S&P puts H&E Equipment notes on watch

S&P said it placed its BB- issue-level rating on H&E Equipment Services Inc.'s $630 million 7% senior notes due 2022 on CreditWatch with negative implications following the company's announcement that it intends to acquire equipment rental provider Neff Corp. for a total enterprise value of about $1.2 billion.

“We expect that the company will finance the transaction with borrowings from its new $1.25 billion asset-based lending (ABL) credit facility, long-term unsecured debt, and by issuing up to $250 million of common equity,” S&P said in a news release.

The CreditWatch negative placement on the unsecured debt rating reflects the likelihood of lower recovery prospects for H&E's existing unsecured noteholders under the company's eventual capital structure after it acquires Neff, the agency said.

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