United Rentals bondholders reached a deal with the company to receive more than six times the amount in consent fees that the firm originally offered for the delay in filing its financial statements with the Securities and Exchange Commission. The company reached an agreement in principle with the bondholders' steering committee to pay note holders $16.25 for each $1000 in principal amount of notes. United Rentals originally offered to pay $2.50 for each $1000 in principal (CIN, 8/29).
The equipment rental company sought consent from note holders in August to change the indentures governing its bonds and convertible quarterly income preferred securities to allow it more time to make certain SEC filings. United Rentals announced in March it would delay reporting its 2004 results and the filing of its 10-K to review matters brought up by the SEC, which is investigating the company. By delaying the filing, the company breached indentures governing its bonds that require the timely filing of reports.
If the majority of note holders agree to the new terms, United Rentals would have until March 30, 2006 to file its financial statements with the SEC. During this time, the company would also have to provide monthly and quarterly unaudited financial operating information, including monthly revenues, capital expenditures, cash flow from operations, liquidity and outstanding debt.
Andrew Rahl, partner at law firm Anderson Kill & Olick, said United Rentals initially did not want to pay the steep increase in fees, but eventually gave in to the bondholders' demands. "Once it became apparent that we had successfully organized the majority of bondholders, which was key to their agreement, they saw it was more important to get a deal done than keep fighting against it," said Rahl.
A United Rentals spokesman said the new consent fees will have little financial impact on the company. He added the company cannot guarantee it will be able to file financial statements by the March 30 deadline. One of the reasons it cannot file financial reports is because of the SEC enquiry, which began in August 2004. "We can't give a deadline when the SEC inquiry will end. It is out of our control. Unless our auditors are comfortable the SEC won't find anything wrong, they will not sign off on the financial statements," said the spokesman. He added that the SEC has not given details of what it is investigating, other than that it is "a broad-based fact finding enquiry that is not confined to any issue."