H&E to buy Neff with $575 million of notes, $1.25 billion of ABL debt

By Devika Patel

Knoxville, Tenn., July 18 – H&E Equipment Services, Inc. will issue about $575 million of senior unsecured notes and borrow $1.25 billion under a new ABL facility in order to acquire Neff Corp. in a merger transaction valued at about $1.2 billion, including approximately $690 million of net debt.

The company also plans to issue $250 million of equity.

“The financial aspects of the Neff deal are very attractive and transformational,” chief financial officer Leslie S. Magee said on the company’s conference call announcing the transaction on Tuesday.

“We expect to finance the transaction with a balanced mix of borrowings on a new ABL credit facility, long-term debt and equity.

“What we intend to do, currently, is $1.25 billion in ABL, $575 million in senior unsecured notes and up to $250 million in equity.

“We believe this is an appropriate mix for our capital structure, enabling us to continue investing in growth.

“The $1.2 billion purchase price, including the $690 million net debt, will be paid in cash,” she said.

Magee said that the company will keep its current credit rating and expects to have leverage metrics of 3x by the end of 2018, which will fall to 2.5x by the end of 2019.

“We expect our current credit rating to be maintained through the use of equity to partially fund the transaction, our increased operating scale and our commitment to de-lever.

“Based upon a late third quarter closing, we anticipate leverage of approximately 3x based upon debt to adjusted EBITDA by the end of 2018 and further reduced to approximately 2.5x by the end of 2019,” she said.

Magee also noted that the deal is not contingent on the company obtaining financing, as Wells Fargo has committed to provide financial support.

“H&E has obtained committed financing from Wells Fargo in support of this transaction,” she said.

H&E will pay $21.07 in cash per Neff common share.

The transaction is expected to close in the late third quarter or early fourth quarter of 2017.

H&E is a heavy construction and industrial equipment services company based in Baton Rouge, La.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.