RERMAG

INDUSTRY NEWS

Apollo Ups Stake in United NEW YORK- Overshadowed by the Atlas Copco play for Rental Service Corp. a day earlier, Apollo Management agreed June 29 to increase its stake in United Rentals to about 16 percent.

Apollo will purchase $100 million of Series B perpetual preferred stock, which is convertible into 3.3 million shares of United common stock at $30 per share, or a 3.5 percent stake in United.

In January, the New York investment firm led by Leon Black bought $300 million of Series A perpetual preferred stock, which represents a stake of 12.5 percent in United, if converted.

In other news, Standard & Poor's has affirmed its positive outlook for United and removed it from CreditWatch, where it was placed April 5.

United's ability "to sustain profitable growth and integrate acquired operations, combined with maintenance of a supportive capital structure, could lead to an upgrade in the next few years," Standard & Poor's said.

Ahern Rentals Adds Three Branches LAS VEGAS- Ahern Rentals, based here, recently opened branches in Sacramento and Bellflower, Calif., and Phoenix, owner Don Ahern told RER. Ahern said the moves were long planned as outlets for large quantities of equipment the company had acquired to service major Las Vegas construction projects.

Ahern operated on-site trailers and was the preferred equipment provider for the construction of the Mandalay Bay, Venetian and Paris hotel casinos. With those jobs either complete or nearing completion, Ahern needed outlets for 1,500 pieces of equipment, 1,200 of which were aerial work platforms.

Ahern added that the company, which now has 16 locations, plans to open three more branches in Arizona and northern California in the coming months. He added, however, that he has no plans to make acquisitions or expand beyond the Southwest.

"We'll go where our relationships take us and might go east if a customer wants us to set up an on-site trailer, but we plan to continue to be a southwestern company," Ahern said.

Ahern Rentals, No. 18 on the RER 100 with 1998 rental volume of $44.1 million, now has nine branches in Nevada, four in California and one each in Colorado, Arizona and Utah.

NES to Buy The Plank Co. HOUSTON- National Equipment Services has agreed to buy underground construction equipment rental specialist The Plank Co., RER has learned.

Employees of The Plank Co., based here, were recently notified that the owners of the 22-location rental company signed a letter of intent to sell to NES, ranked No. 7 on the RER 100. Owner Mike Plank could not be reached for comment; officials at Evanston, Ill.-based NES declined to comment.

The Plank Co. has seven locations in Texas, four in Florida, four in California, three in Washington, two in Oregon, and one each in Louisiana and Nevada.

Terms of the deal were not available.

ICM Parent Buys Head & Engquist NEW YORK- The same private equity investment firm that recently bought ICM Equipment Co. has acquired Baton Rouge, La.-based distributor and rental house Head & Engquist Equipment.

Terms of the sale to leveraged buyout specialist Bruckman, Rosser, Sherrill & Co. were not disclosed.

BRS plans to merge Head & Engquist - which operates 17 equipment sales and rental locations in Arkansas, Louisiana, Tennessee and Texas - with Salt Lake City-based ICM, which has 17 locations in Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Washington.

"We're working together very closely to synergize whatever we can," said ICM president and COO Gary Bagley, who said current management would remain at both companies. "It is going to take another eight to 10 weeks to officially merge the companies."

BRS acquired ICM Equipment from Ripplewood Holdings in May.

Former Prime Owner Invests in NationsRent FORT LAUDERDALE, Fla.- Nations-Rent has raised $400 million in capital through two major sources, including an equity investment from Investcorp., a global investment firm that previously owned Prime Equipment.

New York-based Investcorp. has agreed to buy $100 million of perpetual convertible preferred stock from NationsRent. After completing the transaction, Investcorp. will own about 20 percent of the Fort Lauderdale, Fla.-based rental company. A private placement of $78 million was completed last month, with the remaining $22 million funded upon shareholder approval.

According to NationsRent officials, the company has also increased its senior credit facilities by $300 million. Including the Investcorp. equity investment, NationsRent now has about $455 million available to fund its growth strategy, officials said. The company has a backlog of letters of intent and definitive agreements to acquire seven rental companies with 25 locations, representing about $125 million in annual revenue. It expects to complete these acquisitions shortly.

Investcorp. acquired Houston-based Prime Equipment in 1994 for about $300 million. After taking the company public in 1996 and doubling its annual revenues, Investcorp. sold Prime to Swedish manufacturer Atlas Copco AB for $1.16 billion. Atlas Copco has reached an agreement to acquire Scottsdale, Ariz.-based Rental Service Corp., which came close to merging with NationsRent earlier this year.

NationsRent is No. 8 on the RER 100, with 1998 rental volume of $150.1 million.

HERC Acquires Wisconsin Rental Firm MADISON, Wis.- Hertz Equipment Rental Corp. last month acquired three-location A&E Equipment Co., from Glenn Mueller and Kim Reed.

A&E, based here, with branches in Appleton and Green Bay, Wis., had 1998 net revenue of $1.8 million, according to HERC, which said it will operate the newly acquired locations under the name Hertz A&E.

Both Mueller and Reed, who acquired A&E in 1985, will continue with HERC.

"This acquisition will help provide Hertz Equipment with a stronger local presence in eastern and southern Wisconsin, complementing our existing location in Milwaukee," said HERC president Gerry Plescia.

Park Ridge, N.J-based HERC, No. 2 on the RER 100, has more than 235 outlets in North America.

Fragmented Industry Reflected in Salaries MALIBU, Calif.- Despite the unprecedented and ongoing consolidation of equipment rental businesses, the industry as a whole remains highly fragmented, and so does its salaries, according to the 1999 Rental Industry Salary Report available from RER Research.

Most rental companies still serve a single local market (76 percent) and generate less than $1 million in annual revenue (40 percent), according to the report, which looks at salaries for 13 job titles, broken down by region, revenue, number of locations and employees.

Consolidation's impact on the industry is significant, however, as almost one of every four locations is now part of a regional or national operation, and about one in five belongs to a company with at least $10 million in annual revenue. Equally telling: About 12 percent are part of a network of 10 or more locations.

The fragmented - and changing - profile of the industry accounts for a wide range of salaries at similarly defined positions. They vary significantly by company revenue, with the gap most pronounced among the top-paying positions.

Presidents/CEOs at the largest rental companies ($30 million-plus in revenue), for example, earn about four times more than their counterparts at the smallest companies (under $1 million). Controllers, vice presidents/sales and regional/general managers are paid up to three times more at the largest companies.

Salary levels increase with company revenue at every position, though to a lesser degree for non-executive titles. Most positions - including delivery drivers, branch managers, counterpersons, service technicians and inside sales reps - earn salaries that are between 50 percent and 75 percent higher atthe largest companies than the smallest.

By region, the Northeast claims the highest average salaries for eight of the 13 surveyed positions, though salaries in the Central and West regions are within 5 percent of the Northeast for almost all titles. The lowest average salary can be found in the South for all but one job title - regional/general managers, who earn more in the South than in any other region.

The 36-page 1999 Rental Industry Salary Report is available from RER Research for $99. For more information, call 800/543-4116 and ask for customer service.

Mexican Cat Dealer To Expand Rentals MONTERRE, Mexico- YMaquinarias Diesel S.A., a Caterpillar dealer based here, is expanding into lighter equipment and installing the Cat Rental Store program in its branches. The company, more widely known as Madisa, already rents compaction and earthmoving equipment.

According to sources, Madisa is planning to invest $15 million in new equipment this year after a 1998 revenue increase of more than 50 percent to $153 million (U.S.) Madisa, which has 11 locations in northern Mexico and one in McAllen, Texas, earns about half its revenue from the mining sector.

UpRight Absolved in Lift Tipover Death OAKLAND Calif - Aerial work platform manufacturer UpRight Inc. was recently absolved of liability by an Alameda County (Calif.) jury following an eight-day apportionment trial here, RER has learned.

The case stems from an October 1996 accident at U.S. Rentals' Oakland branch in which real estate developer Ronald Hothem was killed when an UpRight MX-15 scissorlift tipped over during a sales demonstration. According to International Managers Inc., a claims management firm, UpRight and co-defendant U.S. Rentals (now United) agreed to a $10 million settlement following a wrongful death lawsuit filed by Hothem's family. As part of the settlement, the family agreed to defer payment until U.S. Rentals - which was acquired by United Rentals in 1998 - and Selma, Calif.-based UpRight could complete an apportionment trial to determine who should pay.

The jury ruled unanimously that the scissorlift was not defective in its design and attributed the cause of the accident to operator error, according to UpRight vice president and general manager Barris Evulich. The ruling made United responsible for the damages.

Bob Miner, vice president of strategic planning for Greenwich, Conn.-based United told RER that the company, even though it is well-covered by insurance, plans to appeal the ruling.

HERC, Union Agreement Approved by NLRB OAK CREEK, Wis.- Hertz Equip-ment Rental Corp. recently reached a settlement agreement with a union local that had accused it of unfair labor practices, RER has learned.

Although HERC does not admit to any violations of the National Labor Relations Act, it settled with the Pewaukee, Wis.-based International Union of Operating Engineers Local 139 in an agreement that was approved by a regional director of the National Labor Relations Board.

The agreement calls for HERC to post a notice at its Oak Creek, branch, near Milwaukee, for 60 days. The company promises to not interfere with employees' rights to engage in self organization; to form, join or assist labor organizations; to bargain collectively through representatives of their own choosing; and to act together for collective bargaining or other mutual aid or protection.

It also states that the company may not interrogate job applicants regarding union sympathies, tell employees to remove stickers or hats displaying logos for the local, or withhold annual reviews of promised wage increases because of their sympathies for or activities on behalf of the local or any other union organization. The company also states its intention not to interfere with picketing or photograph persons involved in picketing on behalf of Local 139.

Mustang Opens 6th Rental Outlet LUFKIN, Texas- Mustang Rental Services, No. 37 on the RER 100, recently opened a branch here, its sixth location in the state.

The location in Lufkin, about 140 miles northeast of Houston, will serve customers in the area whose equipment needs were previously handled by Mustang branch es in Conroe and Nederland, Texas, according to general manager Kenny Wason.

"This will give us easier access to customers who have immediate needs in the area," Wason said. "The Lufkin branch will have access to our shared inventory ranging from 2-inch pumps on up to dozers and soil stabilizers."

Ronnie Venghaus is managing the branch, with David Walton serving as outside sales representative. Mustang, based in Channelview, Texas, with 1998 rental revenue of $26.5 million, is working on opening a seventh rental branch later this year in the Houston area.

Rental center employees in the South have the lowest average annual salaries in all but one surveyed position. Regional/general managers earn more in the South than their counterparts in other regions.

Source: RER's 1999 Rental Indusrty Salary Report

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