McGrath RentCorp details new $650 million five-year credit facility

By Mary-Katherine Stinson

Lexington, Ky., July 20 – McGrath RentCorp disclosed details of its new $650 million credit facility with a syndicate of banks in an 8-K filing with the Securities and Exchange Commission on Wednesday.

On July 15, the company entered into a second amended and restated credit agreement providing a $650 million unsecured revolving credit facility, which can be expanded by up to $300 million, either through increased revolver commitments or by adding one or more tranches of term loans.

The facility includes a $40 million sublimit for standby letters of credit and an $20 million sublimit for swingline loans.

The credit facility contains financial covenants requiring the company to not permit the consolidated fixed-charge coverage ratio as of the end of any fiscal quarter to be less than 2.5 times and to not permit the consolidated leverage ratio during any period of four consecutive fiscal quarters to be greater than 2.75 times.

Payment in full may be required under the agreement if IBM or any material subsidiaries fail to pay obligations in excess of $10 million or incur liabilities or judgments in excess of $10 million.

As previously reported, the facility matures on July 15, 2027 and replaces the company’s existing $420 million line of credit.

All outstanding obligations under the previous credit facility were refinanced under the new credit facility.

The credit facility permits the company’s existing indebtedness to remain, which includes the company’s Treasury sweep note which may be increased up to $20 million; the existing senior notes issued under the amended and restated note purchase and private shelf agreement dated March 31, 2020 among the company, PGIM, Inc. and the noteholders; the $60 million outstanding principal of notes issued Nov. 5, 2015 and due Nov. 5, 2022; the $40 million 2.57% series D notes issued March 17, 2021 and due on March 17, 2028; and the $60 million 2.35% series E notes issued June 16, 2021 and due June 16, 2026.

In addition, the company can incur additional senior note indebtedness up to $250 million.

BofA Securities, Inc. was bookrunner and a joint lead arranger along with U.S. Bank NA, MUFG Union Bank NA and Wells Fargo Bank, NA.

Bank of America, NA acted as administrative agent. U.S. Bank, MUFG and Wells Fargo were co-syndication agents.

The proceeds of the facility will be used for general corporate purposes including permitted acquisitions.

In connection with the facility, on July 15 U.S. subsidiaries Mobile Modular Management Corp., Enviroplex, Inc. and Adler Tank Rentals, LLC also entered a second amended and restated guaranty in favor of Bank of America as administrative agent.

McGrath RentCorp is a business-to-business rental company based in Livermore, Calif.

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