Ahern to start borrowing on bankruptcy loan to pay debt

Following the news that one of North America's largest independent rental companies, Las Vegas-based Ahern Rentals, has filed for Chapter 11 bankruptcy in order to restructure around $500 million in debt, Dow Jones News services has reported that the company can begin tapping a $350 million bankruptcy loan from its big-bank lenders, mostly to pay off some of its debt.

Ahern filed for Chapter 11 protection in order to restructure its new debt. The company said that if it receives final approval of the $350 million loan, it will use $252 million of the money to pay off a revolving loan.

The company, which has more than 70 depots across the US, filed because it failed to extend the maturity of its revolving credit facility, which had a maturity date of August 21, 2011. Since the maturity date passed, its bank has continued to fund the company while negotiations for an extension to the credit line continued.

Ahern intends to continue its business operations throughout the administration of the Chapter 11 and to honour all of its existing customer, vendor and employee commitments without interruption. Subject to bankruptcy court approval, the company will use the DIP financing to meet its working capital needs during the reorganization process.

"We anticipate there being no interruption to our operations," said chief executive officer Don Ahern. "With our DIP facility, we will have sufficient liquidity to meet our commitments to our customers, vendors and employees. We have been experiencing a significant improvement in our business, with a substantial increase in our utilization levels and improved margins. The company provides a valuable service for its customers, and we do not expect the bankruptcy filing to affect our margins. We do not expect the bankruptcy filing to affect our ability to continue to offer customers highly reliable and quality equipment and service. It is business as usual, and we anticipate no impact to our customers, vendors and employees."

Ahern Rentals has filed a series of motions in the bankruptcy court seeking to ensure that it will not have any interruption in maintaining and honouring all of its commitments to its current customers, vendors and employees during the reorganization process. The restructuring plan and related documents and agreements will be subject to approval by the bankruptcy court.