Section 1.01 Entering into a Material Definitive Agreement.
Fourth Amended and Restated Credit Agreement
On June 30, 2022, United Rentals, Inc. (“Entries”), United Rentals (North America)Inc. (the “Company”), United Rentals of Canada, Inc.a Canadian Borrower (as defined below), United Rentals International B.V.an RDM Borrower (as defined below), United Rentals SAS, a French Borrower (as defined below),
United Rentals Australia Pty Ltdan Australian Borrower (as defined below), United Rentals New Zealand, a New Zealand Borrower (as defined below) (with the WE The Borrowers (as defined below), Canadian Borrowers, ROW Borrowers, French Borrowers and any other ANZ Borrowers, the “Borrowers”) and certain other subsidiaries of Holdings have entered into a Fourth Amended and Restated Credit Agreement day (the “Fourth Amended Credit Agreement and Restated Credit Agreement”) with Bank of America NA. and other financial institutions named therein. The Fourth Amended and Restated Credit Agreement provides for a senior asset-based secured loan facility (the “ABL Facility”) of $4,250 million (subject to availability as part of a borrowing base), a portion of which is available for borrowing by Canadian borrowers, ROW borrowers and French borrowers, in Canadian dollars, Euros, British Pounds or in other approved alternative currencies, as applicable. An aggregate principal amount of $175 million (the “ANZ Tranche”) of $4,250 million available is only available to ANZ borrowers. The Fourth Amended and Restated Credit Agreement also provides for an additional uncommitted increase in the ABL Facility of up to the sum of (i) the greater of the following amounts: $1,500,000,000 and the Deleted Availability and (ii) the amount of any voluntary reduction of the Revolving Credit Commitments. The Fourth Amended and Restated Credit Agreement replaces the existing senior secured loan facility to which Holdings, the Company and certain of their subsidiaries are parties.
Holdings and each existing and future direct or indirect share WE subsidiary of Holdings (other than, inter alia, indirect WE subsidiaries held through foreign subsidiaries, securitization vehicles used under the existing securitization facility or any future holdings and Company securitization facility and certain immaterial subsidiaries (if any)) (the “WE Guarantors”) provide unconditional guarantees of the obligations of the Company and certain of its national subsidiaries (the “WE Borrowers”). In addition, the WE Guarantors and each of Holdings’ existing and future direct and indirect Canadian subsidiaries (excluding, among other things, special purpose entities used in connection with the existing securitization facility or any future securitization facility of Holdings and the and certain immaterial subsidiaries (if any) (the “non-WE Guarantors” and with the WE Guarantors, the “Guarantors”) provide unconditional guarantees of the obligations of Borrowers held under the laws of Canada (the “Canadian Borrowers”), borrowers organized under the laws of France (the “French Borrowers”), the Borrowers organized under the laws of Australia (the “Australian Borrowers”), Borrowers organized under the laws of New Zealand (the “New Zealand Borrowers” and, together with the Australian Borrowers, the “ANZ Borrowers”) and borrowers organized under the laws of any jurisdiction outside the WE, Canada, France, Australia Where New Zealand (the “ROW Borrowers”). In addition, the obligations of the Borrowers under the ABL Facility and the guarantees of the Guarantors are secured by first ranking security interests on substantially all of the tangible and intangible assets of the WE Guarantors, including pledges of all shares or other interests in direct subsidiaries held by the WE Guarantors (but only up to 65% of the voting shares of each direct foreign subsidiary owned by WE Guarantor in the event of a pledge guaranteeing the WE borrowers and WE obligations of the guarantors under the ABL facility). Assets of the type described in the preceding sentence of any non-WE Guarantor are also committed to guarantee the obligations of Canadian Borrowers, French Borrowers, ANZ Borrowers, ROW Borrowers and non-WE Guarantors under the ABL facility. Security and pledges are subject to certain exceptions.
The ABL Facility matures on June 30, 2027. As soon as the offices close on
June 29, 2022approximately $1,621 million was fired and the Borrowers had about $2,063 million available for additional borrowings under the ABL facility (net of letters of credit), subject to borrowing base limits.
The ABL installation includes a $250 million sub-limit for Canadian revolving loans and a $125 million sub-limit for ROW revolving loans. In addition, the ABL installation includes a $150 million sublimit for WE swingline loans, a $50 million sub-limit for Canadian swingline loans, a $25 million sub-limit for swingline ROW loans, a $15 million sub-limit for French swingline loans, and a $300 million combined sub-limit for letters of credit issued in the name of any Borrower or any subsidiary of the Company. The terms of the ABL facility allow increases in certain sub-limits, subject to the consent of the agent and/or the lender. Amounts drawn under the ABL facility bear interest annually (i) at the forward SOFR or daily SOFR rate (plus a 0.10% SOFR adjustment), at the SONIA rate or at the EURIBOR rate (or, in the case of borrowings denominated in Canadian dollars, at the BA rate) plus a margin of 1.125% to 1.375%, (ii) at a base rate (equal to the higher of the Bank of America, NA prime rate, federal funds rate plus 0.5% and 30-day forward SOFR plus 1.0%) plus a margin of 0.125% to 0.375%, (iii) at a foreign base rate plus a margin of 1.125% to 1.375% or (iv ) the Canadian prime rate (equal to the greater of Bank of America, NA prime rate and 30-day BA rate plus 1.0%) plus a margin of 0.125% to 0.375%. Interest rate margins are subject to adjustments depending on the utilization of the facility. The initial margins for borrowings under the ABL facility are 1.125% in the case of SOFR (or BA) term loans and foreign base rate loans and 0.125% in the case of base rate loans and Canadian loans at prime rate. The unused line charge payable on the unused portion of the ABL facility is 0.20%. Borrowers have also agreed to pay customary letter of credit fees.
The ABL Facility contains a number of covenants which, among other things, limit or restrict the ability of Holdings and its subsidiaries to incur additional indebtedness; contract additional privileges; make dividends and other restricted payments; make investments; participate in mergers, acquisitions and divestitures; make optional prepayments of other debts; engage in transactions with affiliates; enter into restrictive agreements; and use the product. The ABL Facility does not include any financial covenant, other than a spring covenant to maintain a minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a rolling four quarter basis from the last day of each quarter, which will be tested only when the availability specified under the ABL facility falls below 10% of the maximum amount of the revolver. The Fourth Amended and Restated Credit Agreement contains customary events of default. If an event of default occurs, the lenders have the right to accelerate the advances made thereunder and to exercise rights on the security.
Holdings, in consultation with a Sustainability Structuring Agent, may establish Key Performance Indicators (“KPIs”) with respect to certain environmental, social and governance objectives of the Borrowers and their respective Subsidiaries, which, in the event of mutual agreement, may be incorporated into the Fourth Amended and Restated Credit Agreement by way of amendment (an “ESG Amendment”). Upon entry into force of an ESG amendment, the commitment fee, applicable revolving loan spreads and letter of credit fees may be increased or decreased within certain limits based on performance against KPIs.
On June 30, 2022in connection with the Fourth Amended and Restated Credit Agreement, Holdings, the Company and certain subsidiaries of Holdings have entered into a Fourth Amended and Restated Credit Agreement WE security agreement and reaffirmed its third amended and restated agreement WE Contract of guarantee, in each case, with Bank of America, North America., as agent. Also on June 30, 2022under the fourth amended and restated credit agreement, United Rentals of Canada, Inc. entered into a fourth amended and restated Canadian warranty agreement and confirmed its third amended and restated Canadian warranty agreement, in each case, with
Bank of America, North America., as agent.
The foregoing summary is qualified in its entirety by reference to the full text of the Fourth Amended and Restated Credit Agreement and related Security Agreements, which are attached hereto. All capitalized terms not defined herein are defined in the full text of the Fourth Amended and Restated Credit Agreement and related Security Agreements, which are attached hereto.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a
Off-Balance Sheet Arrangement of a Registrant.
The information set out in point 1.01 above is incorporated by reference in this point 2.03.
Item 9.01 Financial statements and supporting documents.
10.1 Fourth Amended and Restated Credit Agreement, dated as of June 30,
2022, among United Rentals, Inc., United Rentals (North
America), Inc., certain subsidiaries of United Rentals, Inc. and
United Rentals (North America), Inc., United Rentals of Canada, Inc.,
United Rentals International B.V., United Rentals S.A.S., United
Rentals Australia Pty Ltd, United Rentals New Zealand, Bank of America
N.A., and the other financial institutions named therein.
10.2 Fourth Amended and Restated U.S. Security Agreement, dated as of
June 30, 2022, among United Rentals, Inc., United Rentals (North
America), Inc., certain subsidiaries of United Rentals, Inc. and
United Rentals (North America), Inc. and Bank of America, N.A., as
10.3 Fourth Amended and Restated Canadian Security Agreement, dated as of
June 30, 2022, among United Rentals of Canada, Inc. and Bank of
America, N.A., as agent.
104 The cover page from this Current Report on Form 8-K, formatted in
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