Ahern Rentals: Amended Chapter 11 plan better than noteholder proposal

By Caroline Salls

Pittsburgh, Feb. 26 - Ahern Rentals, Inc. filed an amended plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the District of Nevada.

Ahern said it believes its amended plan is better than the competing plan recently filed by the holders of its 9¼% senior secured second-lien notes due 2013 because it embodies a business plan that projects a significantly higher enterprise value for reorganized Ahern and provides for a 100% recovery to all classes of claims.

The company said the noteholder plan may result in a complete change in management and, as a result, is subject to greater execution risk.

In addition, Ahern said the noteholder plan is not confirmable because it improperly classifies claims, rests on artificially low valuation and has other technical flaws.

Creditor treatment

Treatment of creditors under Ahern's amended plan will include the following:

• Administrative claims, priority tax claims and other priority claims will be paid in full;

• Holders of term loan claims will receive the full amount of the term loan.

Under the company's original plan, term loan claimants would have had the right to make a term loan election under which they would have received a share of $90 million in cash for each dollar of their term loan claim.

Term loan claimants that did not make the election would have received a share of senior secured notes;

• Holders of second-lien loan secured claims will receive a share of $160 million in cash and junior secured A notes if the class votes to accept the plan and a share of junior secured B notes if the class does not accept the plan.

Under the previous plan, these claimants would have had the right to make a second-lien loan election to receive a share of $135 million in cash for each dollar of their second-lien loan secured claim.

Second-lien loan claimants that did not make the election would have received a share of junior secured notes in an amount equal to their share of second-lien loan secured claims;

• Holders of other secured claims will either have their claims reinstated or be paid in full in cash, receive the proceeds from the sale of the collateral securing the claims or receive the collateral;

• Holders of personal injury claims will be paid in full for the first $250,000 of each insured personal injury claim, less defense costs.

Claims not paid in full will receive a share of policy proceeds of liability insurance policies remaining as of the bankruptcy filing date;

• Holders of general unsecured claims will be paid in full in cash in installments over one year with 5% interest.

Under the original plan, these claimants were to be paid in full in equal installments over two years with no interest, or, if the class did not vote to accept the plan, in equal installments over five years with 2% interest;

• Holders of Kubota claims will receive cash equal to 5% of the claim on the plan effective date, cash equal to 5% of the claim 90 days after the effective date and the balance 180 days after the effective date;

• Holders of convenience claims will receive cash equal to 85% of their claims; and

• Holders of equity interests will retain their interests.

Noteholder plan

As previously reported, creditor treatment under the noteholder plan will include the following:

• Holders of other secured claims will either have their claims reinstated, be paid in full in cash, receive the proceeds from the sale of the collateral securing the claims or receive the collateral;

• Holders of priority claims, first-lien term loan claims, personal injury claims and general unsecured claims will be paid in full in cash;

• Holders of second-lien notes claims will receive a share of the new equity interests in the reorganized company;

• Holders of insider claims will receive semiannual payments over two years with interest at a rate to be determined by the court upon the later of the resolution of lawsuits related to insider causes of action, resolution of avoidance actions against an insider who holds an insider claim and another date set by the court; and

• Holders of equity interests that vote to accept the plan will receive a share of new warrants. Those who vote to reject the plan will receive no distribution.

Ahern Rentals, a Las Vegas-based equipment rental company, filed for bankruptcy on Dec. 22, 2011 under Chapter 11 case number 11-53860.

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