Ahern Asks for More Time to Get out of Bankruptcy; Maxim Crane’s Owner Poised for Take Over
According to Dow Jones Daily Bankruptcy Review, Ahern Rentals Inc. said it needs more time to develop a plan to get out of bankruptcy, as the construction equipment renter continues to deal with the effects of the housing market collapse.
Lawyers for Ahern said the company wants until Aug. 20 to file a plan without the threat of rival proposals and until Oct. 19 to poll its creditors on the plan. Without a court's approval of its request, Ahern's exclusive period to file its own plan and solicit votes would end in April and June, respectively.
"The Debtor has not yet had the opportunity to complete the evaluations which are necessary to the formulation of a plan," Ahern said in the filing.
A hearing on the company's request is set for April 3.
In court papers filed in support of the request, Ahern Chief Financial Officer Howard L. Brown said the company "has quickly transitioned into Chapter 11 with no impairment of its operations, and continues to generate positive cash flow on an operational level." He also cited a recent improvement in the housing market, the sustained recovery of which will play a vital role in any Ahern restructuring.
A judge earlier this year gave Ahern final approval to borrow on a $350 million bankruptcy loan from its lenders, including Bank of America Corp. Creditors had called the loan a "unduly burdensome" financing package that gave Bank of America too much control, but a judge overruled them. Ahern needed the financing to pay off a more than $250 million revolving loan, among other things.
Earlier this week, Bloomberg BusinessWeek reported that Platinum Equity LLC, Los Angeles, Calif., may be poised to take over Ahern Rentals if the company doesn’t file the court-ordered reorganization plan by the April deadline.
The reorganization plan is part of Ahern Rentals‘ bankruptcy filing last December. Ahern ranks seventh on Rental Equipment Register’s (RER) list of the country’s largest equipment-rental companies.
BusinessWeek quotes two unnamed investors as saying that Platinum will likely use its stake in the debt to take over. Platinum already runs equipment renter Maxim Crane Works LP, Pittsburgh, Pa., which it bought in 2008.
Ahern Rentals was founded in 1953 by the father of current president Don Ahern. By 2008, the Las Vegas-headquartered company had grown into a multi-state business with $382 million of annual revenue. From 2005 to 2008 Ahern doubled its debt to $611.2 million and added about 16,500 aerial lifts and other pieces of equipment. Then its plan to capitalize on a prospective building boom in Las Vegas backfired when construction all but died during the recession.
BusinessWeek quotes Ed Mally, head of institutional research at Imperial Capital LLC, an investment bank in New York, as saying that creditors likely would gain control of the equity in a reorganization.
Platinum Equity has said it plans to expand its equipment-rental business by buying competitors. In 2009, Louis Samson, who led Platinum’s 2008 buyout of Maxim, told RER, “Our ambitions are to be a consolidator. There’s no limit to our appetite.”