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United Rentals , Inc. (NYSE:URI), a $52.9 billion market cap equipment rental giant with a GREAT financial health score according to InvestingPro, announced on Thursday that it has entered into a Fifth Amended and Restated Credit Agreement with Bank of America N.A. and other financial institutions. The agreement provides for a senior secured asset-based loan facility totaling $4.5 billion, subject to borrowing base availability.
According to the company’s press release statement filed with the SEC, the new facility replaces the previous senior secured asset-based loan arrangement. The agreement allows for borrowings in U.S. dollars and other approved currencies, including Canadian dollars, euros, and sterling. Of the total $4.5 billion, $175 million is allocated exclusively to borrowers in Australia and New Zealand.
The agreement also includes an uncommitted incremental increase option for the facility, potentially allowing United Rentals to expand the borrowing base by the greater of $2 billion or suppressed availability, along with certain other voluntary reductions or prepayments.
As of the close of business on Wednesday, approximately $2.05 billion was drawn under the facility, with about $2.43 billion available for additional borrowing, net of letters of credit and subject to borrowing base limitations.
The facility matures on July 10, 2030. It features sub-limits for various types of loans, including a $250 million sub-limit for Canadian revolving loans, $125 million for rest-of-world revolving loans, and other sub-limits for swingline loans and letters of credit. With a current ratio of 0.85 and a debt-to-equity ratio of 1.59, the company maintains a balanced approach to leverage while generating substantial EBITDA of $4.5 billion in the last twelve months.
Borrowings under the facility bear annual interest at variable rates depending on the currency and type of loan, with margins ranging from 0.000% to 1.250% above benchmark rates such as Term SOFR, EURIBOR, or the Canadian prime rate. The unused portion of the facility is subject to a 0.20% fee.
The agreement contains covenants restricting additional indebtedness, liens, dividends, investments, mergers, and other activities. It does not include ongoing financial covenants except for a minimum fixed charge coverage ratio that is tested only under certain conditions. For a comprehensive analysis of URI’s debt structure, financial health, and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks with expert insights and actionable intelligence.
The company and certain subsidiaries also entered into amended and restated security agreements in connection with this facility. This information is based on a press release statement included in a Form 8-K filing with the SEC.
In other recent news, United Rentals has entered into a $4.5 billion amended credit facility with Bank of America and other lenders. This new agreement replaces the previous credit arrangement and allows for borrowings in multiple currencies, with specific allocations for Australian and New Zealand borrowers. Meanwhile, United Rentals has launched Workspace Ready Solutions, providing customizable accessory packages for mobile and container offices at construction sites, ensuring they are fully equipped upon delivery. On the analyst front, KeyBanc Capital Markets upgraded United Rentals’ stock rating to Overweight, setting a price target of $865, highlighting the company’s market share gains and strategic advantages.
JPMorgan also increased its price target for United Rentals to $920, maintaining an Overweight rating, emphasizing the growth potential in the company’s Specialty segment. This segment is expected to see double-digit revenue growth driven by infrastructure project spending. Bernstein, on the other hand, maintained a Market Perform rating with a $666 price target, noting United Rentals’ aim to reach $7 billion in specialty revenue by 2028. The firm’s strategy includes increasing job site productivity and enhancing technology use on construction sites. These developments highlight United Rentals’ strategic initiatives and growth prospects in the rental market.
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