NationsRent has emerged from Chapter 11 bankruptcy as a privately held company with an $80 million capital infusion from The Baupost Group and a new $150 million revolver from Wachovia Bank and GE Capital. Ft. Lauderdale, Fla.-based NationsRent filed for bankruptcy in December 2001. The Baupost Group and Phoenix Rental Partners--formed by Bryan Rich and Douglas Suliman with the explicit purpose of acquiring NationsRent's debt securities--started buying up the company's bank debt in June 2002, explained John Scherer, treasurer of NationsRent. The claims of the company's pre-petition senior secured lenders and general unsecured creditors have now been converted into new equity, he said.
Approximately two-thirds of the company's new equity is controlled by Baupost and Phoenix, about 5% is owned by unsecured lenders, and the remaining portion of its equity went to other pre-petition senior secured lenders in exchange for their debt. The construction equipment rental company's $275 million of old unsecured debt had a 5% recovery rate, but the old $750 million secured credit facility had a 95% recovery rate, Scherer said. The company's significant off-balance sheet obligations were restructured as cash outs and taken down to fair market value, he added.
The new $150 million revolver is priced at LIBOR plus 41/4%. FleetBoston Financial and Deustche Bank led the pre-petition $750 million credit facility, which was priced at LIBOR plus 3%. Fleet also led the company's $55 million debtor-in-possession (DIP) financing, which was immediately paid off upon emergence from bankruptcy without tapping the new $150 million revolver. Scherer explained that Wachovia and GE were chosen for the new deal because the new facility is an asset-backed loan, and "Wachovia and GE are more of premier banks in the asset-backed loan market."