United Rentals enters $4.5 billion amended credit facility with Bank of America

United Rentals , Inc. (NYSE:URI) and its subsidiaries entered into a Fifth Amended and Restated Credit Agreement with Bank of America N.A. and other lenders on Thursday. The agreement establishes a senior secured asset-based loan facility totaling $4.5 billion, replacing the company’s previous credit arrangement.

According to a press release statement, the facility provides for borrowings in multiple currencies, including U.S. dollars, Canadian dollars, euros, sterling, and other approved currencies. Of the total facility, $175 million is available exclusively to Australian and New Zealand borrowers. The agreement also allows for potential incremental increases in the facility, subject to certain conditions.

As of the close of business on Wednesday, United Rentals had drawn approximately $2.05 billion 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. This new facility adds to the company’s total debt of approximately $14 billion, which InvestingPro analysts note is being managed at moderate levels relative to the company’s $15.6 billion in annual revenue and $4.5 billion in EBITDA.

The credit agreement includes several sub-limits: $250 million for Canadian revolving loans, $125 million for rest-of-world revolving loans, $150 million for U.S. swingline loans, and additional sub-limits for Canadian, rest-of-world, Australian, New Zealand, and European swingline loans. There is also a combined $300 million sub-limit for letters of credit.

Interest rates on borrowings under the facility vary based on the currency and type of loan, with margins ranging from 0% to 1.25% over benchmark rates such as Term SOFR, SONIA, EURIBOR, or Term CORRA. The unused portion of the facility is subject to a 0.20% fee.

The agreement is secured by first priority security interests in substantially all tangible and intangible assets of the company’s U.S. and certain non-U.S. subsidiaries, subject to specified exceptions.

The facility contains covenants that restrict activities such as incurring additional debt, making certain payments, and entering into mergers or acquisitions. A financial covenant requires maintaining a minimum fixed charge coverage ratio if availability under the facility falls below a specified threshold.

This report is based on a statement from a United Rentals, Inc. press release filed with the Securities and Exchange Commission. For deeper insights into URI’s financial position and 13 additional ProTips, including detailed debt analysis and valuation metrics, explore the comprehensive Pro Research Report available on InvestingPro, covering what really matters for smarter investment decisions.

In other recent news, United Rentals has made significant strides with the launch of Workspace Ready Solutions, offering customizable packages for mobile offices and container offices at construction sites. This new service provides project managers with a range of accessories, including furniture and appliances, ensuring that workspaces are fully equipped upon delivery. Additionally, United Rentals has garnered attention from analysts, with KeyBanc Capital Markets upgrading the company’s stock rating to Overweight and setting a price target of $865. This upgrade follows the company’s presentation of its business strategies and growth potential at a recent event.

JPMorgan has also raised its price target for United Rentals to $920, maintaining an Overweight rating. The firm expressed confidence in the company’s growth trajectory, particularly within its Specialty segment, which accounts for a significant portion of rental revenues. Bernstein, on the other hand, maintained a Market Perform rating with a $666 price target, emphasizing the company’s strategic initiatives to drive specialty rental penetration.

Furthermore, BofA Securities increased its price target to $790, retaining a Buy rating and highlighting the competitive advantage of the company’s Specialty segment. The emphasis on this segment, which has shown a strong growth rate over the last decade, is seen as a key differentiator for United Rentals in the rental equipment sector. These recent developments underscore United Rentals’ strategic focus and potential for continued growth in its Specialty rentals space.

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