Item 1.01
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Entry into a Material Definitive Agreement.
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$750,000,000 aggregate principal amount of 3.875% Senior
Secured Notes due 2027
On November 4, 2019, United Rentals (North
America), Inc. (“URNA”) completed an offering of $750,000,000 aggregate principal amount of its 3.875% Senior Secured
Notes due 2027 (the “Notes”). The Notes were sold pursuant to United Rentals, Inc. (“URI”) and URNA’s
shelf registration statement on Form S-3 (File No. 333-222683) (the “Registration Statement”) previously filed with
the Securities and Exchange Commission (the “SEC”) under the Securities Act as supplemented by the final prospectus
supplement, dated as of October 21, 2019, and filed with the SEC on October 22, 2019.
The Notes were issued pursuant to an indenture
(the “Indenture”), dated as of November 4, 2019, among URNA, URI, certain domestic subsidiaries of URNA (the “Subsidiary
Guarantors” and, together with URI, the “Guarantors”), and Wells Fargo Bank, National Association, as trustee
and notes collateral agent.
The Notes mature on November 15, 2027 and
bear interest at a rate of 3.875% per year payable semi-annually in cash in arrears on November 15 and May 15 of each year. The
first such interest payment will be made on May 15, 2020.
The Notes are senior secured obligations
of URNA and rank equally in right of payment with all of URNA’s existing and future senior indebtedness, and senior to any
of URNA’s existing and future subordinated indebtedness. The Notes are effectively senior to all of URNA’s existing
and future unsecured senior indebtedness to the extent of the value of the collateral securing the Notes, effectively junior to
all of URNA’s existing and future first-priority lien indebtedness (including indebtedness under URNA’s senior secured
asset-based revolving credit facility and term loan credit facility) to the extent of the value of the collateral securing such
indebtedness and effectively junior to any of URNA’s other existing and future indebtedness that is secured by assets that
do not constitute collateral for the Notes to the extent of the value of such assets. The Notes are secured on a second-priority
basis by liens on substantially all of the assets of URNA that secure any first-priority lien obligations, subject to permitted
liens and certain exceptions.
The Notes are guaranteed on a senior secured
basis by the Guarantors. The guarantees are senior secured obligations of the Guarantors and rank equally in right of payment with
all of their existing and future senior indebtedness, and senior in right of payment to any of their existing and future subordinated
indebtedness. The guarantees are effectively senior to all existing and future unsecured senior indebtedness of the Guarantors
to the extent of the value of the collateral securing the Notes, effectively junior to all existing and future first-priority lien
indebtedness of the Guarantors (including guarantees under URNA’s senior secured asset-based revolving credit facility and
term loan credit facility) to the extent of the value of the collateral securing such indebtedness, and effectively junior to any
other existing and future indebtedness of the Guarantors that is secured by assets that do not constitute collateral for the Notes
to the extent of the value of such assets. The guarantees are secured on a second-priority basis by liens on substantially all
of the assets of the Guarantors that secure any first-priority lien obligations, subject to permitted liens and certain exceptions.
The Notes are not guaranteed by URNA’s foreign subsidiaries or unrestricted subsidiaries.
URNA may redeem some or all of the Notes,
at its option, at any time on or after November 15, 2022, at the following redemption prices (expressed as percentages of principal
amount), plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period
beginning on November 15 of each of the years indicated below:
Year
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Redemption
Price
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2022
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101.938
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%
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2023
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101.292
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%
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2024
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100.646
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%
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2025 and thereafter
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100.000
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%
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At any time prior to November 15, 2022,
URNA may redeem some or all of the Notes at a price equal to 100% of the aggregate principal amount of the 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 November 15, 2022, URNA may, at its option, on one or more occasions, redeem up to 40% of the aggregate principal
amount of the Notes with the net cash proceeds of certain equity offerings at a price equal to 103.875% of the principal amount
of the Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date. Upon the occurrence of certain change
of control events during a period when the change of control offer to purchase provisions under the Indenture apply, URNA must
offer to repurchase the Notes at a price of 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if
any, to the purchase date.
The Indenture governing the Notes contains
certain covenants applicable to URNA and its restricted subsidiaries, including limitations on: (1) liens
and (2) mergers, consolidations and sale of assets. The Indenture governing the Notes also contains requirements relating
to additional subsidiary guarantors. Each of these covenants is subject to important exceptions and qualifications. In addition,
the requirements to provide subsidiary guarantees, to give further assurances and to make an offer to repurchase the notes upon
the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the Notes are
rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain
circumstances, another rating agency selected by URNA, provided at such time no default under the Indenture has occurred and is
continuing.
The Indenture provides for customary events
of default, including the following (subject to any applicable cure period): nonpayment, breach of covenants in the Indenture,
payment defaults under or acceleration of certain other indebtedness, failure to discharge certain judgments and certain events
of bankruptcy, insolvency and reorganization. If an event of default occurs or is continuing, the trustee or the holders of at
least 30% in aggregate principal amount of the Notes then outstanding may declare the principal of, premium, if any, and accrued
and unpaid interest, if any, to be due and payable immediately.
The description above is qualified in its
entirety by the Indenture (including the Form of Note for the Notes), which is filed as Exhibit 4.1 to this current report on Form
8-K and is incorporated by reference into this Item 1.01.
Security Agreement
On November 4, 2019, URNA, URI and certain
subsidiaries of URNA and URI (collectively, the “Grantors”) entered into the Second Amended and Restated Security Agreement
(the “Security Agreement”) with Wells Fargo Bank, National Association, as trustee under the Notes and notes collateral
agent, pursuant to which the obligations of the Grantors under the Indenture are secured by the pledge and grant of security interests
contained in the Security Agreement. The Security Agreement will be effective November 20, 2019. On November 4, 2019, Wells Fargo
Bank, National Association also entered into a Secured Party Security Agreement Supplement, dated as of November 4, 2019, to the
Amended and Restated Security Agreement, dated as of March 26, 2015 and effective as of April 13, 2015, among URNA, the Grantors,
the trustee under the indenture, dated as of March 26, 2015, relating to URNA’s 4.625% Senior Secured Notes due 2023, and
Wells Fargo Bank, National Association, as notes collateral agent, as an Additional Second Lien Agent. The Notes are secured on
a second-priority basis by liens on the Grantors’ assets that secure URNA’s senior secured asset-based revolving credit
facility and term loan credit facility and any other first-priority lien obligations, subject to permitted liens and certain exceptions.
The description above is qualified in its
entirety by reference to the full text of the Security Agreement, which is filed as Exhibit 10.1 to this current report on Form
8-K and is incorporated by reference into this Item 1.01.