Ahern Rentals DIP loan approved; term lenders consent to financing

By Caroline Salls

Pittsburgh, Jan. 30 - Ahern Rentals, Inc. has entered into a stipulation under which a majority of its term loan lenders have consented to the company's use of cash collateral and to its debtor-in-possession financing, according to a Friday filing with the U.S. Bankruptcy Court for the District of Nevada.

According to a company news release, Ahern received court approval on Friday for DIP financing with about $66 million of availability.

As previously reported, Bank of America, NA is the administrative agent for the DIP financing.

Interest will be Libor plus 400 basis points.

The DIP loan will mature the earlier of March 2013 and the plan of reorganization effective date.

Ahern said in the court filing that it does not have enough available sources of working capital, including cash collateral, to operate its business without the use of pre-bankruptcy collateral, including the term lenders cash collateral, and the DIP financing.

As protection for their consent, the lenders will be entitled to first-lien adequate protection liens, first-lien superpriority claims, 18% interest on term loan obligations and payment of $48,803 of the term loan lenders' expenses.

Under the stipulation, the cash collateral use will terminate on the earliest of dismissal or conversion of Ahern's bankruptcy case, any liquidation or sale of the company's assets without lender consent, the date the company makes a payment not covered by the cash collateral budget, acceleration of the DIP loan obligations or related foreclosure, a breach of financial covenants, filing of a plan of reorganization that does not repay the term loan obligations in full and 11:59 p.m. ET on March 22, 2013.

The stipulation also requires Ahern to file a plan acceptable to the lenders within 360 days of its bankruptcy filing date. That plan must take effect within 440 days of the petition date.

According to the release, the company also received court approval for a series of other motions to ensure that it will not have any interruption in maintaining and honoring its commitments to its current customers, vendors and employees during the reorganization process.

"We anticipate there being no interruption to our operations," chief executive officer Don Ahern said in the release.

"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."

Ahern Rentals, a Las Vegas-based equipment rental company, filed for bankruptcy on Dec. 22. The Chapter 11 case number is 11-53860.

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