarantor subsidiaries accounted for approximately 8% of our rental equipment, approximately 16% of our total assets, and approximately 7% of our total liabilities.
Although the indentures limit the incurrence of indebtedness and issuance of preferred stock of or by certain of our subsidiaries, such limitation is subject to a number of significant qualifications.
Moreover, the indentures do not impose any limitation on the incurrence by such subsidiaries of liabilities that are not considered indebtedness under the indentures. See the sections titled "Description of the 2026 Reopened NotesCertain CovenantsLimitation on Indebtedness" and "Description of the 2027 Reopened NotesCertain CovenantsLimitation on Indebtedness."
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A portion of our operations is currently conducted through URNA's subsidiaries and URNA will depend in part on distributions from these subsidiaries in order to pay amounts due on the reopened notes. Certain provisions of law or contractual restrictions could limit distributions from URNA's subsidiaries.
A portion of our operations is conducted through URNA's subsidiaries. The effect of this structure is that URNA will depend in part on the earnings of its subsidiaries, and the payment or other distribution to it of these earnings, in order to meet its obligations under the reopened notes and its other debt. Provisions of law, such as those requiring that dividends be paid only from surplus, could limit the ability of URNA's subsidiaries to make payments or other distributions to it. Furthermore, these subsidiaries could in certain circumstances agree to contractual restrictions on their ability to make distributions. These restrictions could also render the subsidiary guarantors financially or contractually unable to make payments under their guarantees of the reopened notes.
Holdings' primary asset is its equity interest in URNA.
The reopened notes will be guaranteed by Holdings. However, substantially all of Holdings' net worth is attributable to the stock of URNA owned by Holdings and all of its operations are conducted through URNA. Consequently, the Holdings guarantee will not give holders of the reopened notes a claim to significant assets other than those to which they already have a claim as URNA's direct creditors. Furthermore, substantially all of Holdings' assets are subject to a security interest in favor of the lenders under the ABL Facility, which gives these lenders a first-priority claim to such assets.
A guarantee by a subsidiary guarantor could be voided if the subsidiary guarantor fraudulently transferred the guarantee at the time it incurred the indebtedness, which could result in the holders of the reopened notes being able to rely only on URNA and Holdings to satisfy claims.
A guarantee by one of our subsidiary guarantors that is found to be a fraudulent transfer may be voided under the fraudulent transfer laws described below. The application of these laws requires the making of complex factual determinations and estimates as to which there may be different opinions and views.
In general, federal and state fraudulent transfer laws provide that a guarantee by a subsidiary guarantor can be voided, or claims under a guarantee by a subsidiary guarantor may be subordinated to all other debts of that subsidiary guarantor if, among other things, at the time it incurred the indebtedness evidenced by its guarantee:
In addition, any payment by that subsidiary guarantor under a guarantee could be voided and required to be returned to the subsidiary guarantor or to a fund for the benefit of the creditors of the subsidiary guarantor.
The measures of insolvency for purposes of fraudulent transfer laws vary depending upon the governing law. Generally, a subsidiary guarantor would be considered insolvent if:
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We cannot predict:
In the event that the guarantee of the reopened notes by a subsidiary guarantor is voided as a fraudulent conveyance, holders of the reopened notes would effectively be subordinated to all indebtedness and other liabilities of that subsidiary guarantor.
If we experience a change of control, URNA will be required to make an offer to repurchase the reopened notes. However, URNA may be unable to do so due to lack of funds or covenant restrictions.
If we experience a change of control (as defined in the indentures governing the notes), URNA will be required to make an offer to repurchase all outstanding reopened notes at the applicable percentage of their principal amount, plus accrued but unpaid interest, if any, to the date of repurchase. However, URNA may be unable to do so because:
A failure to make an offer to repurchase the reopened notes upon a change of control would give rise to an event of default under the indentures governing the notes and could result in an acceleration of amounts due thereunder. Any such default and acceleration under one indenture could trigger a cross-default under our and URNA's other indebtedness. In addition, any such default under one indenture would trigger a default under the ABL Facility (which could result in the acceleration of all indebtedness thereunder) and a termination event under our accounts receivable securitization facility. A change of control (as defined in the agreement governing the ABL Facility), in and of itself, is also an event of default under the ABL Facility, which would entitle our lenders to accelerate all amounts owing thereunder. In the event of any such acceleration, there can be no assurance that we will have enough cash to repay our outstanding indebtedness, including the reopened notes. In addition, such acceleration could cause a default under the reopened notes.
A downgrade, suspension or withdrawal of the rating assigned by a rating agency to our debt securities could cause the liquidity or market value of the reopened notes to decline significantly and increase our cost of borrowing.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. In general, rating agencies base their ratings on many quantitative and qualitative factors, including, but not limited to, capital adequacy, liquidity, asset quality, business mix and quality of earnings, and, as a result, we may not be able to maintain our current credit ratings.
Credit rating agencies continually review their ratings for the companies that they follow, including us. Borrowing under the ABL Facility, as well as the future incurrence of additional secured or additional
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unsecured indebtedness, may cause the rating agencies to reassess the ratings assigned to our debt securities. Any such action may lead to a downgrade of any rating assigned to the notes or in the assignment of a rating for the notes that is lower than might otherwise be the case. Real or anticipated changes in our credit ratings could cause the liquidity or market value of the reopened notes to decline significantly.
There can be no assurance that the ratings assigned by S&P and Moody's to the notes will remain for any given period of time or that these ratings will not be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes in our company, so warrant. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. Neither we nor any underwriter undertakes any obligation to maintain the ratings or to advise holders of the reopened notes of any changes in ratings. Each agency's rating should be evaluated independently of any other agency's rating.
There may be no public market for the reopened notes.
As with the original notes, we do not intend to apply for listing of the reopened notes on any securities exchange or any automated dealer quotation system. The underwriters have advised us that they presently intend to continue to make a market in the notes. The underwriters are not obligated, however, to make a market in the notes, and may discontinue any such market-making at any time at their sole discretion. In addition, any market-making activity will be subject to the limits imposed by securities laws. Accordingly, we cannot assure you as to:
If a market for the reopened notes does exist, it is possible that you will not be able to sell your reopened notes at a particular time or that the price that you receive when you sell will be favorable. It is also possible that any trading market that does exist for the reopened notes will not be liquid. Future trading prices of the reopened notes will depend on many factors, including:
Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices. If a market for the notes exists, it is possible that the market for the notes will be subject to disruptions and price volatility. Any disruptions may have a negative effect on holders of the reopened notes, regardless of our operating performance, financial condition and prospects.
Many of the covenants contained in the indentures and, if requested by us, the subsidiary guarantees, will not be applicable during any period when the notes are rated investment grade by S&P and Moody's or, in certain circumstances, another rating agency selected by us.
Many of the covenants in the indentures governing the notes will not apply to us during any period when the notes are rated investment grade by both S&P and Moody's or, in certain circumstances, another nationally recognized statistical rating agency selected by us, provided that at such time no default under the applicable indenture has occurred and is continuing. These covenants restrict, among other things, our
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ability to pay dividends, to incur debt and to enter into certain other transactions. There can be no assurance that the notes will ever be rated investment grade, or that if they are rated investment grade, the notes will maintain such ratings. However, suspension of these covenants would allow us to engage in certain transactions that would not be permitted while these covenants were in force, and the effects of any such actions will be permitted to remain in place even if the notes are subsequently downgraded below investment grade and the covenants are reinstated. Please see "Description of the Reopened 2026 NotesCertain CovenantsCovenant Suspension" and "Description of the Reopened 2027 NotesCertain CovenantsCovenant Suspension."
During any period when the notes are rated investment grade by both S&P and Moody's or, in certain circumstances, another nationally recognized statistical rating agency selected by us, provided that at such time no default under the applicable indenture has occurred and is continuing, we may request to release the guarantee of any subsidiary guarantor. In the event that the guarantee of the notes by a subsidiary guarantor is released, holders of the reopened notes would effectively be subordinated to all indebtedness and other liabilities of that subsidiary guarantor. Please see "Description of the Reopened 2026 NotesGuarantees" and "Description of the Reopened 2027 NotesGuarantees."
The reopened notes will be effectively subordinated to URNA's and each guarantor's secured indebtedness, in each case to the extent of the value of the assets securing such indebtedness.
The reopened notes will be URNA's senior unsecured obligations and will be effectively subordinated to all of URNA's and each guarantor's secured indebtedness, to the extent of the value of the collateral. Our U.S. dollar borrowings under the ABL Facility and our senior secured notes are secured by substantially all of our and the guarantors' assets. Most of our U.S. receivable assets have been sold to a bankruptcy remote special purpose entity in connection with our accounts receivable securitization facility (the accounts receivable in the collateral pool being the lenders' only source of payment under that facility). The lenders under the ABL Facility, the holders of the secured notes or the holders of other secured indebtedness will be entitled to exercise the remedies available to a secured lender under applicable law (in addition to any remedies that may be available under documents pertaining to the ABL Facility, the senior secured notes or our other secured indebtedness). The exercise of such remedies may adversely affect our ability to meet our financial obligations under the reopened notes.
As of December 31, 2016, on an as adjusted basis after giving effect to the issuance of the reopened notes and related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," our total indebtedness was approximately $8.8 billion, and:
Under the terms of the agreements governing our debt, we may incur significant amounts of additional secured indebtedness.
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Risks Related to the Proposed NES Acquisition
We cannot assure you that the proposed NES Acquisition will be completed.
There are a number of risks and uncertainties relating to the NES Acquisition. For example, the NES Acquisition may not be completed, or may not be completed in the timeframe, on the terms or in the manner currently anticipated, as a result of a number of factors, including, among other things, the failure of one or more of the conditions to closing. There can be no assurance that the conditions to closing of the NES Acquisition will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the NES Acquisition. The NES Merger Agreement may be terminated by the parties thereto under certain circumstances, including, without limitation, if the NES Acquisition has not been completed by October 25, 2017, which date is subject to extension by written agreement of the parties. Any delay in closing or a failure to close could have a negative impact on our business and the trading price of our securities, including our reopened notes.
In addition, to complete the NES Acquisition, we need to obtain approvals or consents from, and make filings with, certain applicable governmental authorities. While we believe that we will receive all required approvals for the NES Acquisition, there can be no assurance as to the receipt or timing of receipt of these approvals. The receipt of such approvals may be conditional upon actions that we are not obligated to take under the NES Merger Agreement, which could result in the termination of the NES Merger Agreement by us, or, if such approvals are received, their terms could have a detrimental impact on us following the completion of the NES Acquisition. A substantial delay in obtaining any required authorizations, approvals or consents, or the imposition of unfavorable terms, conditions or restrictions contained in such authorizations, approvals or consents, could prevent the completion of the NES Acquisition or have an adverse effect on the anticipated benefits of the NES Acquisition, thereby adversely impacting our business, financial condition or results of operations.
In the event the NES Acquisition is not completed, we will not be required to redeem the reopened notes, and the net proceeds from this offering that were used to repay borrowings under the ABL Facility may be reborrowed for general corporate purposes.
We may fail to realize the growth prospects and other benefits anticipated as a result of the NES Acquisition.
The success of the NES Acquisition will depend, in part, on our ability to realize the anticipated business opportunities and growth prospects from the NES Acquisition. We may never realize these business opportunities and growth prospects. The NES Acquisition and related integration will require significant efforts and expenditures. Our management might have its attention diverted while trying to integrate operations and corporate and administrative infrastructures and the cost of integration may exceed our expectations. We may also be required to make unanticipated capital expenditures or investments in order to maintain, improve or sustain the acquired operations or take writeoffs or impairment charges and may be subject to unanticipated or unknown liabilities relating to the NES Acquisition. If any of these factors limit our ability to complete the NES Acquisition and integration of operations successfully or on a timely basis, our expectations of future results of operations following the NES Acquisition might not be met.
In addition, it is possible that the integration process could result in the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to achieve the anticipated benefits of the NES Acquisition and could harm our financial performance.
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We anticipate that we will receive approximately $492 million in net proceeds from the sale of the reopened notes, after underwriting discounts and commissions and payment of estimated fees and expenses. We expect to use the net proceeds from this offering and from additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition and to pay related fees and expenses.
Pending the payment of the purchase price for the NES Acquisition, the net proceeds from this offering will be applied to reduce borrowings under the ABL Facility. We expect to then borrow under the ABL Facility to fund the NES Acquisition.
In the event the NES Acquisition is not consummated, the net proceeds from this offering that were used to repay borrowings under the ABL Facility may be reborrowed for general corporate purposes.
As of December 31, 2016, on an as adjusted basis after giving effect to the issuance of the reopened notes and the related guarantees, additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom, we had $2.177 billion outstanding under the ABL Facility (with a carrying value of $2.168 billion). The ABL Facility currently bears interest at a rate of 2.3% and matures on June 8, 2021. The borrowings under the ABL Facility, which will be reduced with the net proceeds from the sale of the reopened notes until reborrowed in connection with the consummation of the NES Acquisition, were used for general corporate purposes, including working capital needs and the financing of share repurchases. For more information regarding our outstanding senior indebtedness, including maturities and applicable interest rates, see "Capitalization" and note 11 to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report, which is incorporated by reference herein.
Affiliates of Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, and Citigroup Global Capital Markets Inc. are joint lead arrangers and joint book-runners under the ABL Facility, each of which is acting as an underwriter for this offering, and affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated are the agent, U.S. swingline lender, U.S. letter of credit issuer, Canadian swingline lender and Canadian letter of credit issuer under the ABL Facility. An affiliate of Scotia Capital (USA) Inc. is the administrative agent under our accounts receivable securitization facility. In addition, certain affiliates of each of the underwriters are lenders under the ABL Facility and/or under our accounts receivable securitization facility. As described above, we intend to use the net proceeds from this offering to temporarily repay indebtedness owed to the underwriters and certain affiliates of the underwriters who are lenders under the ABL Facility, and such underwriters (or their affiliates) therefore may receive more than 5 percent of the net proceeds from this offering through the repayment of such debt, which creates a conflict of interest under FINRA Rule 5121. This offering is therefore being made in compliance with Rule 5121 and J.P. Morgan Securities LLC is assuming the responsibilities of acting as a qualified independent underwriter in preparing this prospectus supplement, in pricing the offering and conducting due diligence. Aside from its relative portion of the underwriting discount set forth on the cover page of this prospectus supplement, J.P. Morgan Securities LLC will not receive any fees for serving as a qualified independent underwriter in connection with this offering. We have agreed to indemnify J.P. Morgan Securities LLC against liabilities incurred in connection with acting as the qualified independent underwriter, including liabilities under the Securities Act and the Exchange Act. No underwriter having a conflicting interest under Rule 5121 will sell to a discretionary account any security with respect to which the conflict exists, unless the member has received specific written approval of the transaction from the account holder and retains documentation of the approval in its records.
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The following table presents our consolidated cash position and consolidated capitalization as of December 31, 2016: (1) on an actual basis and (2) as adjusted for (i) the issuance of the reopened notes and related guarantees, (ii) additional borrowings of approximately $523 million under the ABL Facility to finance the NES Acquisition (and pay related fees and expenses) and (iii) the assumed application of the net proceeds therefrom, as described under "Use of Proceeds." For information regarding our outstanding senior indebtedness, including maturity and applicable interest rates, see note 11 to our consolidated financial statements for the year ended December 31, 2016 in our Annual Report, which is incorporated by reference herein. This table is derived from and should be read in conjunction with our audited consolidated financial statements incorporated in this prospectus supplement by reference to our Annual Report. See "Incorporation of Certain Information by Reference" beginning on page S-iii of this prospectus supplement.
|
At December 31, 2016 | ||||||
---|---|---|---|---|---|---|---|
|
Actual | As Adjusted(1) | |||||
|
(in millions) |
||||||
Cash and cash equivalents |
$ | 312 | $ | 312 | |||
Debt: |
|||||||
ABL Facility(2) |
1,645 | 2,168 | |||||
Accounts receivable securitization facility(3) |
568 | 568 | |||||
45/8% Senior Secured Notes due 2023(4) |
991 | 991 | |||||
Capital leases |
71 | 71 | |||||
75/8% Senior Notes due 2022(5) |
469 | 469 | |||||
61/8% Senior Notes due 2023(6) |
936 | 936 | |||||
53/4% Senior Notes due 2024(7) |
839 | 839 | |||||
51/2% Senior Notes due 2025(8) |
792 | 792 | |||||
57/8% Senior Notes due 2026 (including the reopened 2026 notes offered hereby)(9) |
740 | 986 | |||||
51/2% Senior Notes due 2027 (including the reopened 2027 notes offered hereby)(10) |
739 | 985 | |||||
Total debt |
7,790 | 8,805 | |||||
Total stockholders' equity(11) |
1,648 | 1,618 | |||||
| | | | | | | |
Total capitalization |
$ | 9,438 | $ | 10,423 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
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DESCRIPTION OF THE REOPENED 2026 NOTES
We will issue the reopened 2026 notes (together with the original 2026 notes, the "2026 Notes") under the indenture (the "2026 Indenture"), dated as of May 13, 2016, among us, the Guarantors and Wells Fargo Bank, National Association, as trustee (the "Trustee").
The terms of the 2026 Notes will include those expressly set forth in the 2026 Indenture and those made part of the 2026 Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following description is a summary of the material provisions of the 2026 Notes and the 2026 Indenture and does not purport to be complete. This summary is subject to and is qualified by reference to all of the provisions of the 2026 Notes and the 2026 Indenture, including the definitions of certain terms used in the 2026 Indenture. We urge you to read these documents because they, and not this description, define your rights as a holder of the reopened 2026 notes. Copies of the 2026 Indenture are available as set forth below under "Additional Information."
Certain terms used in this description are defined under the caption "Certain Definitions." Defined terms used in this description but not defined under "Certain Definitions" will have the meanings assigned to them in the 2026 Indenture. Unless the context otherwise requires, references to "2026 Notes" include the original 2026 notes, the reopened 2026 notes offered hereby and any other Additional Notes (as defined below). In this description, the words "Company," "we" and "our" refer only to United Rentals (North America), Inc. and not to any of its subsidiaries.
Brief Description of the 2026 Notes
The 2026 Notes will be:
The Company's Subsidiaries, with limited exceptions, are "Restricted Subsidiaries." As of and for the year ended December 31, 2016, the Unrestricted Subsidiaries represented 7% of Holdings' total assets and had no revenue. Under the circumstances described below under the captions "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and "Certain CovenantsLimitation on Restricted Payments," the Company will be permitted to designate certain of its other Subsidiaries as "Unrestricted Subsidiaries." The Company's Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the 2026 Indenture. The Company's Unrestricted Subsidiaries will not guarantee the 2026 Notes.
As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened 2026 notes and the guarantees (the "Guarantees"), the issuance of the reopened 2027 notes and the related guarantees, additional borrowings of approximately $523 million under the Credit Agreement to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the reopened 2026 notes would have ranked (1) equally in right of payment with $4.8 billion principal amount of our other senior unsecured obligations, comprised of $475 million principal amount of 75/8% Senior Notes due 2022, $925 million principal amount of 61/8 Senior Notes due 2023, $850 million principal amount of 53/4% Senior Notes due 2024, $800 million principal amount of 51/2% Senior Notes due 2025, $750 million principal amount of
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original 2026 notes and $1 billion principal amount of 51/2% Senior Notes due 2027 (including the $250 million of reopened 2027 notes to be issued concurrently with the reopened 2026 notes); (2) effectively junior to approximately $3.2 billion of our secured obligations, comprised of (i) $2.074 billion of our outstanding borrowings under the Credit Agreement (excluding $286 million of additional borrowing capacity, net of outstanding letters of credit of $36 million), (ii) $1 billion principal amount of the Secured Notes, (iii) our guarantee obligations in respect of $103 million of the outstanding borrowings of our Subsidiary Guarantors under the Credit Agreement, (iv) $53 million in capital leases and (v) our guarantee obligations in respect of $8 million of capital leases of our Subsidiary Guarantors; and (3) effectively junior to (i) $568 million of indebtedness of our special purpose vehicle in connection with the Existing Securitization Facility, (ii) $7 million of capital leases of our Subsidiaries that are not Guarantors and (iii) $3 million of capital leases of Holdings. Most of our U.S. receivable assets have been sold to our special purpose vehicle in connection with our Existing Securitization Facility (the accounts receivable in the collateral pool being the lenders' only source of payment under that facility). See "Capitalization."
Principal, Maturity and Interest
The Company will issue the reopened 2026 notes in this offering in an aggregate principal amount of $250 million. Upon issuance of the reopened 2026 notes, the aggregate principal amount outstanding of our 2026 Notes will be $1 billion. The reopened 2026 notes will have identical terms, be fungible with and be part of a single series of senior debt securities with the original 2026 notes.
The 2026 Notes will mature on September 15, 2026. Subject to its compliance with the covenant described under the caption "Certain CovenantsLimitation on Indebtedness," the Company will be permitted to issue additional 2026 Notes under the 2026 Indenture (the "Additional Notes"). The 2026 Notes offered hereby and any Additional Notes will rank equally and be treated as a single class for all purposes of the 2026 Indenture, including waivers, amendments, redemptions and offers to purchase. Interest on the 2026 Notes will accrue at the rate of 5.875% per annum and will be payable semiannually in arrears on March 15 and September 15 of each year, to the holders of record of 2026 Notes at the close of business on March 1 and September 1, respectively, immediately preceding such interest payment date. The next interest payment with respect to the 2026 Notes will be made on March 15, 2017.
Interest on the 2026 Notes will accrue from the most recent date to which interest has been paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
The reopened 2026 notes will be issued only in registered form without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. Principal of, premium, if any, and interest on the 2026 Notes will be payable, and the 2026 Notes will be transferable, at the designated corporate trust office or agency of the Trustee in the City of New York maintained for such purposes. In addition, interest may be paid at the option of the Company by check mailed to the person entitled thereto as shown on the security register. No service charge will be made for any transfer, exchange or redemption of 2026 Notes, except in certain circumstances for any tax or other governmental charge that may be imposed in connection therewith.
Initial settlement for the reopened 2026 notes will be made in same-day funds. The 2026 Notes are expected to trade in the Same-Day Funds Settlement System of The Depository Trust Company ("DTC") until maturity, and secondary market trading activity for the 2026 Notes will therefore settle in same-day funds.
Guarantees
Holdings and the Subsidiary Guarantors will fully and unconditionally guarantee, on a senior unsecured basis, jointly and severally, to each holder of the 2026 Notes and the Trustee under the 2026 Indenture, the full and prompt performance of the Company's obligations under the 2026 Indenture and
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such 2026 Notes, including the payment of principal of, premium, if any, and interest on the 2026 Notes. Subject to limited exceptions, the Subsidiary Guarantors are the current and future Domestic Restricted Subsidiaries of the Company, other than (unless otherwise determined by the Company) any Foreign Subsidiary Holding Company or Subsidiary of a Foreign Subsidiary.
The obligations of each Subsidiary Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its guarantee or pursuant to its contribution obligations under the 2026 Indenture, will result in the obligations of such Subsidiary Guarantor under the guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. See "Risk FactorsRisks Relating to the Reopened NotesA guarantee by a subsidiary guarantor could be voided if the subsidiary guarantor fraudulently transferred the guarantee at the time it incurred the indebtedness, which could result in the holders of the reopened notes being able to rely only on URNA and Holdings to satisfy claims."
Each Subsidiary Guarantor that makes a payment under its guarantee of the 2026 Notes will be entitled to a contribution from each other Guarantor of the 2026 Notes in an amount equal to such other Guarantor's pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP (for purposes hereof, Holdings' net assets shall be those of all its consolidated Subsidiaries other than the Subsidiary Guarantors); provided, however, that during a Default, the right to receive payment in respect of such right of contribution shall be suspended until the payment in full of all guaranteed obligations under the 2026 Indenture.
Each guarantee of the 2026 Notes:
As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened 2026 notes and the Guarantees, the issuance of the reopened 2027 notes and the related guarantees, additional borrowings of approximately $523 million under the Credit Agreement to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the Guarantees would have ranked (1) equally in right of payment with approximately $4.8 billion of the Guarantors' other senior unsecured obligations, comprised of the Guarantors' guarantee obligations in respect of (a) $475 million principal amount of 75/8% Senior Notes due 2022, (b) $925 million principal amount of the 61/8% Senior Notes due 2023, (c) $850 million principal amount of 53/4% Senior Notes due 2024, (d) $800 million principal amount of 51/2% Senior Notes due 2025, (e) $750 million principal amount of original 2026 notes and (f) $1 billion principal amount of 51/2% Senior Notes due 2027 (including the $250 million of reopened 2027 notes to be issued concurrently with the reopened 2026 notes); (2) effectively junior to approximately $3.2 billion of the Guarantors' secured obligations, comprised of (i) the Guarantors' guarantee obligations in respect of $2.074 billion of our outstanding borrowings under the Credit Agreement, (ii) $103 million of the outstanding borrowings of our Subsidiary Guarantors under the Credit Agreement, (iii) the Guarantors' guarantee obligations in respect of $1 billion principal amount of the Secured Notes, (iv) the Guarantors' guarantee obligations in respect of $53 million in our capital leases, (v) $8 million of capital leases of our Subsidiary Guarantors and (vi) $3 million of capital leases of Holdings; and (3) effectively junior to (i) $568 million of indebtedness of
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our special purpose vehicle in connection with the Existing Securitization Facility and (ii) $7 million of capital leases of our Subsidiaries that are not Guarantors. See "Capitalization."
The Subsidiaries that are not Guarantors accounted for $223 million, or 8%, of our adjusted EBITDA for the year ended December 31, 2016. The Subsidiaries that are not Guarantors accounted for $510 million, or 9%, of our total revenues for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $1.893 billion, or 16%, of our total assets, and $698 million, or 7%, of our total liabilities, at December 31, 2016.
Although the 2026 Indenture limits the incurrence of Indebtedness and the issuance of preferred stock of certain of our Subsidiaries, such limitation is subject to a number of significant qualifications. Moreover, the 2026 Indenture does not impose any limitation on the incurrence by such Subsidiaries of liabilities that are not considered Indebtedness under the 2026 Indenture. See "Certain CovenantsLimitation on Indebtedness."
The guarantee of a Subsidiary Guarantor will be released:
Optional Redemption
Except as set forth below, we will not be entitled to redeem the 2026 Notes at our option prior to September 15, 2021.
The 2026 Notes will be redeemable at our option, in whole or in part, at any time on or after September 15, 2021, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if
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redeemed during the twelve-month period beginning on September 15 of each of the years indicated below:
Year
|
Redemption Price |
|||
---|---|---|---|---|
2021 |
102.938 | % | ||
2022 |
101.958 | % | ||
2023 |
100.979 | % | ||
2024 and thereafter |
100.000 | % |
In addition, at any time, or from time to time, on or prior to September 15, 2019, we may, at our option, use the net cash proceeds of one or more Equity Offerings to redeem up to an aggregate of 40.0% of the principal amount of the 2026 Notes at a redemption price equal to 105.875% of the principal amount of the 2026 Notes, plus accrued and unpaid interest, if any, thereon to the redemption date; provided, however, that (1) at least 50.0% of the aggregate principal amount of 2026 Notes issued (including any Additional Notes, but excluding 2026 Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 120 days of the consummation of any such Equity Offering.
Prior to September 15, 2021, we will be entitled at our option to redeem the 2026 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2026 Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the redemption date (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date).
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund payments with respect to the 2026 Notes.
Selection and Notice of Redemption
In the event that less than all of the 2026 Notes are to be redeemed at any time, selection of such 2026 Notes for redemption will be made on a pro rata basis (subject to the rules of DTC) unless otherwise required by law or applicable stock exchange requirements; provided, however, that such 2026 Notes shall only be redeemable in principal amounts of $2,000 or an integral multiple of $1,000 in excess thereof. Notice of redemption shall be delivered electronically or mailed by first-class mail to each holder of the 2026 Notes to be redeemed at its registered address, at least 30 but not more than 60 days before the redemption date, except that redemption notices may be delivered electronically or mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance or a satisfaction and discharge of the 2026 Notes.
Notices of redemption may be subject to the satisfaction of one or more conditions precedent established by us in our sole discretion. In addition, we may provide in any notice of redemption for the 2026 Notes that payment of the redemption price and the performance of our obligations with respect to such redemption may be performed by another Person.
If any 2026 Note is to be redeemed in part only, the notice of redemption that relates to such 2026 Note shall state the portion of the principal amount thereof to be redeemed. A new 2026 Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon surrender for cancellation of the original 2026 Note. 2026 Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on 2026 Notes or portions thereof called for redemption, unless we default in the payment of the redemption price.
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Change of Control
Upon the occurrence of a Change of Control after the Issue Date, we shall be obligated to make an offer to purchase all of the then outstanding 2026 Notes (a "Change of Control Offer"), on a business day (the "Change of Control Purchase Date") not more than 60 nor less than 30 days following the delivery to each holder of the 2026 Notes of a notice of the Change of Control (a "Change of Control Notice"). The Change of Control Offer shall be at a purchase price in cash (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to the Change of Control Purchase Date, subject to the rights of holders of the 2026 Notes on the relevant record date to receive interest due on the relevant interest payment date. We shall be required to purchase all 2026 Notes tendered pursuant to the Change of Control Offer and not withdrawn. The Change of Control Offer is required to remain open for at least 20 business days.
In order to effect such Change of Control Offer, we shall, not later than the 30th day after the Change of Control, deliver the Change of Control Notice to each holder of the 2026 Notes, which notice shall govern the terms of the Change of Control Offer and shall state, among other things, (i) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holder's 2026 Notes at the Change of Control Purchase Price, (ii) the date which shall be the Change of Control Purchase Date and (iii) the procedures that holders of the 2026 Notes must follow to accept the Change of Control Offer. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable to a Change of Control Offer and the repurchase of 2026 Notes pursuant thereto. The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the 2026 Indenture are applicable.
Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.
The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the 2026 Indenture applicable to a Change of Control Offer made by the Company and purchases all 2026 Notes properly tendered and not withdrawn under the Change of Control Offer or (2) notice of redemption for all outstanding 2026 Notes has been given pursuant to the 2026 Indenture as described above under the caption "Optional Redemption," unless and until there is a default in payment of the applicable redemption price.
The use of the term "all or substantially all" in provisions of the 2026 Indenture such as clause (b) of the definition of "Change of Control" and under "Consolidation, Merger, Sale of Assets, etc." has no clearly established meaning under New York law (which governs the 2026 Indenture) and has been the subject of limited judicial interpretation in only a few jurisdictions. Accordingly, there may be a degree of uncertainty in ascertaining whether any particular transaction would involve a disposition of "all or substantially all" of the assets of a person, which uncertainty should be considered by prospective purchasers of 2026 Notes.
The provisions under the 2026 Indenture set forth above relating to the Company's obligations to make a Change of Control Offer may, prior to the occurrence of a Change of Control, be waived or modified with the consent of the holders of a majority in principal amount of the then outstanding 2026 Notes issued under the 2026 Indenture. Following the occurrence of a Change of Control, any change, amendment or modification in any material respect of the obligation of the Company to make and consummate a Change of Control Offer may only be effected with the consent of each holder of the 2026 Notes affected thereby. See "Amendments and Waivers."
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Certain Covenants
Effectiveness of Covenants. The 2026 Indenture contains covenants including, among others, the covenants described below.
During any period of time that: (a) the 2026 Notes have Investment Grade Ratings from both Rating Agencies, and (b) no Default has occurred and is continuing under the 2026 Indenture (the occurrence of the events described in the foregoing clauses (a) and (b) being collectively referred to as a "Covenant Suspension Event"), the Company and its Restricted Subsidiaries will not be subject to the following provisions of the 2026 Indenture (collectively, the "Suspended Covenants"):
In the event that the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants under the 2026 Indenture for any period of time as a result of the foregoing, and on any subsequent date (the "Reversion Date") one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the 2026 Notes below an Investment Grade Rating, then the Company and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the 2026 Indenture with respect to future events.
The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to in this description as the "Suspension Period." Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Asset Sales will be reset at zero. With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments made since the Issue Date will be calculated as though the covenant described under the heading "Limitation on Restricted Payments" had been in effect during the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period, unless such designation would have complied with the covenant described under the heading "Limitation on Designations of Unrestricted Subsidiaries" as if the Suspended Covenants were in effect during such period. In addition, all Indebtedness incurred will be classified as having been incurred pursuant to clause (c) of paragraph (2) of "Limitation on Indebtedness." Any Preferred Stock issued during the Suspension Period will be classified as having been issued pursuant to "Limitation on Preferred Stock of Restricted Subsidiaries." In addition, for purposes of the covenant described under the heading "Transactions with Affiliates," all agreements and arrangements entered into by the Company and any Restricted Subsidiary during the Suspension Period prior to such Reversion Date will be deemed to have been entered into on or prior to the Issue Date, and for purposes of the covenant described under the heading "Limitation on Dividends and other Payment Restrictions Affecting Restricted Subsidiaries," all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by such covenant will be deemed to have been existing on the Issue Date.
During the Suspension Period, any reference in "Permitted Liens" and "Limitation on Designations of Unrestricted Subsidiaries" to any provision described under the heading "Limitation on Indebtedness"
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or any provision thereof will be construed as if such covenant had remained in effect since the Issue Date and during the Suspension Period.
During the Suspension Period, the obligation to grant further guarantees will be suspended. Upon the Reversion Date, the obligation to grant guarantees pursuant to the covenant described under the heading "Additional Subsidiary Guarantors" will be reinstated (and the Reversion Date will be deemed to be the date on which any guaranteed Indebtedness was incurred for purposes of the covenant described under the heading "Additional Subsidiary Guarantors"). In addition, any guarantees that were terminated as described under "Guarantees" will be required to be reinstated promptly and in no event later than 30 days after the Reversion Date to the extent such guarantees would otherwise be required to be provided hereunder.
Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period and the Company and any Restricted Subsidiary will be permitted, following a Reversion Date, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof) under the 2026 Indenture, to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby.
There can be no assurance that the 2026 Notes will ever achieve or maintain Investment Grade Ratings.
Limitation on Indebtedness. (1) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or in any manner become directly or indirectly liable, contingently or otherwise (in each case, to "incur"), for the payment of any Indebtedness (including any Acquired Indebtedness); provided, however, that the Company and any Restricted Subsidiary will be permitted to incur Indebtedness (including Acquired Indebtedness) if the Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries is at least 2.00:1.00.
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Obligations entered into for bona fide hedging purposes of the Company and not for speculative purposes, (iii) financing of insurance premiums in the ordinary course of business or (iv) cash management obligations and netting, overdraft protection and other similar facilities or arrangements, in each case arising under standard business terms of any bank at which the Company or any Restricted Subsidiary maintains such facility or arrangement;
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For the purposes of determining compliance with, and the outstanding principal amount of Indebtedness incurred pursuant to and in compliance with, this covenant, (i) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in paragraphs (1) and (2) of this
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covenant, the Company, in its sole discretion, will classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one or a combination of the clauses of paragraph (1) or (2) of this covenant; provided that (i) Indebtedness outstanding on the Issue Date under the Credit Agreement shall be treated as incurred pursuant to clause (a) of paragraph (2) above, and (ii) any other obligation of the obligor on such Indebtedness (or of any other Person who could have incurred such Indebtedness under this covenant) arising under any guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness.
Except as provided in the following paragraph with respect to Indebtedness denominated in a foreign currency, the amount of any Indebtedness outstanding as of any date will be:
For purposes of determining compliance with any dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that (x) the dollar-equivalent principal amount of any such Indebtedness outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date, (y) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency (or in a different currency from such Indebtedness so being incurred), and such refinancing would cause the applicable dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness, calculated as described in the following sentence, does not exceed (i) the outstanding or committed principal amount (whichever is higher) of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing and (z) the dollar-equivalent principal amount of Indebtedness denominated in a foreign currency and incurred pursuant to a Credit Facility shall be calculated based on the relevant currency exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii) any date on which any of the respective commitments under such Credit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder or (iii) the date of such incurrence. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.
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Limitation on Restricted Payments. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly:
(such payments or Investments described in the preceding clauses (a), (b), (c) and (d) are collectively referred to as "Restricted Payments"), unless, immediately after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the Fair Market Value of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment):
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Restricted Payment (or, if such aggregate cumulative Consolidated Net Income of the Company for such period shall be a deficit, minus 100% of such deficit);
As of December 31, 2016, the amount available for Restricted Payments under clause (C) of the immediately preceding paragraph was $1.056 billion. None of the foregoing provisions will prohibit the following; provided that with respect to payments pursuant to clauses (i), (iv), (v), (vii), (viii), (x), (xvi) and (xvii) below, no Default or Event of Default has occurred and is continuing:
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Any payments made pursuant to clauses (i), (xvi) or (xvii) of this paragraph shall be taken into account, and any payments made pursuant to other clauses of this paragraph shall be excluded, in calculating the amount of Restricted Payments pursuant to clause (C) of the first paragraph of this covenant.
The Company, in its sole discretion, may classify or reclassify (x) any Permitted Investment as being made in whole or in part as a permitted Restricted Payment or (y) any Restricted Payment as being made in whole or in part as a Permitted Investment (to the extent such Restricted Payment qualifies as a Permitted Investment).
The Company, in its sole discretion, may classify any Investment or other Restricted Payment as being made in part under one of the provisions of this covenant (or, in the case of any Investment, the definition of "Permitted Investments") and in part under one or more other such provisions (or, as applicable, clauses).
Limitation on Liens. The Company will not, and will not permit any Restricted Subsidiary to create, incur, assume or suffer to exist any Lien (the "Initial Lien") of any kind (except for Permitted Liens) securing any Indebtedness, unless the 2026 Notes are equally and ratably secured (except that Liens securing Subordinated Indebtedness shall be expressly subordinate to Liens securing the 2026 Notes to the same extent such Subordinated Indebtedness is subordinate to the 2026 Notes). Any Lien created for the benefit of the holders of the 2026 Notes pursuant to the preceding sentence shall provide by its terms that
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such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
Disposition of Proceeds of Asset Sales. The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Sale unless:
Within 365 days of the later of an Asset Sale and the date of receipt of Net Cash Proceeds from such Asset Sale, the Company or such Restricted Subsidiary, as the case may be, may apply the Net Cash Proceeds from such Asset Sale to (1) to the extent the Company or such Restricted Subsidiary elects or is required to the terms thereof, to repay (or, in the case of letters of credit, bankers' acceptances or other similar instruments, cash collateralize) Indebtedness and to correspondingly reduce commitments with respect thereto (in each case other than Subordinated Indebtedness and Indebtedness owed to the Company or a Restricted Subsidiary) or (2) invest in properties or assets that are used or useful in the business of the Company and its Restricted Subsidiaries conducted at such time or in businesses reasonably related thereto or in Capital Stock of a Person, the principal portion of whose assets consist of such property or assets (collectively, "Replacement Assets"); provided, however, that any such reinvestment in Replacement Assets made pursuant to a definitive binding agreement or commitment approved by the Board of Directors of the Company that is executed or approved within such time will satisfy this requirement, so long as such investment is consummated within 180 days of such 365th day or within such longer period of time authorized by the Board of Directors as is necessary to consummate such investment; provided that in the event such binding agreement or commitment is later canceled or terminated for any reason before such Net Cash Proceeds are so applied, the Company or such Restricted Subsidiary may satisfy its obligations as to any Net Cash Proceeds by entering into another binding agreement or commitment within six months of such cancellation or termination of the prior binding agreement or commitment or treating such Net Cash Proceeds as Excess Proceeds; provided, further, that the Company or such Restricted Subsidiary may only enter into such an agreement or commitment under the foregoing provision one time with respect to each Asset Sale. Any Net Cash Proceeds from any Asset Sale that are not used in accordance with the preceding sentence constitute "Excess Proceeds" subject to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds $75.0 million, the Company shall make an offer to purchase (an "Asset Sale Offer"), from all holders of the 2026 Notes and, to the extent the Company elects or is required by the terms thereof, all holders of other Indebtedness that is pari passu in right of payment with the 2026 Notes containing provisions similar to those set forth in the 2026 Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, pro rata in proportion to the respective principal amounts of the 2026 Notes and such other Indebtedness to be purchased or redeemed, the maximum principal amount of 2026 Notes and such other pari passu Indebtedness that may be purchased with the Excess Proceeds.
The offer price for the 2026 Notes in any Asset Sale Offer will be equal to 100% of the principal amount of the 2026 Notes plus accrued and unpaid interest, if any, to the purchase date and the offer price for any other Indebtedness that is pari passu in right of payment with the 2026 Notes, as applicable, will be as set forth in the documentation governing such Indebtedness (the "Asset Sale Offer Price") and will be
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payable in cash. If any Excess Proceeds remain after an Asset Sale Offer, the Company may use such Excess Proceeds for general corporate purposes. If the Asset Sale Offer Price with respect to 2026 Notes tendered into such Asset Sale Offer exceeds the Excess Proceeds allocable to the 2026 Notes, 2026 Notes to be purchased will be selected on a pro rata basis. The 2026 Notes shall be purchased by the Company on a date that is not earlier than 30 days and not later than 60 days from the date the notice is given to holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero.
The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that an Asset Sale occurs and the Company is required to purchase 2026 Notes as described above.
For the purposes of paragraph (b) above, the following are deemed to be cash: (1) the assumption of Indebtedness of the Company or any Restricted Subsidiary to the extent the Company or such Restricted Subsidiary is released from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Sale, (2) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale to the extent that the Company and each other Restricted Subsidiary are released in full from any guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Sale, (3) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days, (4) consideration consisting of Indebtedness of the Company or any Restricted Subsidiary (provided that such Indebtedness is not expressly subordinated in right of payment to the 2026 Notes), (5) Replacement Assets or (6) any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in an Asset Sale; provided, however, that the aggregate Fair Market Value of all Designated Non-cash Consideration received and treated as cash pursuant to this clause is not to exceed, at any time, an aggregate amount outstanding equal to the greater of $150.0 million and 2.0% of Consolidated Net Tangible Assets as of the date of the applicable Asset Sale, without giving effect to changes in value subsequent to the receipt of such Designated Non-cash Consideration.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any Restricted Subsidiary to issue any Preferred Stock other than Preferred Stock issued to the Company or a Wholly Owned Restricted Subsidiary. The Company will not sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary or permit a Restricted Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary, other than to the Company or a Wholly Owned Restricted Subsidiary. Notwithstanding the foregoing, nothing in such covenant will prohibit Preferred Stock (other than Redeemable Capital Stock) issued by a Person prior to the time:
provided, however, that such Preferred Stock was not issued or incurred by such person in anticipation of a transaction contemplated by subclauses (A), (B), or (C) above.
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Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the sale, transfer, disposition, purchase, exchange or lease of assets, property or services) with, or for the benefit of, any of its Affiliates involving aggregate consideration in excess of $10.0 million, except:
Notwithstanding the foregoing, the restrictions set forth in this covenant shall not apply to:
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Limitation on Dividends and other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
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Limitation on Designations of Unrestricted Subsidiaries. The Company may designate any Restricted Subsidiary as an "Unrestricted Subsidiary" under the 2026 Indenture (a "Designation") only if:
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on Restricted Payments" above in an amount (the "Designation Amount") equal to the Fair Market Value of the Company's interest in such Subsidiary on such date; and
In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to the covenant "Limitation on Restricted Payments" for all purposes of the 2026 Indenture in the Designation Amount.
All Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if:
All Designations and Revocations must be evidenced by board resolutions of the Company delivered to the Trustee certifying compliance with the foregoing provisions.
Additional Subsidiary Guarantors. The Company will cause each Domestic Restricted Subsidiary, other than (unless otherwise determined by the Company) any Foreign Subsidiary Holding Company or Subsidiary of a Foreign Subsidiary, that guarantees any Indebtedness of the Company or of any other Restricted Subsidiary incurred pursuant to clause (a) of paragraph (2) of the covenant described under "Limitation on Indebtedness" to, within a reasonable time thereafter, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Domestic Restricted Subsidiary will guarantee payment of the 2026 Notes on the same terms and conditions as those set forth in the 2026 Indenture, subject to any limitations that apply to the guarantee of Indebtedness giving rise to the requirement to guarantee the 2026 Notes. This covenant shall not apply to any of the Company's Subsidiaries that have been properly designated as an Unrestricted Subsidiary.
Reporting Requirements. For so long as the 2026 Notes are outstanding, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the SEC (if permitted by SEC practice and applicable law and regulations) the annual reports, quarterly reports and other documents which the Company would have been required to file with the SEC pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were so subject, such documents to be filed with the SEC on or prior to the respective dates (the "Required Filing Dates") by which the Company would have been required so to file such documents if the Company were so subject. If, notwithstanding the preceding sentence, filing such documents by the Company with the SEC is not permitted by SEC practice or applicable law or regulations, the Company shall transmit (or cause to be transmitted) electronically or by mail to all holders of the 2026 Notes, as their names and addresses appear in the 2026 Note register, copies of such documents within 30 days after the Required Filing Date (or make such documents available on a website maintained by the Company or Holdings).
Consolidation, Merger, Sale of Assets, etc.
The Company will not, directly or indirectly, in any transaction or series of transactions, merge or consolidate with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any Person or Persons, and the Company will not permit any
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Restricted Subsidiary to enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company or the Company and its Restricted Subsidiaries, taken as a whole, to any other person or persons, unless at the time and after giving effect thereto:
In connection with any consolidation, merger, transfer, lease, assignment or other disposition contemplated hereby, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, transfer, lease, assignment or other disposition and the supplemental indenture in respect thereof comply with the requirements under the 2026 Indenture.
Upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with the immediately preceding paragraphs, the successor person formed by such consolidation or into which the Company or a Restricted Subsidiary, as the case may be, is merged or the successor person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under the 2026 Notes and the 2026 Indenture with the same effect as if such successor had been named as the Company in the 2026 Notes and the 2026 Indenture and, except in the case of a lease, the Company or such Restricted Subsidiary shall be released and discharged from its obligations thereunder.
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The 2026 Indenture provides that for all purposes of the 2026 Indenture and the 2026 Notes (including the provision of this covenant and the covenants described in "Certain CovenantsLimitation on Indebtedness," "Certain CovenantsLimitation on Restricted Payments" and "Certain CovenantsLimitation on Liens"), Subsidiaries of any surviving person shall, upon such transaction or series of related transactions, become Restricted Subsidiaries unless and until designated Unrestricted Subsidiaries pursuant to and in accordance with "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and all Indebtedness, and all Liens on property or assets, of the Company and the Restricted Subsidiaries in existence immediately after such transaction or series of related transactions will be deemed to have been incurred upon such transaction or series of related transactions.
Events of Default
The following will be "Events of Default" under the 2026 Indenture:
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If an Event of Default (other than those covered by clause (viii) or (ix) above with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries of the Company, that, taken together, would constitute a Significant Subsidiary) shall occur and be continuing, the Trustee, by notice to the Company, or the holders of at least 25.0% in aggregate principal amount of the 2026 Notes then outstanding, by notice to the Trustee and the Company, may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the outstanding 2026 Notes due and payable immediately. If an Event of Default specified in clause (viii) or (ix) above with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries of the Company, that, taken together, would constitute a Significant Subsidiary, occurs and is continuing, then the principal of, premium, if any, accrued and unpaid interest, if any, on all the outstanding 2026 Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of the 2026 Notes.
After a declaration of acceleration under the 2026 Indenture, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in aggregate
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principal amount of the outstanding 2026 Notes, by written notice to the Company and the Trustee, may rescind such declaration if:
The holders of a majority in aggregate principal amount of the outstanding 2026 Notes may on behalf of the holders of all the 2026 Notes waive any past defaults under the 2026 Indenture, except a default in the payment of the principal of and premium, if any, or interest on any 2026 Note, or in respect of a covenant or provision which under the 2026 Indenture cannot be modified or amended without the consent of the holder of each 2026 Note outstanding.
No holder of any of the 2026 Notes has any right to institute any proceeding with respect to the 2026 Indenture or any remedy thereunder, unless the holders of at least 25.0% in aggregate principal amount of the outstanding 2026 Notes have made written request to the Trustee, and offered indemnity satisfactory to the Trustee, to institute such proceeding as Trustee under the 2026 Notes and the 2026 Indenture, the Trustee has failed to institute such proceeding within 45 days after receipt of such notice and the Trustee, within such 45-day period, has not received directions inconsistent with such written request by holders of a majority in aggregate principal amount of the outstanding 2026 Notes. Such limitations do not apply, however, to a suit instituted by a holder of a 2026 Note for the enforcement of the payment of the principal of and premium, if any, or interest on such 2026 Note on or after the respective due dates expressed in such 2026 Note.
During the existence of an Event of Default, the Trustee is required to exercise such rights and powers vested in it under the 2026 Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. Subject to the provisions of the 2026 Indenture relating to the duties of the Trustee, whether or not an Event of Default shall occur and be continuing, the Trustee under the 2026 Indenture is not under any obligation to exercise any of its rights or powers under the 2026 Indenture at the request or direction of any of the holders of the 2026 Notes unless such holders shall have offered to the Trustee security or indemnity satisfactory to it. Subject to certain provisions concerning the rights of the Trustee, the holders of a majority in aggregate principal amount of the outstanding 2026 Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under the 2026 Indenture.
If a Default or an Event of Default occurs and is continuing and is known to the Trustee, the Trustee shall deliver to each holder of the 2026 Notes notice of the Default or Event of Default within 90 days after obtaining knowledge thereof. Except in the case of a Default or an Event of Default in payment of principal of and premium, if any, or interest on any 2026 Notes, the Trustee may withhold the notice to the holders of such 2026 Notes if the Trustee, in good faith, determines that withholding the notice is in the interest of the noteholders.
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The Company is required to furnish to the Trustee annual statements as to the performance by the Company of its and its Restricted Subsidiaries' obligations under the 2026 Indenture and as to any default in such performance.
No Liability for Certain Persons
No director, officer, employee or stockholder of Holdings or the Company, nor any director, officer or employee of any Subsidiary Guarantor, as such, will have any liability for any obligations of the Company or any Guarantor under the 2026 Notes, the guarantees thereof or the 2026 Indenture based on or by reason of such obligations or their creation. Each holder by accepting a 2026 Note waives and releases all such liability. The foregoing waiver and release are an integral part of the consideration for the issuance of the 2026 Notes. Such waiver may not be effective to waive liabilities under the federal securities laws.
Legal Defeasance and Covenant Defeasance
The Company may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an officers' certificate, elect to have all of its obligations discharged with respect to the outstanding 2026 Notes and all obligations of the Guarantors discharged with respect to their guarantees of such 2026 Notes ("Legal Defeasance") except for:
In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the 2026 Indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the 2026 Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the 2026 Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding 2026 Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
Satisfaction and Discharge
The 2026 Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the 2026 Notes as expressly provided for in the 2026 Indenture) as to all outstanding 2026 Notes when:
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premium, if any, and interest on the 2026 Notes to the date of deposit (in the case of the 2026 Notes that have become due and payable) or to the maturity or redemption date, as the case may be, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
Amendments and Waivers
From time to time, the Company and the Trustee may, without the consent of the holders of any of the outstanding 2026 Notes, amend, waive or supplement the 2026 Indenture, the 2026 Notes or the guarantees for certain specified purposes, including, among other things, curing ambiguities, omissions, mistakes, defects or inconsistencies, conforming any provision to any provision under the heading "Description of the Reopened 2026 Notes," qualifying, or maintaining the qualification of, the 2026 Indenture under the Trust Indenture Act, making any change that does not adversely affect the rights of any holder of the 2026 Notes, adding Guarantees or releasing or discharging Guarantees in accordance with the terms of the 2026 Indenture, providing for uncertificated 2026 Notes in addition to or in place of certificated 2026 Notes, making such provisions as necessary (as determined in good faith by the Company) for the issuance of Additional Notes or evidencing and providing for the acceptance and appointment under the 2026 Indenture of a successor Trustee pursuant to the requirements thereof. Other amendments and modifications of the 2026 Indenture, the 2026 Notes or the guarantees may be made by the Company and the Trustee with the consent of the holders of a majority of the aggregate principal amount of the outstanding 2026 Notes; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding 2026 Note affected thereby:
The Trustee
The 2026 Indenture provides that, except during the continuance of an Event of Default, the Trustee thereunder will perform only such duties as are specifically set forth in the 2026 Indenture. If an Event of Default has occurred and is continuing, the Trustee will exercise such rights and powers vested in it under the 2026 Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.
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The 2026 Indenture and provisions of the Trust Indenture Act incorporated by reference therein contain limitations on the rights of the Trustee thereunder, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions; provided, however, that if it acquires any conflicting interest (as defined in such Act) it must eliminate such conflict or resign.
We maintain banking and lending relationships in the ordinary course of business with the Trustee and its affiliates.
Governing Law
The 2026 Indenture and the 2026 Notes are governed by the laws of the State of New York, without regard to the principles of conflicts of law.
Additional Information
Anyone who receives this prospectus supplement may obtain a copy of the 2026 Indenture without charge by writing to United Rentals, Inc., 100 First Stamford Place, Suite 700, Stamford, CT 06902, Attention: Corporate Secretary.
Book-Entry, Delivery and Form
The 2026 Notes will be issued in the form of one or more registered global notes (the "Global Notes"). The Global Notes will be deposited upon issuance with the Trustee as custodian for DTC, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in certificated form ("Certificated Notes") except in the limited circumstances described below. See "Exchange of Global Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.
Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants, which may change from time to time.
Depository Procedures
The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the underwriters), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants.
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The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by it:
Investors in the Global Notes who are Participants in DTC's system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations which are Participants in such system. All interests in a Global Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on behalf of the Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Notes will not have 2026 Notes registered in their names, will not receive physical delivery of 2026 Notes in certificated form and will not be considered the registered owners or "holders" thereof under the 2026 Indenture for any purpose.
Payments in respect of the principal of, and interest and premium, if any on, a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the 2026 Indenture. Under the terms of the 2026 Indenture, the Company and the Trustee will treat the Persons in whose names the 2026 Notes, including the Global Notes, are registered as the owners of the 2026 Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:
DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the 2026 Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of 2026 Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the 2026 Notes, and the
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Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to be taken by a holder of the 2026 Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the 2026 Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the 2026 Notes, DTC reserves the right to exchange the Global Notes for legended 2026 Notes in certificated form, and to distribute such 2026 Notes to its Participants.
None of the Company, the Trustee and any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes if:
Any Global Note that is exchangeable as above is exchangeable for certificated notes issuable in authorized denominations and registered in such names as DTC shall direct.
Same Day Settlement and Payment
The Company will make payments in respect of the 2026 Notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. The Company will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder's registered address. The 2026 Notes represented by the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such 2026 Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a person:
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"Adjusted Treasury Rate" means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after September 15, 2021, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month, except that if the period from the redemption date to September 15, 2021 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third business day immediately preceding the redemption date, plus 0.50%.
"Affiliate" means, with respect to any specified Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person.
"Applicable Premium" means with respect to any 2026 Notes at any redemption date, the greater of
"Asset Acquisition" means:
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition by the Company or any Restricted Subsidiary to any Person other than the Company or a Restricted Subsidiary of:
other than, in the case of clauses (a), (b) or (c) above,
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"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the 2026 Notes of the applicable series, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capitalized Lease Obligation."
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"Average Life to Stated Maturity" means, with respect to any Indebtedness, as at any date of determination, the quotient obtained by dividing:
"Board of Directors" means the board of directors of a company or its equivalent, including managers of a limited liability company, general partners of a partnership or trustees of a business trust, or any duly authorized committee thereof.
"Capital Stock" means, with respect to any person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such person's capital stock or equity participations, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock and, including, without limitation, with respect to partnerships, limited liability companies or business trusts, ownership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, such partnerships, limited liability companies or business trusts.
"Capitalized Lease Obligation" means any obligation under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose of the 2026 Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP; provided that if GAAP shall change after the Issue Date so that a lease (or other agreement conveying the right to use property) that would not be classified as a capital lease under GAAP as in effect as of the Issue Date would be classified as a capital lease, then the obligations under such lease (or other agreement conveying the right to use any property) shall not be considered to be a Capitalized Lease Obligation.
"Cash Equivalents" means, at any time:
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"Change of Control" means the occurrence of any of the following events:
"Code" means the Internal Revenue Code of 1986, as amended.
"Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity most nearly equal to the period from the redemption date to September 15, 2021 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to September 15, 2021.
"Comparable Treasury Price" means, with respect to any redemption date, if clause (ii) of the definition of "Adjusted Treasury Rate" is applicable, the average of three, or such lesser number as is given to the Company, Reference Treasury Dealer Quotations for such redemption date.
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"Consolidated Cash Flow Available for Fixed Charges" means, with respect to any Person for any period:
"Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the Company and its consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), on a consolidated basis, after eliminating:
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any person, the ratio of the aggregate amount of Consolidated Cash Flow Available for Fixed Charges of such person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available
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immediately preceding the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period being referred to herein as the "Four Quarter Period") to the aggregate amount of Consolidated Fixed Charges of such person for the Four Quarter Period.
The Consolidated Fixed Charge Coverage Ratio shall be calculated after giving pro forma effect to:
For purposes of this definition, whenever pro forma effect is to be given to any Investment, acquisition, disposition or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including without limitation in respect of anticipated cost savings or synergies relating to any such Investment, acquisition, disposition or other transaction that have been or are expected to be realized) shall be as determined in good faith by the chief financial officer or an authorized officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Protection Agreement applicable to such Indebtedness). If any interest bears, at the option of the Company or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Company or such Restricted Subsidiary may designate. If any Indebtedness that is being given pro forma effect was incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, subject to the definition of Capitalized Lease Obligation hereunder.
If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third person, the above clause shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or such Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness.
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"Consolidated Fixed Charges" means, with respect to any person for any period, the sum of, without duplication, the amounts for such period of:
"Consolidated Income Tax Expense" means, with respect to any person for any period, the provision for federal, state, local and foreign taxes (whether or not paid, estimated or accrued) based on income, profits or capitalization of such person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for any period, without duplication, the sum of:
"Consolidated Net Income" means, with respect to any person, for any period, the consolidated net income (or loss) of such person and its Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income, by excluding, without duplication:
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accounting in relation to the RSC Merger Transactions, the National Pump Transactions or any consummated acquisition and the amortization or write-off or removal of revenue otherwise recognizable of any amounts thereof, net of taxes, shall be excluded or added back in the case of lost revenue;
"Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less the sum of goodwill and other intangibles, net) which would appear on a consolidated balance sheet of the Company and its consolidated Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, and after giving effect to the acquisition or disposal of any property or assets consummated on or prior to such date and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of:
"Consolidated Non-cash Charges" means, with respect to any person for any period, the aggregate depreciation, amortization (including amortization of goodwill and other intangibles) and other non-cash expenses of such person and its Restricted Subsidiaries reducing Consolidated Net Income of such person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss).
"Control" when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing.
"Credit Agreement" means the Second Amended and Restated Credit Agreement, dated as of March 31, 2015, among the Company and certain of its Subsidiaries, as Borrowers, Holdings and certain of its Subsidiaries, as Guarantors, United Rentals of Canada, Inc., as Canadian Borrower, United Rentals Financing Limited Partnership, as specified loan borrower, Bank of America, N.A., as agent, U.S. swingline lender and U.S. letter of credit issuer, Bank of America, N.A. (acting through its Canada branch), as Canadian swingline lender and Canadian letter of credit issuer, and the lenders and other financial institutions party thereto, together with the related documents (including any term loans and revolving loans thereunder, any guarantees and any security documents, instruments and agreements executed in connection therewith), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement, indenture or other instrument (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings
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and commitments at any time outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether to the same obligor or different obligors.
"Credit Facility" means one or more debt facilities or agreements (including the Credit Agreement and the Secured Notes), commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for, or acting as underwriters of, revolving loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), notes, debentures, letters of credit or the issuance and sale of securities including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith and in each case, as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreements, indentures or other instruments (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments at any time outstanding or permitted to be outstanding under such facility or agreement or successor facility or agreement whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether the same obligor or different obligors.
"Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values.
"Default" means any event that is, or after notice or passage of time or both would be, an Event of Default.
"Designated Non-cash Consideration" means the Fair Market Value of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an officers' certificate which sets forth the Fair Market Value of the non-cash consideration at the time of its receipt and the basis for such valuation.
"Disinterested Member of the Board of Directors of the Company" means, with respect to any transaction or series of transactions, a member of the Board of Directors of the Company other than a member who has any material direct or indirect financial interest in or with respect to such transaction or series of transactions or is an Affiliate, or an officer, director or an employee of any Person (other than the Company, Holdings or any Restricted Subsidiary) who has any direct or indirect financial interest in or with respect to such transaction or series of transactions.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary other than a Foreign Subsidiary.
"Equipment Securitization Transaction" means any sale, assignment, pledge or other transfer (a) by the Company or any Subsidiary of the Company of rental fleet equipment, (b) by any ES Special Purpose Vehicle of leases or rental agreements between the Company and/or any Subsidiary of the Company, as lessee, on the one hand, and such ES Special Purpose Vehicle, as lessor, on the other hand, relating to such rental fleet equipment and lease receivables arising under such leases and rental agreements and (c) by the Company or any Subsidiary of the Company of any interest in any of the foregoing, together in each case with (i) any and all proceeds thereof (including all collections relating thereto, all payments and other rights under insurance policies or warranties relating thereto, all disposition proceeds received upon a sale thereof, and all rights under manufacturers' repurchase programs or guaranteed depreciation programs relating thereto), (ii) any collection or deposit account relating thereto and (iii) any collateral, guarantees, credit enhancement or other property or claims supporting or securing payment on, or otherwise relating to, any such leases, rental agreements or lease receivables.
"Equity Offering" means a private or public sale for cash after the Issue Date by (1) the Company of its common Capital Stock (other than Redeemable Capital Stock and other than to a Subsidiary of the Company) or (2) Holdings of its Capital Stock (other than to the Company or a Subsidiary of the
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Company) to the extent that the net proceeds therefrom are contributed to the common equity capital of the Company.
"ES Special Purpose Vehicle" means a trust, bankruptcy remote entity or other special purpose entity which is a Subsidiary of the Company or Holdings (or, if not a Subsidiary of the Company or Holdings, the common equity of which is wholly owned, directly or indirectly, by the Company or Holdings) and which is formed for the purpose of, and engages in no material business other than, acting as a lessor, issuer or depositor in an Equipment Securitization Transaction (and, in connection therewith, owning the rental fleet equipment, leases, rental agreements, lease receivables, rights to payment and other interests, rights and assets described in the definition of Equipment Securitization Transaction, and pledging or transferring any of the foregoing or interests therein).
"Event of Default" has the meaning set forth under "Events of Default" herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid.
"Existing Securitization Facility" means the receivables facility established pursuant to the Third Amended and Restated Receivables Purchase Agreement, dated as of September 24, 2012, among United Rentals Receivables LLC II, as seller, Holdings, as collection agent, Liberty Street Funding LLC, as a purchaser, Gotham Funding Corporation, as a purchaser, PNC Bank, National Association, as purchaser agent for itself and as a bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a purchaser agent and as a bank, SunTrust Bank, as a purchaser agent for itself and as a bank, Bank of Montreal, as a purchaser agent and as a bank, and The Bank of Nova Scotia, as administrative agent, as a bank and as a purchaser agent, as amended, modified or supplemented from time to time, and the other Transaction Documents under and as defined therein.
"Fair Market Value" means, with respect to any asset, the fair market value of such asset as determined by the Board of Directors of the Company in good faith, whose determination shall be conclusive and, in the case of assets with a Fair Market Value in excess of $200.0 million, evidenced by a resolution of the Board of Directors of the Company.
"Foreign Subsidiary" means any Restricted Subsidiary not created or organized under the laws of the United States or any state thereof or the District of Columbia.
"Foreign Subsidiary Holding Company" means any Subsidiary the primary assets of which consist of Capital Stock in (i) one or more Foreign Subsidiaries or (ii) one or more Foreign Subsidiary Holding Companies.
"Fuel Hedging Agreement" means any forward contract, swap, option, hedge or other similar financial agreement designed to protect against fluctuations in fuel prices.
"GAAP" means generally accepted accounting principles set forth in the Financial Accounting Standards Board codification (or by agencies or entities with similar functions of comparable stature and authority within the U.S. accounting profession) or in rules or interpretative releases of the SEC applicable to SEC registrants; provided that (a) if at any time the SEC permits or requires U.S. domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes, the Company may irrevocably elect by written notice to the Trustee to so use IFRS in lieu of GAAP and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (i) IFRS for periods beginning on and after the date of such notice or a later date as specified in such notice as in effect on such date and (ii) for prior periods, GAAP as defined in the first sentence of this definition and (b) GAAP is determined as of the date of any calculation or determination required hereunder; provided that (x) the Company, on any date, may, by providing notice thereof to the Trustee, elect to establish that GAAP shall mean GAAP as in effect on such date and (y) any such election, once
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made, shall be irrevocable. The Company shall give notice of any such election to the Trustee and the holders of the 2026 Notes.
"guarantee" means, as applied to any obligation:
The term "guarantee" used as a verb has a corresponding meaning.
"Guarantor" means Holdings and each Subsidiary Guarantor.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company's obligations with respect to the 2026 Notes on the terms provided for in the 2026 Indenture.
"Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Protection Agreement, Currency Agreement or Fuel Hedging Agreement.
"Holdings" means United Rentals, Inc., a Delaware corporation, and any permitted successor or assign.
"IFRS" means International Financial Reporting Standards and applicable accounting requirements set by the International Accounting Standards Board or any successor thereto (or the Financial Accounting Standards Board or any successor to such Board, or the SEC, as the case may be), as in effect from time to time.
"Indebtedness" means, with respect to any person, without duplication:
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provided, however, that Indebtedness shall not include:
For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the 2026 Indenture, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Redeemable Capital Stock.
"Interest Rate Protection Agreement" means, with respect to any person, any arrangement with any other person whereby, directly or indirectly, such person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include without limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any person pursuant to any Interest Rate Protection Agreements.
"Investment" means, with respect to any Person, any loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to any other Person (by means of any transfer of cash or other property or any payment for property or services for consideration of Indebtedness or Capital Stock of any other Person), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of indebtedness issued by any other Person. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the Company's option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in respect of such Investment; provided that to the extent that the amount of Restricted Payments outstanding at any time is so reduced by any portion of any such amount or value that would otherwise be included in the calculation of Consolidated Net Income, such portion of such amount or value shall not be so included for purposes of calculating the amount of Restricted Payments that may be made pursuant to the first paragraph of the covenant described under "Limitation on Restricted Payments."
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's and BBB (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.
"Issue Date" means May 13, 2016.
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"Lien" means any mortgage, charge, pledge, lien (statutory or other), security interest, hypothecation, assignment for security, claim, or preference or priority or other encumbrance upon or with respect to any property of any kind. A Person shall be deemed to own subject to a Lien any property which such person has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement.
"Maturity Date" means September 15, 2026.
"Moody's" means Moody's Investors Service, Inc. and any successor to its rating agency business.
"National Pump Acquisition" means the acquisition of assets contemplated by the Asset Purchase Agreement, effective as of March 7, 2014, by and among the Company, United Rentals of Canada, Inc., LD Services, LLC, National Pump & Compressor Ltd., Canadian Pump & Compressor, Ltd., Gulfco Industrial Equipment, L.P. and the Owners named therein, as amended from time to time.
"National Pump Transactions" means (a) the National Pump Acquisition, (b) the issuance of debt securities in connection with the National Pump Acquisition and (c) any other transactions contemplated in connection with the National Pump Acquisition and any other financing transactions in connection with the National Pump Acquisition.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary) net of:
"Permitted Investments" means any of the following:
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"Permitted Liens" means:
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or other contracts, performance and return-of-money bonds and other similar obligations (in each case, exclusive of obligations for the payment of borrowed money);
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For purposes of determining compliance with this definition, (x) a Lien need not be incurred solely by reference to one category of Permitted Liens described in this definition but may be incurred under any combination of such categories (including in part under one such category and in part under any other such category), (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Company shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition, and (z) in the event that a portion of Indebtedness secured by a Lien could be classified as secured in part pursuant to clause (ee) above (giving effect to the incurrence of such portion of such Indebtedness), the Company, in its sole discretion, may classify such portion of such Indebtedness (and any obligations in respect thereof) as having been secured pursuant to clause (ee) above and thereafter the remainder of such Indebtedness as having been secured pursuant to one or more of the other clauses of this definition.
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"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Preferred Stock," as applied to any person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such person, over shares of Capital Stock of any other class of such person.
"Purchase Money Obligations" means any Indebtedness incurred to finance or refinance the acquisition, leasing, construction or improvement of property (real or personal) or assets (including Capital Stock), and whether acquired through the direct acquisition of such property or assets or the acquisition of the Capital Stock of any person owning such property or assets, or otherwise; provided that such Indebtedness is incurred within 180 days after such acquisition.
"Quotation Agent" means a Reference Treasury Dealer selected by the Company.
"Rating Agencies" mean Moody's and S&P or if Moody's or S&P or both shall not make a rating on the 2026 Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company which shall be substituted for Moody's or S&P or both, as the case may be.
"Receivables Securitization Transaction" means any sale, discount, assignment or other transfer by the Company or any Subsidiary of the Company of accounts receivable, lease receivables or other payment obligations owing to the Company or such Subsidiary of the Company or any interest in any of the foregoing, together in each case with any collections and other proceeds thereof, any collection or deposit account related thereto, and any collateral, guarantees or other property or claims supporting or securing payment by the obligor thereon of, or otherwise related to, or subject to leases giving rise to, any such receivables.
"Redeemable Capital Stock" means any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or by contract or otherwise, is or upon the happening of an event or passage of time would be, required to be redeemed prior to the Maturity Date or is redeemable at the option of the holder thereof at any time prior to the Maturity Date, or is convertible into or exchangeable for debt securities at any time prior to the Maturity Date; provided, however, that Capital Stock will not constitute Redeemable Capital Stock solely because the holders thereof have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a "change of control" or an "asset sale."
"Reference Treasury Dealer" means each of three nationally recognized investment banking firms selected by the Company that are primary U.S. Government securities dealers.
"Reference Treasury Dealer Quotations" means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day immediately preceding such redemption date.
"Related Business" means any business in which the Company or any of the Restricted Subsidiaries was engaged on the Issue Date and any business, related, complementary, ancillary or incidental to such business or extensions, developments or expansions thereof.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.
"RS Special Purpose Vehicle" means a trust, bankruptcy remote entity or other special purpose entity which is a Subsidiary of the Company or Holdings (or, if not a Subsidiary of the Company or Holdings, the
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common equity of which is wholly owned, directly or indirectly, by the Company or Holdings) and which is formed for the purpose of, and engages in no material business other than, acting as an issuer or a depositor in a Receivables Securitization Transaction (and, in connection therewith, owning accounts receivable, lease receivables, other rights to payment, leases and related assets and pledging or transferring any of the foregoing or interests therein).
"RSC Merger" means the merger of RSC Holdings Inc. with and into Holdings, as effected on and subsequent to April 30, 2012.
"RSC Merger Transactions" means the transactions necessary to effect the RSC Merger, including (a) the RSC Merger, (b) the merger of all of the U.S. Subsidiaries of RSC Holdings Inc. and their successors in interest into one or more Subsidiaries of Holdings, (c) the mergers of one or more U.S. Subsidiaries of Holdings into one or more other U.S. Subsidiaries of Holdings, (d) the merger, amalgamation, consolidation and/or liquidation of RSC Holdings Inc.'s Foreign Subsidiaries into one or more Foreign Subsidiaries of the Company, (e) the issuance of debt securities and borrowings under the Credit Agreement in connection with the RSC Merger, (f) the amendment and increase of the Credit Agreement in connection with the RSC Merger, (g) the amendment and refinancing of the Existing Securitization Facility in connection with the RSC Merger and (h) any other transactions contemplated in connection with the RSC Merger and any other financing transactions in connection with the RSC Merger.
"S&P" means Standard & Poor's Ratings Services and any successor to its rating agency business.
"Sale/Leaseback Transaction" means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a person and the Company or a Restricted Subsidiary leases it from such person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Secured Notes" means the Company's 45/8% Senior Secured Notes due 2023.
"Securitization Transaction" means an Equipment Securitization Transaction or a Receivables Securitization Transaction.
"Senior Secured Indebtedness Leverage Ratio" means, with respect to any Person, on any date of determination, a ratio (i) the numerator of which is the aggregate principal amount (or accreted value, as the case may be) of Indebtedness that is secured by a Lien of such Person and its Restricted Subsidiaries on a consolidated basis outstanding on such date, less the amount of cash and Cash Equivalents that would be stated on the consolidated balance sheet of such Person and held by such Person or its Restricted Subsidiaries, as determined in accordance with GAAP, as of the date of determination, and (ii) the denominator of which is the Consolidated Cash Flow Available for Fixed Charges of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of such calculation, in each case calculated with the pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of "Consolidated Fixed Charge Coverage Ratio."
"Significant Subsidiary" of any person means a Restricted Subsidiary of such person which would be a significant subsidiary of such person as determined in accordance with the definition in Rule 1-02(w) of Article 1 of Regulation S-X promulgated by the SEC and as in effect on the Issue Date.
"Similar Business" means any businesses conducted or proposed to be conducted by the Company and its Restricted Subsidiaries on the Issue Date and any other activities that are similar, ancillary or reasonably related to, or a reasonable extension, expansion or development of such business or ancillary thereto.
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"Special Purpose Vehicle" means an ES Special Purpose Vehicle or an RS Special Purpose Vehicle.
"Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any of its Restricted Subsidiaries that are reasonably customary in a Securitization Transaction.
"Stated Maturity" means, when used with respect to any 2026 Note or any installment of interest thereon, the date specified in such 2026 Note as the fixed date on which the principal of such 2026 Note or such installment of interest is due and payable, and when used with respect to any other Indebtedness, means the date specified in the instrument governing such Indebtedness as the fixed date on which the principal of such Indebtedness, or any installment of interest thereon, is due and payable.
"Subordinated Indebtedness" means, with respect to a person, Indebtedness of such person (whether outstanding on the Issue Date or thereafter incurred) which is subordinate or junior in right of payment to the 2026 Notes or a guarantee of the 2026 Notes by such person, as the case may be, pursuant to a written agreement to that effect.
"Subsidiary" means, with respect to any person:
For purposes of this definition, any directors' qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary.
"Subsidiary Guarantors" means each of the Company's Domestic Restricted Subsidiaries that executes a subsidiary guarantee in accordance with the provisions of the 2026 Indenture, and their respective successors and assigns.
"Total Indebtedness Leverage Ratio" means, with respect to any Person, on any date of determination, a ratio (i) the numerator of which is the aggregate principal amount (or accreted value, as the case may be) of Indebtedness of such Person and its Restricted Subsidiaries on a consolidated basis outstanding on such date, less the amount of cash and Cash Equivalents that would be stated on the consolidated balance sheet of such Person and held by such Person or its Restricted Subsidiaries, as determined in accordance with GAAP, as of the date of determination, (ii) and the denominator of which is the Consolidated Cash Flow Available for Fixed Charges of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of such calculation, in each case calculated with the pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of "Consolidated Fixed Charge Coverage Ratio."
"Transactions" means the issuance of the 2026 Notes and the Guarantees.
"Unrestricted Subsidiary" means (a) United Rentals Receivables LLC II and any other Special Purpose Vehicles and (b) each Subsidiary of the Company designated as such pursuant to and in compliance with the covenant described under "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and each Subsidiary of such Unrestricted Subsidiary. As of the Issue Date, United Rentals Receivables LLC II will be the only Unrestricted Subsidiary.
"U.S. Government Obligations" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of Person
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controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of that is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.
"Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees of any person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of which 100% of the outstanding Capital Stock is owned by the Company or another Wholly Owned Restricted Subsidiary. For purposes of this definition, any directors' qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary.
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DESCRIPTION OF THE REOPENED 2027 NOTES
We will issue the reopened 2027 notes (together with the original 2027 notes, the "2027 Notes") under the indenture (the "2027 Indenture"), dated as of November 7, 2016, among us, the Guarantors and Wells Fargo Bank, National Association, as trustee (the "Trustee").
The terms of the 2027 Notes will include those expressly set forth in the 2027 Indenture and those made part of the 2027 Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following description is a summary of the material provisions of the 2027 Notes and the 2027 Indenture and does not purport to be complete. This summary is subject to and is qualified by reference to all of the provisions of the 2027 Notes and the 2027 Indenture, including the definitions of certain terms used in the 2027 Indenture. We urge you to read these documents because they, and not this description, define your rights as a holder of the reopened 2027 notes. Copies of the 2027 Indenture are available as set forth below under "Additional Information."
Certain terms used in this description are defined under the caption "Certain Definitions." Defined terms used in this description but not defined under "Certain Definitions" will have the meanings assigned to them in the 2027 Indenture. Unless the context otherwise requires, references to "2027 Notes" include the original 2027 notes, the reopened 2027 notes offered hereby and any other Additional Notes (as defined below). In this description, the words "Company," "we" and "our" refer only to United Rentals (North America), Inc. and not to any of its subsidiaries.
Brief Description of the 2027 Notes
The 2027 Notes will be:
The Company's Subsidiaries, with limited exceptions, are "Restricted Subsidiaries." As of and for the year ended December 31, 2016, the Unrestricted Subsidiaries represented 7% of Holdings' total assets and had no revenue. Under the circumstances described below under the captions "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and "Certain CovenantsLimitation on Restricted Payments," the Company will be permitted to designate certain of its other Subsidiaries as "Unrestricted Subsidiaries." The Company's Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the 2027 Indenture. The Company's Unrestricted Subsidiaries will not guarantee the 2027 Notes.
As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened 2027 notes and the guarantees (the "Guarantees"), the issuance of the reopened 2026 notes and the related guarantees, additional borrowings of approximately $523 million under the Credit Agreement to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the reopened 2027 notes would have ranked (1) equally in right of payment with $4.8 billion principal amount of our other senior unsecured obligations, comprised of $475 million principal amount of 75/8% Senior Notes due 2022, $925 million principal amount of 61/8 Senior Notes due 2023, $850 million principal amount of 53/4% Senior Notes due 2024, $800 million principal amount of 51/2% Senior Notes due 2025, $1 billion principal amount of 57/8%
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Senior Notes due 2026 (including the $250 million of reopened 2026 notes to be issued concurrently with the reopened 2027 notes) and $750 million principal amount of original 2027 notes; (2) effectively junior to approximately $3.2 billion of our secured obligations, comprised of (i) $2.074 billion of our outstanding borrowings under the Credit Agreement (excluding $286 million of additional borrowing capacity, net of outstanding letters of credit of $36 million), (ii) $1 billion principal amount of the Secured Notes, (iii) our guarantee obligations in respect of $103 million of the outstanding borrowings of our Subsidiary Guarantors under the Credit Agreement, (iv) $53 million in capital leases and (v) our guarantee obligations in respect of $8 million of capital leases of our Subsidiary Guarantors; and (3) effectively junior to (i) $568 million of indebtedness of our special purpose vehicle in connection with the Existing Securitization Facility, (ii) $7 million of capital leases of our Subsidiaries that are not Guarantors and (iii) $3 million of capital leases of Holdings. Most of our U.S. receivable assets have been sold to our special purpose vehicle in connection with our Existing Securitization Facility (the accounts receivable in the collateral pool being the lenders' only source of payment under that facility). See "Capitalization."
Principal, Maturity and Interest
The Company will issue the reopened 2027 notes in this offering in an aggregate principal amount of $250 million. Upon issuance of the reopened 2027 notes, the aggregate principal amount outstanding of our 2027 Notes will be $1 billion. The reopened 2027 notes will have identical terms, be fungible with and be part of a single series of senior debt securities with the original 2027 notes.
The 2027 Notes will mature on May 15, 2027. Subject to its compliance with the covenant described under the caption "Certain CovenantsLimitation on Indebtedness," the Company will be permitted to issue additional 2027 Notes under the 2027 Indenture (the "Additional Notes"). The 2027 Notes offered hereby and any Additional Notes will rank equally and be treated as a single class for all purposes of the 2027 Indenture, including waivers, amendments, redemptions and offers to purchase. Interest on the 2027 Notes will accrue at the rate of 5.500% per annum and will be payable semiannually in arrears on February 15 and August 15 of each year, to the holders of record of 2027 Notes at the close of business on February 1 and August 1, respectively, immediately preceding such interest payment date, except that the last payment of interest will be made on May 15, 2027, to the holders of record of 2027 Notes at the close of business on May 1, 2027. The next interest payment with respect to the 2027 Notes will be made on August 15, 2017.
Interest on the 2027 Notes will accrue from the most recent date to which interest has been paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
The reopened 2027 notes will be issued only in registered form without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. Principal of, premium, if any, and interest on the 2027 Notes will be payable, and the 2027 Notes will be transferable, at the designated corporate trust office or agency of the Trustee in the City of New York maintained for such purposes. In addition, interest may be paid at the option of the Company by check mailed to the person entitled thereto as shown on the security register. No service charge will be made for any transfer, exchange or redemption of 2027 Notes, except in certain circumstances for any tax or other governmental charge that may be imposed in connection therewith.
Initial settlement for the reopened 2027 notes will be made in same-day funds. The 2027 Notes are expected to trade in the Same-Day Funds Settlement System of The Depository Trust Company ("DTC") until maturity, and secondary market trading activity for the 2027 Notes will therefore settle in same-day funds.
Guarantees
Holdings and the Subsidiary Guarantors will fully and unconditionally guarantee, on a senior unsecured basis, jointly and severally, to each holder of the 2027 Notes and the Trustee under the 2027
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Indenture, the full and prompt performance of the Company's obligations under the 2027 Indenture and such 2027 Notes, including the payment of principal of, premium, if any, and interest on the 2027 Notes. Subject to limited exceptions, the Subsidiary Guarantors are the current and future Domestic Restricted Subsidiaries of the Company, other than (unless otherwise determined by the Company) any Foreign Subsidiary Holding Company or Subsidiary of a Foreign Subsidiary.
The obligations of each Subsidiary Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its guarantee or pursuant to its contribution obligations under the 2027 Indenture, will result in the obligations of such Subsidiary Guarantor under the guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. See "Risk FactorsRisks Relating to the Reopened NotesA guarantee by a subsidiary guarantor could be voided if the subsidiary guarantor fraudulently transferred the guarantee at the time it incurred the indebtedness, which could result in the holders of the reopened notes being able to rely only on URNA and Holdings to satisfy claims."
Each Subsidiary Guarantor that makes a payment under its guarantee of the 2027 Notes will be entitled to a contribution from each other Guarantor of the 2027 Notes in an amount equal to such other Guarantor's pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP (for purposes hereof, Holdings' net assets shall be those of all its consolidated Subsidiaries other than the Subsidiary Guarantors); provided, however, that during a Default, the right to receive payment in respect of such right of contribution shall be suspended until the payment in full of all guaranteed obligations under the 2027 Indenture.
Each guarantee of the 2027 Notes:
As of December 31, 2016, on an as adjusted basis, after giving effect to the issuance of the reopened 2027 notes and the Guarantees, the issuance of the reopened 2026 notes and the related guarantees, additional borrowings of approximately $523 million under the Credit Agreement to finance the NES Acquisition (and pay related fees and expenses) and the assumed application of the net proceeds therefrom as described under "Use of Proceeds," the Guarantees would have ranked (1) equally in right of payment with approximately $4.8 billion of the Guarantors' other senior unsecured obligations, comprised of the Guarantors' guarantee obligations in respect of (a) $475 million principal amount of 75/8% Senior Notes due 2022, (b) $925 million principal amount of the 61/8% Senior Notes due 2023, (c) $850 million principal amount of 53/4% Senior Notes due 2024, (d) $800 million principal amount of 51/2% Senior Notes due 2025, (e) $1 billion principal amount of 57/8% Senior Notes due 2026 (including the $250 million of reopened 2026 notes to be issued concurrently with the reopened 2027 notes) and (f) $750 million principal amount of original 2027 notes; (2) effectively junior to approximately $3.2 billion of the Guarantors' secured obligations, comprised of (i) the Guarantors' guarantee obligations in respect of $2.074 billion of our outstanding borrowings under the Credit Agreement, (ii) $103 million of the outstanding borrowings of our Subsidiary Guarantors under the Credit Agreement, (iii) the Guarantors' guarantee obligations in respect of $1 billion principal amount of the Secured Notes, (iv) the Guarantors' guarantee obligations in respect of $53 million in our capital leases, (v) $8 million of capital leases of our
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Subsidiary Guarantors and (vi) $3 million of capital leases of Holdings; and (3) effectively junior to (i) $568 million of indebtedness of our special purpose vehicle in connection with the Existing Securitization Facility and (ii) $7 million of capital leases of our Subsidiaries that are not Guarantors. See "Capitalization."
The Subsidiaries that are not Guarantors accounted for $223 million, or 8%, of our adjusted EBITDA for the year ended December 31, 2016. The Subsidiaries that are not Guarantors accounted for $510 million, or 9%, of our total revenues for the year ended December 31, 2016. The non-guarantor subsidiaries of URNA accounted for $1.893 billion, or 16%, of our total assets, and $698 million, or 7%, of our total liabilities, at December 31, 2016.
Although the 2027 Indenture limits the incurrence of Indebtedness and the issuance of preferred stock of certain of our Subsidiaries, such limitation is subject to a number of significant qualifications. Moreover, the 2027 Indenture does not impose any limitation on the incurrence by such Subsidiaries of liabilities that are not considered Indebtedness under the 2027 Indenture. See "Certain CovenantsLimitation on Indebtedness."
The guarantee of a Subsidiary Guarantor will be released:
Optional Redemption
Except as set forth below, we will not be entitled to redeem the 2027 Notes at our option prior to May 15, 2022.
The 2027 Notes will be redeemable at our option, in whole or in part, at any time on or after May 15, 2022, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the
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relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on May 15 of each of the years indicated below:
Year
|
Redemption Price |
|||
---|---|---|---|---|
2022 |
102.75 | % | ||
2023 |
101.833 | % | ||
2024 |
100.917 | % | ||
2025 and thereafter |
100.000 | % |
In addition, at any time, or from time to time, on or prior to May 15, 2020, we may, at our option, use the net cash proceeds of one or more Equity Offerings to redeem up to an aggregate of 40.0% of the principal amount of the 2027 Notes at a redemption price equal to 105.50% of the principal amount of the 2027 Notes, plus accrued and unpaid interest, if any, thereon to the redemption date; provided, however, that (1) at least 50.0% of the aggregate principal amount of 2027 Notes issued (including any Additional Notes, but excluding 2027 Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 120 days of the consummation of any such Equity Offering.
Prior to May 15, 2022, we will be entitled at our option to redeem the 2027 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2027 Notes plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the redemption date (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date).
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund payments with respect to the 2027 Notes.
Selection and Notice of Redemption
In the event that less than all of the 2027 Notes are to be redeemed at any time, selection of such 2027 Notes for redemption will be made on a pro rata basis (subject to the rules of DTC) unless otherwise required by law or applicable stock exchange requirements; provided, however, that such 2027 Notes shall only be redeemable in principal amounts of $2,000 or an integral multiple of $1,000 in excess thereof. Notice of redemption shall be delivered electronically or mailed by first-class mail to each holder of the 2027 Notes to be redeemed at its registered address, at least 30 but not more than 60 days before the redemption date, except that redemption notices may be delivered electronically or mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance or a satisfaction and discharge of the 2027 Notes.
Notices of redemption may be subject to the satisfaction of one or more conditions precedent established by us in our sole discretion. In addition, we may provide in any notice of redemption for the 2027 Notes that payment of the redemption price and the performance of our obligations with respect to such redemption may be performed by another Person.
If any 2027 Note is to be redeemed in part only, the notice of redemption that relates to such 2027 Note shall state the portion of the principal amount thereof to be redeemed. A new 2027 Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon surrender for cancellation of the original 2027 Note. 2027 Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on 2027 Notes or portions thereof called for redemption, unless we default in the payment of the redemption price.
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Change of Control
Upon the occurrence of a Change of Control after the Issue Date, we shall be obligated to make an offer to purchase all of the then outstanding 2027 Notes (a "Change of Control Offer"), on a business day (the "Change of Control Purchase Date") not more than 60 nor less than 30 days following the delivery to each holder of the 2027 Notes of a notice of the Change of Control (a "Change of Control Notice"). The Change of Control Offer shall be at a purchase price in cash (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to the Change of Control Purchase Date, subject to the rights of holders of the 2027 Notes on the relevant record date to receive interest due on the relevant interest payment date. We shall be required to purchase all 2027 Notes tendered pursuant to the Change of Control Offer and not withdrawn. The Change of Control Offer is required to remain open for at least 20 business days.
In order to effect such Change of Control Offer, we shall, not later than the 30th day after the Change of Control, deliver the Change of Control Notice to each holder of the 2027 Notes, which notice shall govern the terms of the Change of Control Offer and shall state, among other things, (i) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holder's 2027 Notes at the Change of Control Purchase Price, (ii) the date which shall be the Change of Control Purchase Date and (iii) the procedures that holders of the 2027 Notes must follow to accept the Change of Control Offer. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable to a Change of Control Offer and the repurchase of 2027 Notes pursuant thereto. The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the 2027 Indenture are applicable.
Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.
The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the 2027 Indenture applicable to a Change of Control Offer made by the Company and purchases all 2027 Notes properly tendered and not withdrawn under the Change of Control Offer or (2) notice of redemption for all outstanding 2027 Notes has been given pursuant to the 2027 Indenture as described above under the caption "Optional Redemption," unless and until there is a default in payment of the applicable redemption price.
The use of the term "all or substantially all" in provisions of the 2027 Indenture such as clause (b) of the definition of "Change of Control" and under "Consolidation, Merger, Sale of Assets, etc." has no clearly established meaning under New York law (which governs the 2027 Indenture) and has been the subject of limited judicial interpretation in only a few jurisdictions. Accordingly, there may be a degree of uncertainty in ascertaining whether any particular transaction would involve a disposition of "all or substantially all" of the assets of a person, which uncertainty should be considered by prospective purchasers of 2027 Notes.
The provisions under the 2027 Indenture set forth above relating to the Company's obligations to make a Change of Control Offer may, prior to the occurrence of a Change of Control, be waived or modified with the consent of the holders of a majority in principal amount of the then outstanding 2027 Notes issued under the 2027 Indenture. Following the occurrence of a Change of Control, any change, amendment or modification in any material respect of the obligation of the Company to make and consummate a Change of Control Offer may only be effected with the consent of each holder of the 2027 Notes affected thereby. See "Amendments and Waivers."
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Certain Covenants
Effectiveness of Covenants. The 2027 Indenture contains covenants including, among others, the covenants described below.
During any period of time that: (a) the 2027 Notes have Investment Grade Ratings from both Rating Agencies, and (b) no Default has occurred and is continuing under the 2027 Indenture (the occurrence of the events described in the foregoing clauses (a) and (b) being collectively referred to as a "Covenant Suspension Event"), the Company and its Restricted Subsidiaries will not be subject to the following provisions of the 2027 Indenture (collectively, the "Suspended Covenants"):
In the event that the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants under the 2027 Indenture for any period of time as a result of the foregoing, and on any subsequent date (the "Reversion Date") one or both of the Rating Agencies withdraw their Investment Grade Rating or downgrade the rating assigned to the 2027 Notes below an Investment Grade Rating, then the Company and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the 2027 Indenture with respect to future events.
The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to in this description as the "Suspension Period." Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Asset Sales will be reset at zero. With respect to Restricted Payments made after the Reversion Date, the amount of Restricted Payments made since the Issue Date will be calculated as though the covenant described under the heading "Limitation on Restricted Payments" had been in effect during the Suspension Period. No Subsidiary may be designated as an Unrestricted Subsidiary during the Suspension Period, unless such designation would have complied with the covenant described under the heading "Limitation on Designations of Unrestricted Subsidiaries" as if the Suspended Covenants were in effect during such period. In addition, all Indebtedness incurred will be classified as having been incurred pursuant to clause (c) of paragraph (2) of "Limitation on Indebtedness." Any Preferred Stock issued during the Suspension Period will be classified as having been issued pursuant to "Limitation on Preferred Stock of Restricted Subsidiaries." In addition, for purposes of the covenant described under the heading "Transactions with Affiliates," all agreements and arrangements entered into by the Company and any Restricted Subsidiary during the Suspension Period prior to such Reversion Date will be deemed to have been entered into on or prior to the Issue Date, and for purposes of the covenant described under the heading "Limitation on Dividends and other Payment Restrictions Affecting Restricted Subsidiaries," all contracts entered into during the Suspension Period prior to such Reversion Date that contain any of the restrictions contemplated by such covenant will be deemed to have been existing on the Issue Date.
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During the Suspension Period, any reference in "Permitted Liens" and "Limitation on Designations of Unrestricted Subsidiaries" to any provision described under the heading "Limitation on Indebtedness" or any provision thereof will be construed as if such covenant had remained in effect since the Issue Date and during the Suspension Period.
During the Suspension Period, the obligation to grant further guarantees will be suspended. Upon the Reversion Date, the obligation to grant guarantees pursuant to the covenant described under the heading "Additional Subsidiary Guarantors" will be reinstated (and the Reversion Date will be deemed to be the date on which any guaranteed Indebtedness was incurred for purposes of the covenant described under the heading "Additional Subsidiary Guarantors"). In addition, any guarantees that were terminated as described under "Guarantees" will be required to be reinstated promptly and in no event later than 30 days after the Reversion Date to the extent such guarantees would otherwise be required to be provided hereunder.
Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of any failure to comply with the Suspended Covenants during any Suspension Period and the Company and any Restricted Subsidiary will be permitted, following a Reversion Date, without causing a Default or Event of Default or breach of any of the Suspended Covenants (notwithstanding the reinstatement thereof) under the 2027 Indenture, to honor, comply with or otherwise perform any contractual commitments or obligations entered into during a Suspension Period following a Reversion Date and to consummate the transactions contemplated thereby.
There can be no assurance that the 2027 Notes will ever achieve or maintain Investment Grade Ratings.
Limitation on Indebtedness. (1) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or in any manner become directly or indirectly liable, contingently or otherwise (in each case, to "incur"), for the payment of any Indebtedness (including any Acquired Indebtedness); provided, however, that the Company and any Restricted Subsidiary will be permitted to incur Indebtedness (including Acquired Indebtedness) if the Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries is at least 2.00:1.00.
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(including to secure workers' compensation and other similar insurance coverages), but excluding letters of credit issued in respect of or to secure money borrowed, (ii) obligations under Hedging Obligations entered into for bona fide hedging purposes of the Company and not for speculative purposes, (iii) financing of insurance premiums in the ordinary course of business or (iv) cash management obligations and netting, overdraft protection and other similar facilities or arrangements, in each case arising under standard business terms of any bank at which the Company or any Restricted Subsidiary maintains such facility or arrangement;
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Company as necessary to accomplish such refinancing by means of a tender offer or privately negotiated purchase, plus the amount of expenses in connection therewith; and
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For the purposes of determining compliance with, and the outstanding principal amount of Indebtedness incurred pursuant to and in compliance with, this covenant, (i) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in paragraphs (1) and (2) of this covenant, the Company, in its sole discretion, will classify, and may from time to time reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one or a combination of the clauses of paragraph (1) or (2) of this covenant; provided that (i) Indebtedness outstanding on the Issue Date under the Credit Agreement shall be treated as incurred pursuant to clause (a) of paragraph (2) above, and (ii) any other obligation of the obligor on such Indebtedness (or of any other Person who could have incurred such Indebtedness under this covenant) arising under any guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation supporting such Indebtedness shall be disregarded to the extent that such guarantee, Lien or letter of credit, bankers' acceptance or other similar instrument or obligation secures the principal amount of such Indebtedness.
Except as provided in the following paragraph with respect to Indebtedness denominated in a foreign currency, the amount of any Indebtedness outstanding as of any date will be:
For purposes of determining compliance with any dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that (x) the dollar-equivalent principal amount of any such Indebtedness outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date, (y) if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency (or in a different currency from such Indebtedness so being incurred), and such refinancing would cause the applicable dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness, calculated as described in the following sentence, does not exceed (i) the outstanding or committed principal amount (whichever is higher) of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing and (z) the dollar-equivalent principal amount of Indebtedness denominated in a foreign currency and incurred pursuant to a Credit Facility shall be calculated based on the relevant currency exchange rate in effect on, at the Company's option, (i) the Issue Date, (ii) any date on which any of the respective commitments under such Credit Facility shall be reallocated between or among facilities or subfacilities thereunder, or on which such rate is otherwise calculated for any purpose thereunder or (iii) the date of such incurrence. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.
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Limitation on Restricted Payments. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly:
(such payments or Investments described in the preceding clauses (a), (b), (c) and (d) are collectively referred to as "Restricted Payments"), unless, immediately after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the Fair Market Value of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment):
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Restricted Payment (or, if such aggregate cumulative Consolidated Net Income of the Company for such period shall be a deficit, minus 100% of such deficit);
As of December 31, 2016, the amount available for Restricted Payments under clause (C) of the immediately preceding paragraph was $953 million. None of the foregoing provisions will prohibit the following; provided that with respect to payments pursuant to clauses (i), (iv), (v), (vii), (viii), (x), (xvi) and (xvii) below, no Default or Event of Default has occurred and is continuing:
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Any payments made pursuant to clauses (i), (xvi) or (xvii) of this paragraph shall be taken into account, and any payments made pursuant to other clauses of this paragraph shall be excluded, in calculating the amount of Restricted Payments pursuant to clause (C) of the first paragraph of this covenant.
The Company, in its sole discretion, may classify or reclassify (x) any Permitted Investment as being made in whole or in part as a permitted Restricted Payment or (y) any Restricted Payment as being made in whole or in part as a Permitted Investment (to the extent such Restricted Payment qualifies as a Permitted Investment).
The Company, in its sole discretion, may classify any Investment or other Restricted Payment as being made in part under one of the provisions of this covenant (or, in the case of any Investment, the definition of "Permitted Investments") and in part under one or more other such provisions (or, as applicable, clauses).
Limitation on Liens. The Company will not, and will not permit any Restricted Subsidiary to create, incur, assume or suffer to exist any Lien (the "Initial Lien") of any kind (except for Permitted Liens) securing any Indebtedness, unless the 2027 Notes are equally and ratably secured (except that Liens securing Subordinated Indebtedness shall be expressly subordinate to Liens securing the 2027 Notes to the same extent such Subordinated Indebtedness is subordinate to the 2027 Notes). Any Lien created for the benefit of the holders of the 2027 Notes pursuant to the preceding sentence shall provide by its terms that
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such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
Disposition of Proceeds of Asset Sales. The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Sale unless:
Within 365 days of the later of an Asset Sale and the date of receipt of Net Cash Proceeds from such Asset Sale, the Company or such Restricted Subsidiary, as the case may be, may apply the Net Cash Proceeds from such Asset Sale to (1) to the extent the Company or such Restricted Subsidiary elects or is required to the terms thereof, to repay (or, in the case of letters of credit, bankers' acceptances or other similar instruments, cash collateralize) Indebtedness and to correspondingly reduce commitments with respect thereto (in each case other than Subordinated Indebtedness and Indebtedness owed to the Company or a Restricted Subsidiary) or (2) invest in properties or assets that are used or useful in the business of the Company and its Restricted Subsidiaries conducted at such time or in businesses reasonably related thereto or in Capital Stock of a Person, the principal portion of whose assets consist of such property or assets (collectively, "Replacement Assets"); provided, however, that any such reinvestment in Replacement Assets made pursuant to a definitive binding agreement or commitment approved by the Board of Directors of the Company that is executed or approved within such time will satisfy this requirement, so long as such investment is consummated within 180 days of such 365th day or within such longer period of time authorized by the Board of Directors as is necessary to consummate such investment; provided that in the event such binding agreement or commitment is later canceled or terminated for any reason before such Net Cash Proceeds are so applied, the Company or such Restricted Subsidiary may satisfy its obligations as to any Net Cash Proceeds by entering into another binding agreement or commitment within six months of such cancellation or termination of the prior binding agreement or commitment or treating such Net Cash Proceeds as Excess Proceeds; provided, further, that the Company or such Restricted Subsidiary may only enter into such an agreement or commitment under the foregoing provision one time with respect to each Asset Sale. Any Net Cash Proceeds from any Asset Sale that are not used in accordance with the preceding sentence constitute "Excess Proceeds" subject to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds $75.0 million, the Company shall make an offer to purchase (an "Asset Sale Offer"), from all holders of the 2027 Notes and, to the extent the Company elects or is required by the terms thereof, all holders of other Indebtedness that is pari passu in right of payment with the 2027 Notes containing provisions similar to those set forth in the 2027 Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, pro rata in proportion to the respective principal amounts of the 2027 Notes and such other Indebtedness to be purchased or redeemed, the maximum principal amount of 2027 Notes and such other pari passu Indebtedness that may be purchased with the Excess Proceeds.
The offer price for the 2027 Notes in any Asset Sale Offer will be equal to 100% of the principal amount of the 2027 Notes plus accrued and unpaid interest, if any, to the purchase date and the offer price for any other Indebtedness that is pari passu in right of payment with the 2027 Notes, as applicable, will be as set forth in the documentation governing such Indebtedness (the "Asset Sale Offer Price") and will be
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payable in cash. If any Excess Proceeds remain after an Asset Sale Offer, the Company may use such Excess Proceeds for general corporate purposes. If the Asset Sale Offer Price with respect to 2027 Notes tendered into such Asset Sale Offer exceeds the Excess Proceeds allocable to the 2027 Notes, 2027 Notes to be purchased will be selected on a pro rata basis. The 2027 Notes shall be purchased by the Company on a date that is not earlier than 30 days and not later than 60 days from the date the notice is given to holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero.
The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that an Asset Sale occurs and the Company is required to purchase 2027 Notes as described above.
For the purposes of paragraph (b) above, the following are deemed to be cash: (1) the assumption of Indebtedness of the Company or any Restricted Subsidiary to the extent the Company or such Restricted Subsidiary is released from all liability on payment of the principal amount of such Indebtedness in connection with such Asset Sale, (2) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale to the extent that the Company and each other Restricted Subsidiary are released in full from any guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Sale, (3) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days, (4) consideration consisting of Indebtedness of the Company or any Restricted Subsidiary (provided that such Indebtedness is not expressly subordinated in right of payment to the 2027 Notes), (5) Replacement Assets or (6) any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in an Asset Sale; provided, however, that the aggregate Fair Market Value of all Designated Non-cash Consideration received and treated as cash pursuant to this clause is not to exceed, at any time, an aggregate amount outstanding equal to the greater of $150.0 million and 2.0% of Consolidated Net Tangible Assets as of the date of the applicable Asset Sale, without giving effect to changes in value subsequent to the receipt of such Designated Non-cash Consideration.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any Restricted Subsidiary to issue any Preferred Stock other than Preferred Stock issued to the Company or a Wholly Owned Restricted Subsidiary. The Company will not sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary or permit a Restricted Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary, other than to the Company or a Wholly Owned Restricted Subsidiary. Notwithstanding the foregoing, nothing in such covenant will prohibit Preferred Stock (other than Redeemable Capital Stock) issued by a Person prior to the time:
provided, however, that such Preferred Stock was not issued or incurred by such person in anticipation of a transaction contemplated by subclauses (A), (B), or (C) above.
Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the sale, transfer, disposition, purchase, exchange or lease of assets, property
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or services) with, or for the benefit of, any of its Affiliates involving aggregate consideration in excess of $10.0 million, except:
Notwithstanding the foregoing, the restrictions set forth in this covenant shall not apply to:
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Limitation on Dividends and other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
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Limitation on Designations of Unrestricted Subsidiaries. The Company may designate any Restricted Subsidiary as an "Unrestricted Subsidiary" under the 2027 Indenture (a "Designation") only if:
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In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to the covenant "Limitation on Restricted Payments" for all purposes of the 2027 Indenture in the Designation Amount.
All Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if:
All Designations and Revocations must be evidenced by board resolutions of the Company delivered to the Trustee certifying compliance with the foregoing provisions.
Additional Subsidiary Guarantors. The Company will cause each Domestic Restricted Subsidiary, other than (unless otherwise determined by the Company) any Foreign Subsidiary Holding Company or Subsidiary of a Foreign Subsidiary, that guarantees any Indebtedness of the Company or of any other Restricted Subsidiary incurred pursuant to clause (a) of paragraph (2) of the covenant described under "Limitation on Indebtedness" to, within a reasonable time thereafter, execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Domestic Restricted Subsidiary will guarantee payment of the 2027 Notes on the same terms and conditions as those set forth in the 2027 Indenture, subject to any limitations that apply to the guarantee of Indebtedness giving rise to the requirement to guarantee the 2027 Notes. This covenant shall not apply to any of the Company's Subsidiaries that have been properly designated as an Unrestricted Subsidiary.
Reporting Requirements. For so long as the 2027 Notes are outstanding, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the SEC (if permitted by SEC practice and applicable law and regulations) the annual reports, quarterly reports and other documents which the Company would have been required to file with the SEC pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were so subject, such documents to be filed with the SEC on or prior to the respective dates (the "Required Filing Dates") by which the Company would have been required so to file such documents if the Company were so subject. If, notwithstanding the preceding sentence, filing such documents by the Company with the SEC is not permitted by SEC practice or applicable law or regulations, the Company shall transmit (or cause to be transmitted) electronically or by mail to all holders of the 2027 Notes, as their names and addresses appear in the 2027 Note register, copies of such documents within 30 days after the Required Filing Date (or make such documents available on a website maintained by the Company or Holdings).
Consolidation, Merger, Sale of Assets, etc.
The Company will not, directly or indirectly, in any transaction or series of transactions, merge or consolidate with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any Person or Persons, and the Company will not permit any Restricted Subsidiary to enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or
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other disposition of all or substantially all of the properties and assets of the Company or the Company and its Restricted Subsidiaries, taken as a whole, to any other person or persons, unless at the time and after giving effect thereto:
In connection with any consolidation, merger, transfer, lease, assignment or other disposition contemplated hereby, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, transfer, lease, assignment or other disposition and the supplemental indenture in respect thereof comply with the requirements under the 2027 Indenture.
Upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with the immediately preceding paragraphs, the successor person formed by such consolidation or into which the Company or a Restricted Subsidiary, as the case may be, is merged or the successor person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under the 2027 Notes and the 2027 Indenture with the same effect as if such successor had been named as the Company in the 2027 Notes and the 2027 Indenture and, except in the case of a lease, the Company or such Restricted Subsidiary shall be released and discharged from its obligations thereunder.
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The 2027 Indenture provides that for all purposes of the 2027 Indenture and the 2027 Notes (including the provision of this covenant and the covenants described in "Certain CovenantsLimitation on Indebtedness," "Certain CovenantsLimitation on Restricted Payments" and "Certain CovenantsLimitation on Liens"), Subsidiaries of any surviving person shall, upon such transaction or series of related transactions, become Restricted Subsidiaries unless and until designated Unrestricted Subsidiaries pursuant to and in accordance with "Certain CovenantsLimitation on Designations of Unrestricted Subsidiaries" and all Indebtedness, and all Liens on property or assets, of the Company and the Restricted Subsidiaries in existence immediately after such transaction or series of related transactions will be deemed to have been incurred upon such transaction or series of related transactions.
Events of Default
The following will be "Events of Default" under the 2027 Indenture:
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If an Event of Default (other than those covered by clause (viii) or (ix) above with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries of the Company, that, taken together, would constitute a Significant Subsidiary) shall occur and be continuing, the Trustee, by notice to the Company, or the holders of at least 25.0% in aggregate principal amount of the 2027 Notes then outstanding, by notice to the Trustee and the Company, may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the outstanding 2027 Notes due and payable immediately. If an Event of Default specified in clause (viii) or (ix) above with respect to the Company, any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries of the Company, that, taken together, would constitute a Significant Subsidiary, occurs and is continuing, then the principal of, premium, if any, accrued and unpaid interest, if any, on all the outstanding 2027 Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of the 2027 Notes.
After a declaration of acceleration under the 2027 Indenture, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in aggregate
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principal amount of the outstanding 2027 Notes, by written notice to the Company and the Trustee, may rescind such declaration if:
The holders of a majority in aggregate principal amount of the outstanding 2027 Notes may on behalf of the holders of all the 2027 Notes waive any past defaults under the 2027 Indenture, except a default in the payment of the principal of and premium, if any, or interest on any 2027 Note, or in respect of a covenant or provision which under the 2027 Indenture cannot be modified or amended without the consent of the holder of each 2027 Note outstanding.
No holder of any of the 2027 Notes has any right to institute any proceeding with respect to the 2027 Indenture or any remedy thereunder, unless the holders of at least 25.0% in aggregate principal amount of the outstanding 2027 Notes have made written request to the Trustee, and offered indemnity satisfactory to the Trustee, to institute such proceeding as Trustee under the 2027 Notes and the 2027 Indenture, the Trustee has failed to institute such proceeding within 45 days after receipt of such notice and the Trustee, within such 45-day period, has not received directions inconsistent with such written request by holders of a majority in aggregate principal amount of the outstanding 2027 Notes. Such limitations do not apply, however, to a suit instituted by a holder of a 2027 Note for the enforcement of the payment of the principal of and premium, if any, or interest on such 2027 Note on or after the respective due dates expressed in such 2027 Note.
During the existence of an Event of Default, the Trustee is required to exercise such rights and powers vested in it under the 2027 Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. Subject to the provisions of the 2027 Indenture relating to the duties of the Trustee, whether or not an Event of Default shall occur and be continuing, the Trustee under the 2027 Indenture is not under any obligation to exercise any of its rights or powers under the 2027 Indenture at the request or direction of any of the holders of the 2027 Notes unless such holders shall have offered to the Trustee security or indemnity satisfactory to it. Subject to certain provisions concerning the rights of the Trustee, the holders of a majority in aggregate principal amount of the outstanding 2027 Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under the 2027 Indenture.
If a Default or an Event of Default occurs and is continuing and is known to the Trustee, the Trustee shall deliver to each holder of the 2027 Notes notice of the Default or Event of Default within 90 days after
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obtaining knowledge thereof. Except in the case of a Default or an Event of Default in payment of principal of and premium, if any, or interest on any 2027 Notes, the Trustee may withhold the notice to the holders of such 2027 Notes if the Trustee, in good faith, determines that withholding the notice is in the interest of the noteholders.
The Company is required to furnish to the Trustee annual statements as to the performance by the Company of its and its Restricted Subsidiaries' obligations under the 2027 Indenture and as to any default in such performance.
No Liability for Certain Persons
No director, officer, employee or stockholder of Holdings or the Company, nor any director, officer or employee of any Subsidiary Guarantor, as such, will have any liability for any obligations of the Company or any Guarantor under the 2027 Notes, the guarantees thereof or the 2027 Indenture based on or by reason of such obligations or their creation. Each holder by accepting a 2027 Note waives and releases all such liability. The foregoing waiver and release are an integral part of the consideration for the issuance of the 2027 Notes. Such waiver may not be effective to waive liabilities under the federal securities laws.
Legal Defeasance and Covenant Defeasance
The Company may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an officers' certificate, elect to have all of its obligations discharged with respect to the outstanding 2027 Notes and all obligations of the Guarantors discharged with respect to their guarantees of such 2027 Notes ("Legal Defeasance") except for:
In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the 2027 Indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the 2027 Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the 2027 Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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Satisfaction and Discharge
The 2027 Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the 2027 Notes as expressly provided for in the 2027 Indenture) as to all outstanding 2027 Notes when:
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the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the 2027 Notes not theretofore delivered to the Trustee for cancellation, for principal of and premium, if any, and interest on the 2027 Notes to the date of deposit (in the case of the 2027 Notes that have become due and payable) or to the maturity or redemption date, as the case may be, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
Amendments and Waivers
From time to time, the Company and the Trustee may, without the consent of the holders of any of the outstanding 2027 Notes, amend, waive or supplement the 2027 Indenture, the 2027 Notes or the guarantees for certain specified purposes, including, among other things, curing ambiguities, omissions, mistakes, defects or inconsistencies, conforming any provision to any provision under the heading "Description of the Reopened 2027 Notes," qualifying, or maintaining the qualification of, the 2027 Indenture under the Trust Indenture Act, making any change that does not adversely affect the rights of any holder of the 2027 Notes, adding Guarantees or releasing or discharging Guarantees in accordance with the terms of the 2027 Indenture, providing for uncertificated 2027 Notes in addition to or in place of certificated 2027 Notes, making such provisions as necessary (as determined in good faith by the Company) for the issuance of Additional Notes or evidencing and providing for the acceptance and appointment under the 2027 Indenture of a successor Trustee pursuant to the requirements thereof. Other amendments and modifications of the 2027 Indenture, the 2027 Notes or the guarantees may be made by the Company and the Trustee with the consent of the holders of a majority of the aggregate principal amount of the outstanding 2027 Notes; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding 2027 Note affected thereby:
The Trustee
The 2027 Indenture provides that, except during the continuance of an Event of Default, the Trustee thereunder will perform only such duties as are specifically set forth in the 2027 Indenture. If an Event of
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Default has occurred and is continuing, the Trustee will exercise such rights and powers vested in it under the 2027 Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.
The 2027 Indenture and provisions of the Trust Indenture Act incorporated by reference therein contain limitations on the rights of the Trustee thereunder, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions; provided, however, that if it acquires any conflicting interest (as defined in such Act) it must eliminate such conflict or resign.
We maintain banking and lending relationships in the ordinary course of business with the Trustee and its affiliates.
Governing Law
The 2027 Indenture and the 2027 Notes are governed by the laws of the State of New York, without regard to the principles of conflicts of law.
Additional Information
Anyone who receives this prospectus supplement may obtain a copy of the 2027 Indenture without charge by writing to United Rentals, Inc., 100 First Stamford Place, Suite 700, Stamford, CT 06902, Attention: Corporate Secretary.
Book-Entry, Delivery and Form
The 2027 Notes will be issued in the form of one or more registered global notes (the "Global Notes"). The Global Notes will be deposited upon issuance with the Trustee as custodian for DTC, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in certificated form ("Certificated Notes") except in the limited circumstances described below. See "Exchange of Global Notes for Certificated Notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.
Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants, which may change from time to time.
Depository Procedures
The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Company takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the underwriters), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants.
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The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by it:
Investors in the Global Notes who are Participants in DTC's system may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations which are Participants in such system. All interests in a Global Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on behalf of the Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Notes will not have 2027 Notes registered in their names, will not receive physical delivery of 2027 Notes in certificated form and will not be considered the registered owners or "holders" thereof under the 2027 Indenture for any purpose.
Payments in respect of the principal of, and interest and premium, if any on, a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the 2027 Indenture. Under the terms of the 2027 Indenture, the Company and the Trustee will treat the Persons in whose names the 2027 Notes, including the Global Notes, are registered as the owners of the 2027 Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:
DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the 2027 Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of 2027 Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the 2027 Notes, and the
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Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to be taken by a holder of the 2027 Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the 2027 Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the 2027 Notes, DTC reserves the right to exchange the Global Notes for legended 2027 Notes in certificated form, and to distribute such 2027 Notes to its Participants.
None of the Company, the Trustee and any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes if:
Any Global Note that is exchangeable as above is exchangeable for certificated notes issuable in authorized denominations and registered in such names as DTC shall direct.
Same Day Settlement and Payment
The Company will make payments in respect of the 2027 Notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. The Company will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder's registered address. The 2027 Notes represented by the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such 2027 Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a person:
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"Adjusted Treasury Rate" means, with respect to any redemption date, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after May 15, 2022, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month, except that if the period from the redemption date to May 15, 2022 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third business day immediately preceding the redemption date, plus 0.50%.
"Affiliate" means, with respect to any specified Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person.
"Applicable Premium" means with respect to any 2027 Notes at any redemption date, the greater of
"Asset Acquisition" means:
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition by the Company or any Restricted Subsidiary to any Person other than the Company or a Restricted Subsidiary of:
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other than, in the case of clauses (a), (b) or (c) above,
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the 2027 Notes of the applicable series, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease
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Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capitalized Lease Obligation."
"Average Life to Stated Maturity" means, with respect to any Indebtedness, as at any date of determination, the quotient obtained by dividing:
"Board of Directors" means the board of directors of a company or its equivalent, including managers of a limited liability company, general partners of a partnership or trustees of a business trust, or any duly authorized committee thereof.
"Capital Stock" means, with respect to any person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such person's capital stock or equity participations, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock and, including, without limitation, with respect to partnerships, limited liability companies or business trusts, ownership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, such partnerships, limited liability companies or business trusts.
"Capitalized Lease Obligation" means any obligation under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose of the 2027 Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP; provided that if GAAP shall change after the Issue Date so that a lease (or other agreement conveying the right to use property) that would not be classified as a capital lease under GAAP as in effect as of the Issue Date would be classified as a capital lease, then the obligations under such lease (or other agreement conveying the right to use any property) shall not be considered to be a Capitalized Lease Obligation.
"Cash Equivalents" means, at any time:
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"Change of Control" means the occurrence of any of the following events:
"Code" means the Internal Revenue Code of 1986, as amended.
"Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity most nearly equal to the period from the redemption date to May 15, 2022 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity most nearly equal to May 15, 2022.
"Comparable Treasury Price" means, with respect to any redemption date, if clause (ii) of the definition of "Adjusted Treasury Rate" is applicable, the average of three, or such lesser number as is given to the Company, Reference Treasury Dealer Quotations for such redemption date.
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"Consolidated Cash Flow Available for Fixed Charges" means, with respect to any Person for any period:
"Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the Company and its consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), on a consolidated basis, after eliminating:
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any person, the ratio of the aggregate amount of Consolidated Cash Flow Available for Fixed Charges of such person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available
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immediately preceding the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period being referred to herein as the "Four Quarter Period") to the aggregate amount of Consolidated Fixed Charges of such person for the Four Quarter Period.
The Consolidated Fixed Charge Coverage Ratio shall be calculated after giving pro forma effect to:
For purposes of this definition, whenever pro forma effect is to be given to any Investment, acquisition, disposition or other transaction, or the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness incurred or repaid, repurchased, redeemed, defeased or otherwise acquired, retired or discharged in connection therewith, the pro forma calculations in respect thereof (including without limitation in respect of anticipated cost savings or synergies relating to any such Investment, acquisition, disposition or other transaction that have been or are expected to be realized) shall be as determined in good faith by the chief financial officer or an authorized officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Protection Agreement applicable to such Indebtedness). If any interest bears, at the option of the Company or a Restricted Subsidiary, a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Indebtedness is being given pro forma effect, the interest expense on such Indebtedness shall be calculated by applying such optional rate as the Company or such Restricted Subsidiary may designate. If any Indebtedness that is being given pro forma effect was incurred under a revolving credit facility, the interest expense on such Indebtedness shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, subject to the definition of Capitalized Lease Obligation hereunder.
If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third person, the above clause shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or such Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness.
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"Consolidated Fixed Charges" means, with respect to any person for any period, the sum of, without duplication, the amounts for such period of:
"Consolidated Income Tax Expense" means, with respect to any person for any period, the provision for federal, state, local and foreign taxes (whether or not paid, estimated or accrued) based on income, profits or capitalization of such person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for any period, without duplication, the sum of:
"Consolidated Net Income" means, with respect to any person, for any period, the consolidated net income (or loss) of such person and its Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income, by excluding, without duplication:
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accounting in relation to the RSC Merger Transactions, the National Pump Transactions or any consummated acquisition and the amortization or write-off or removal of revenue otherwise recognizable of any amounts thereof, net of taxes, shall be excluded or added back in the case of lost revenue;
"Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less the sum of goodwill and other intangibles, net) which would appear on a consolidated balance sheet of the Company and its consolidated Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, and after giving effect to the acquisition or disposal of any property or assets consummated on or prior to such date and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of:
"Consolidated Non-cash Charges" means, with respect to any person for any period, the aggregate depreciation, amortization (including amortization of goodwill and other intangibles) and other non-cash expenses of such person and its Restricted Subsidiaries reducing Consolidated Net Income of such person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss).
"Control" when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "Controlling" and "Controlled" have meanings correlative to the foregoing.
"Credit Agreement" means the Second Amended and Restated Credit Agreement, dated as of March 31, 2015, among the Company and certain of its Subsidiaries, as Borrowers, Holdings and certain of its Subsidiaries, as Guarantors, United Rentals of Canada, Inc., as Canadian Borrower, United Rentals Financing Limited Partnership, as specified loan borrower, Bank of America, N.A., as agent, U.S. swingline lender and U.S. letter of credit issuer, Bank of America, N.A. (acting through its Canada branch), as Canadian swingline lender and Canadian letter of credit issuer, and the lenders and other financial institutions party thereto, together with the related documents (including any term loans and revolving loans thereunder, any guarantees and any security documents, instruments and agreements executed in connection therewith), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement, indenture or other instrument (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings
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and commitments at any time outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether to the same obligor or different obligors.
"Credit Facility" means one or more debt facilities or agreements (including the Credit Agreement and the Secured Notes), commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for, or acting as underwriters of, revolving loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), notes, debentures, letters of credit or the issuance and sale of securities including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith and in each case, as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreements, indentures or other instruments (and related documents) governing any form of Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments at any time outstanding or permitted to be outstanding under such facility or agreement or successor facility or agreement whether by the same or any other lender or holder of Indebtedness or group of lenders or holders of Indebtedness and whether the same obligor or different obligors.
"Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement with respect to currency values.
"Default" means any event that is, or after notice or passage of time or both would be, an Event of Default.
"Designated Non-cash Consideration" means the Fair Market Value of non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an officers' certificate which sets forth the Fair Market Value of the non-cash consideration at the time of its receipt and the basis for such valuation.
"Disinterested Member of the Board of Directors of the Company" means, with respect to any transaction or series of transactions, a member of the Board of Directors of the Company other than a member who has any material direct or indirect financial interest in or with respect to such transaction or series of transactions or is an Affiliate, or an officer, director or an employee of any Person (other than the Company, Holdings or any Restricted Subsidiary) who has any direct or indirect financial interest in or with respect to such transaction or series of transactions.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary other than a Foreign Subsidiary.
"Equipment Securitization Transaction" means any sale, assignment, pledge or other transfer (a) by the Company or any Subsidiary of the Company of rental fleet equipment, (b) by any ES Special Purpose Vehicle of leases or rental agreements between the Company and/or any Subsidiary of the Company, as lessee, on the one hand, and such ES Special Purpose Vehicle, as lessor, on the other hand, relating to such rental fleet equipment and lease receivables arising under such leases and rental agreements and (c) by the Company or any Subsidiary of the Company of any interest in any of the foregoing, together in each case with (i) any and all proceeds thereof (including all collections relating thereto, all payments and other rights under insurance policies or warranties relating thereto, all disposition proceeds received upon a sale thereof, and all rights under manufacturers' repurchase programs or guaranteed depreciation programs relating thereto), (ii) any collection or deposit account relating thereto and (iii) any collateral, guarantees, credit enhancement or other property or claims supporting or securing payment on, or otherwise relating to, any such leases, rental agreements or lease receivables.
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"Equity Offering" means a private or public sale for cash after the Issue Date by (1) the Company of its common Capital Stock (other than Redeemable Capital Stock and other than to a Subsidiary of the Company) or (2) Holdings of its Capital Stock (other than to the Company or a Subsidiary of the Company) to the extent that the net proceeds therefrom are contributed to the common equity capital of the Company.
"ES Special Purpose Vehicle" means a trust, bankruptcy remote entity or other special purpose entity which is a Subsidiary of the Company or Holdings (or, if not a Subsidiary of the Company or Holdings, the common equity of which is wholly owned, directly or indirectly, by the Company or Holdings) and which is formed for the purpose of, and engages in no material business other than, acting as a lessor, issuer or depositor in an Equipment Securitization Transaction (and, in connection therewith, owning the rental fleet equipment, leases, rental agreements, lease receivables, rights to payment and other interests, rights and assets described in the definition of Equipment Securitization Transaction, and pledging or transferring any of the foregoing or interests therein).
"Event of Default" has the meaning set forth under "Events of Default" herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid.
"Existing Securitization Facility" means the receivables facility established pursuant to the Third Amended and Restated Receivables Purchase Agreement, dated as of September 24, 2012, among United Rentals Receivables LLC II, as seller, Holdings, as collection agent, Liberty Street Funding LLC, as a purchaser, Gotham Funding Corporation, as a purchaser, Fairway Finance Corporation, as a purchaser, PNC Bank, National Association, as purchaser agent for itself and as a bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a purchaser agent and as a bank, SunTrust Bank, as a purchaser agent for itself and as a bank, Bank of Montreal, as a purchaser agent and as a bank, and The Bank of Nova Scotia, as administrative agent, as a bank and as a purchaser agent, as amended, modified or supplemented from time to time, and the other Transaction Documents under and as defined therein.
"Fair Market Value" means, with respect to any asset, the fair market value of such asset as determined by the Board of Directors of the Company in good faith, whose determination shall be conclusive and, in the case of assets with a Fair Market Value in excess of $200.0 million, evidenced by a resolution of the Board of Directors of the Company.
"Foreign Subsidiary" means any Restricted Subsidiary not created or organized under the laws of the United States or any state thereof or the District of Columbia.
"Foreign Subsidiary Holding Company" means any Subsidiary the primary assets of which consist of Capital Stock in (i) one or more Foreign Subsidiaries or (ii) one or more Foreign Subsidiary Holding Companies.
"Fuel Hedging Agreement" means any forward contract, swap, option, hedge or other similar financial agreement designed to protect against fluctuations in fuel prices.
"GAAP" means generally accepted accounting principles set forth in the Financial Accounting Standards Board codification (or by agencies or entities with similar functions of comparable stature and authority within the U.S. accounting profession) or in rules or interpretative releases of the SEC applicable to SEC registrants; provided that (a) if at any time the SEC permits or requires U.S. domiciled companies subject to the reporting requirements of the Exchange Act to use IFRS in lieu of GAAP for financial reporting purposes, the Company may irrevocably elect by written notice to the Trustee to so use IFRS in lieu of GAAP and, upon any such notice, references herein to GAAP shall thereafter be construed to mean (i) IFRS for periods beginning on and after the date of such notice or a later date as specified in such notice as in effect on such date and (ii) for prior periods, GAAP as defined in the first sentence of this
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definition and (b) GAAP is determined as of the date of any calculation or determination required hereunder; provided that (x) the Company, on any date, may, by providing notice thereof to the Trustee, elect to establish that GAAP shall mean GAAP as in effect on such date and (y) any such election, once made, shall be irrevocable. The Company shall give notice of any such election to the Trustee and the holders of the 2027 Notes.
"guarantee" means, as applied to any obligation:
The term "guarantee" used as a verb has a corresponding meaning.
"Guarantor" means Holdings and each Subsidiary Guarantor.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company's obligations with respect to the 2027 Notes on the terms provided for in the 2027 Indenture.
"Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Protection Agreement, Currency Agreement or Fuel Hedging Agreement.
"Holdings" means United Rentals, Inc., a Delaware corporation, and any permitted successor or assign.
"IFRS" means International Financial Reporting Standards and applicable accounting requirements set by the International Accounting Standards Board or any successor thereto (or the Financial Accounting Standards Board or any successor to such Board, or the SEC, as the case may be), as in effect from time to time.
"Indebtedness" means, with respect to any person, without duplication:
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liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the value of such property or asset (as determined in good faith by the Company) or the amount of the obligation so secured);
provided, however, that Indebtedness shall not include:
For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the 2027 Indenture, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Redeemable Capital Stock.
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