United Rentals announces Dutch auction tender offer for 31.4% of its common stock

By Lisa Kerner

Charlotte, N.C., June 10 - The board of directors of United Rentals, Inc. approved a modified Dutch auction tender offer for up 27.16 million shares, or about 31.4%, of the company's common stock at a price not less than $22.00 or greater than $25.00 per share for a maximum total of $679 million.

United Rentals said the low and high ends of the price range represent a 12.8% and 28.2% premium, respectively, to Monday's $19.50 closing price for the common stock.

The offer is expected to begin within the next week and is not conditioned on financing or any minimum number of shares being tendered, according to a United Rentals news release.

United Rentals also announced it has repurchased all of its outstanding series C preferred stock and series D preferred stock, a substantial majority of which was held by Apollo Investment Fund IV, LP and Apollo Overseas Partners IV, LP.

Under a definitive repurchase agreement, the total purchase price for the preferreds is approximately $679 million, and the former preferred stockholders are prohibited from tendering into the offer any shares of common stock they hold, the news release stated.

Company directors Leon Black and Michael Gross, elected by the former preferred holders, have resigned from the board as a result of United Rentals' repurchase of the preferreds.

"The removal of the preferred stock from our capital structure was a necessary step in proceeding with the tender offer and will give us greater flexibility in many respects," United Rentals chief executive officer Michael Kneeland said in the release.

On June 9, in anticipation of the share repurchases, United Rentals entered into a new $1.25 billion asset-based loan facility and repaid the approximately $464 million outstanding under the company's former revolving credit facility and term loan.

United Rentals is a Greenwich, Conn., equipment rental company with a network of 690 rental locations in 48 states, 10 Canadian provinces and Mexico.

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