H&E Equipment Services amends loan, changing financial restrictions due to litigation loss

By Sara Rosenberg

New York, May 15 - H&E Equipment Services LLC amended its senior secured credit agreement, changing certain restrictive financial covenants and ratios. The amendment was sought after a $17 million loss from litigation.

In return, the Baton Rouge, La. equipment rental company paid lenders and amendment fee of $400,000.

In July 2000, BPS Equipment filed a complaint against the company, Robert W. Hepler, an executive officer, and other employees that alleged, among other things, breach of fiduciary duty, misappropriation of trade secrets, unfair trade practices, interference with prospective advantage and civil conspiracy.

On May 2 the court awarded the plaintiff damages totaling $15 million plus attorneys' fees.

During the quarter ended March 31, the company recorded a $17 million loss for the estimated damages and plaintiff's attorneys' fees.

"We were very surprised by the recent court order and opinion," said John Engquist, president and chief executive officer, in a news release. "Our intention is to appeal and vigorously contest this judgment. We have worked closely with our legal counsel and senior secured lenders to proactively respond to this situation, and are pleased to have reached a timely agreement with our senior secured lenders to address the impact on our senior secured credit facility."

As of March 31, the company had $77.9 million outstanding on its facility with an additional $67.4 million in available borrowings, based on the collateral value of the borrowing base assets.

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