National Equipment Services Inc., a leading provider of specialty and general equipment to construction and industrial end-users, has announced that in order to reduce its debt and strengthen its competitive position, the company and its domestic subsidiaries have filed voluntary petitions for a reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The company also has received the support from the steering committee of its existing bank group through an agreement in principle with respect to the major elements of a restructured credit facility to provide exit financing upon emergence.
NES has also received a commitment for up to $30 million in debtor-in-possession (DIP) financing led by Wachovia Bank, National Association that will be used, if necessary, to fund post-petition operating expenses and to meet supplier and employee obligations.
President and Chief Executive Officer Joseph Gullion said, "NES is a solid company. It has a good portfolio of rental equipment, an excellent group of employees, and plenty of opportunities to grow.
Unfortunately, it has too much debt and the balance sheet needed to be fixed. While our company generates a lot of cash from operations, it was not enough to repay our debt maturity obligations under our existing credit agreement, which is scheduled to mature in July 2003."
The principal elements of the exit facility include extending the maturity of the bank debt for up to four years. The restructured facility also contemplates the conversion of the outstanding senior subordinated notes due 2004 into substantially all of the outstanding equity, which will reduce the total debt of the company by $275 million.
The company has been in discussions with an ad hoc committee of holders of the senior subordinated notes, which the company intends to continue following the filing. The company expects to file a reorganization plan in the next few weeks. The company contemplates that the plan will provide that a substantial portion of the company’s trade vendors will be paid in full following completion of the bankruptcy proceedings.
NES is the fourth largest company in the $25-billion equipment rental industry. The company focuses on renting specialty and general equipment to industrial and construction end-users. It rents more than 750 types of machinery and equipment, and distributes new equipment for nationally recognized original equipment manufacturers.
NES also sells used equipment as well as complementary parts, supplies and merchandise, and provides repair and maintenance services to its customers. In addition to the rental business NES is the second largest supplier of traffic and safety services to the construction industry. The company is a leading competitor in each geographic market it reaches, from its approximately 180 locations in 34 states and Canada.