The renewed facility carries pricing of LIBOR plus 200bp to 250bp depending on leverage, 1% lower than the pricing applicable to the existing $1.3bn of commitments that were to mature in November 2013.  Initial drawings under the renewed facility are at LIBOR plus 225bp.

Ashtead also announces that its subsidiary, Ashtead Holdings PLC, has today notified the trustee for its $250 million 8.625% senior secured notes, due August 2015 (“the 2015 Notes”) that it will redeem in full the outstanding 2015 Notes on 28 April 2011.

Over the 2008 to 2010 period the Group reduced outstanding debt by around one-third, principally from organic cash generation.  Given this reduction and following the renewal of the senior credit facility until 2016, the Board has decided to redeem the 2015 Notes early in order to rebalance the mix of Ashtead’s senior and junior debt.  This reflects the Board’s expectation that the Group has now reached a size and scale where cash generation can largely fund organic growth and hence that net debt can remain broadly unchanged over the next phase of the cycle¹.

As a consequence of these steps, Ashtead expects to record an exceptional financing cost of approximately £22 million in the fourth quarter of the current fiscal year.  This comprises the early redemption call premium of approximately £7 million payable in cash on 28 April 2011 to holders of the 2015 Notes being redeemed and approximately £15 million for the non-cash write off of the remaining unamortised balance of deferred debt raising costs on the existing senior credit facility and 2015 Notes.

Following the redemption, the Group’s total debt at 30 April 2011 is expected to comprise around $750 million drawn under the senior loan facility together with the 9% $550 million 2016 senior secured note issue and around $5 million of finance lease debt, a total of $1.3 billion or around £800 million.  Excess availability on the asset based facility is estimated to be around $475 million once the redemption of the $250 million 2015 Notes has been concluded.  The renewed senior credit facility and all of the Group’s debt remain effectively free from any financial covenants whilst excess availability exceeds 12% of facility size or $168 million.

Geoff Drabble, chief executive, commented:

“We continue to demonstrate that our strong financial structure is appropriate to all phases of the economic cycle.  We are pleased with the good support we received from our senior lenders in agreeing to the renewed senior loan facility with total commitments received of $1.9 billion, a 37% oversubscription.  The resulting five year average maturity across all our debt and our still strong availability provide us with the balance sheet flexibility and strength required to enable our businesses to succeed and prosper in the years ahead.”


Contacts:

Geoff Drabble - Chief executive
020 7726 9700

Ian Robson - Finance director
020 7726 9700
            
Brian Hudspith - Maitland
020 7379 5151
 

Notes

1. The Board’s expectation that net debt can remain broadly unchanged over the next phase of the cycle assumes the current $1.60 dollar sterling exchange rate, current capital expenditure plans and ignores the impact of possible larger scale M&A.
2. At 31 January 2011, drawn debt under the asset based senior loan facility was $485 million.  At the same date Ashtead also had $800 million outstanding in respect of its 2015 and 2016 senior secured notes and $5 million of finance lease debt.
3. There are no changes in the renewed senior loan facility to the financial covenants which apply if excess availability falls below 12% of the facility size or $168 million which are (i) funded debt to EBITDA before exceptionals must not exceed 4.0 times and (ii) the fixed charge coverage ratio must exceed 1.1 times.  Both financial covenants are measured at a fixed exchange rate to protect against the risk of currency fluctuations impacting covenanted performance.
4. The other material terms and conditions of the renewed facility are also broadly unchanged except that lenders have extended their conditional pre-approval of acquisitions to encompass all rental businesses not just those in the US, UK and Canada.
5. The principal lenders under the renewed senior credit facility are Bank of America, Wells Fargo, GE Capital, Deutsche Bank, Citi, JPMorgan, LloydsTSB, Barclays, RBS, UBS, and HSBC
6. The redemption of the 2015 Notes will be effected in accordance with the terms of the indenture governing the 2015 Notes at the required redemption price of 104.313% of the principal amount of the 2015 Notes plus accrued and unpaid interest.  A separate formal Notice of Redemption is being released by Ashtead Holdings PLC today.