National Equipment Services filed for Chapter 11 bankruptcy protection Friday to reduce its debt load and “strengthen its competitive position.”
According to company officials, the Evanston, Ill.-based consolidator received support from the steering committee of its existing bank group for a restructured credit facility to provide exit financing upon emergence. NES also received a commitment for up to $30 million in debtor-in-possession financing led by Wachovia Bank that will be used, if necessary, to fund post-petition operating expenses and to meet supplier and employee obligations.
“NES is a solid company, but unfortunately it has too much debt and the balance sheet needed to be fixed,” said president and CEO Joseph Guillion. “While our company generates a lot o cash from operations, it was not enough to repay our debt maturity obligations under our existing credit agreement, which is scheduled to mature in July 2003.”
The company has been in discussions with a committee of senior subordinated note holders that will continue after the filing. The restructured facility contemplates the conversion of the notes due 2004 into substantially all of the outstanding equity. A reorganization plan is expected to be filed in the next few weeks that would allow trade vendors to be paid in full after the bankruptcy proceedings and, the company said, will reduce its total debt by $275 million in the conversion to equity.
NES is No. 5 on the RER 100 with 180 locations in 34 states and Canada. The filing comes two weeks after No. 6 NationsRent emerged successfully from Chapter 11 bankruptcy.