United Rentals issues 14% notes in exchange for series C, series D preferreds

By Angela McDaniels

Tacoma, Wash., June 10 - United Rentals, Inc. said it repurchased all of its outstanding series C preferred stock and series D preferred stock for a total of $679 million under a repurchase agreement with the holders.

A portion of the purchase price was paid with $425 million of new 14% notes due 2014, according to a company news release. These notes are callable at par at any time.

Prior to the repurchase, a majority of the preferred holders had the right to consent to some transactions made by the company, including a proposed Dutch auction tender offer under which the company plans to purchase up to 27.16 million shares of common stock.

Under the preferred repurchase agreement, the former preferred holders cannot participate in the tender offer. United Rentals said it plans to begin the tender offer within the next week.

In addition, Leon Black and Michael Gross, the two company directors elected by the former preferred holders under the terms of the series C preferreds, have resigned from the board.

"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. We believe that these transactions are in the best interests of our company and stockholders," chief executive officer Michael Kneeland said in the release.

A substantial majority of the preferreds was held by Apollo Investment Fund IV, LP and Apollo Overseas Partners IV, LP, the company noted.

United Rentals is an equipment rental company based in Greenwich, Conn.

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