Sunbelt Parent to Raise Capital, Seek U.S. Acquisitions

International rental giant Ashtead Group last week said it planned to raise about 212 million pounds — about $370 million U.S. — through an issue of loan notes and an open offer. Ashtead made the announcement while reporting full-year results that showed a continued recovery in profits driven by a strong construction market in the United States and a strong performance by its U.S. affiliate Sunbelt Rentals. Ashtead chief executive George Burnett added that Ashtead will continue an acquisition strategy in the United States, focusing on small acquisitions in southern states such as Texas and Arizona.

The group said it expects to raise about $122 million before expenses by placing 73.4 million ordinary shares at 95.5 pence per share. The company said it would raise another $250 million via the loan note issue.

Benefits of the refinancing, expected to begin August 3, include the early repayment of a convertible loan note from Rentokil, which Ashtead acquired several years ago, and redeeming up to 35 percent of existing senior loan notes, which carry interest at a rate of 12 percent, the company said.

Ashtead also reported full-year pretax profit of 16.4 million pounds — about $28.6 million — for the fiscal year ended April 30, compared with a loss the previous year of about 33.1 million pounds (about $57.7 million). Burnett said the company expects further progress in the coming year.

In the United States, where Ashtead makes most of its money, profits rose 48 percent year over year. And the strong oil market lifted the performance of the Ashtead Technology division, a supplier of rental equipment for environmental monitoring, which reported a 26-percent rise in annual profits.

Burnett added that Ashtead expects to capitalize on an expected construction boom in London, following last week’s announcement that the city will host the 2012 Olympic games.

In response to the announcements, Standard & Poor’s Ratings Services placed its B+ corporate credit and other ratings on Ashtead, with positive implication. Charlotte, N.C.-based Sunbelt Rentals is No. 4 on the RER 100.

TAGS: Syndicate
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