Chicago-based National Equipment Services, also known as NES Rentals, one of the largest equipment rental companies in North America, emerged from Chapter 11 bankruptcy protection last week.
The reorganization plan, approved by the bankruptcy court on January 23, includes a new three-year $496-million exit loan facility from a bank group led by Wachovia Bank. A portion of the exit loan will be used for capital expenditures to revitalize the NES rental fleet. NES eliminated about $275 million in debt from its balance sheet as bondholders agreed to convert to approximately 97.5 percent equity ownership in the company. NES management and Carl Marks Consulting Group undertook a number of actions during the reorganization, such as analyzing the company’s core business, improving management of NES’ fleet of 45,000 pieces of equipment, and implementing significant cost reductions including the consolidation of back-office operations. Total NES revenues for 2003 are expected to exceed $550 million, company officials said. NES grew by acquiring 42 companies between 1q1996 and 2001. At the time of the bankruptcy protection filing on June 27, 2003, the company was operating under an $800 million debt burden. The combination of an economic downturn with maturing bank and bond debt led to the need for reorganization. NES retained the Marks group, a corporate revitalization firm, to work with NES management to develop and implement its turnaround and restructuring strategy.
“We are excited with the momentum that has been created,” said Michael Milligan, chief financial officer of NES Rentals. “NES is in the right position to continue improving our services, building our brand name and increasing operational efficiencies. NES has been very fortunate to have been able to draw upon the expertise and leadership of Carl Marks Consulting Group to help get the company to this point.”
Chief restructuring advisor Duff Meyercord, a partner at CMCG said a new board of directors for NES will be announced for NES this week, and the board will elect the company’s new CEO. Meyercord said an executive search firm has been retained to identify CEO candidates. Working with the board, it is anticipated that the new CEO search will be completed by late March or early April, at which point Meyercord will complete his NES duties. Douglas Booth, a managing director with CMCG and NES interim chief operating advisor, will retain some responsibilities through the completion of the transition.
Milligan will remain as CFO.
NES is No. 5 on the RER 100.