Neff issues term loans in exchange for $196 million of 10% notes; second-lien lenders file complaint

By Angela McDaniels

Tacoma, Wash., Dec. 16 - Neff Corp. said it received tenders for $196 million of notes during its offer to issue new senior secured first-lien term loan debt due May 2013 in exchange for its outstanding 10% senior notes due 2015.

The offer began on Nov. 17 and ended at 9 a.m. ET on Dec. 16. The consent deadline was 5 p.m. ET on Dec. 4.

The expiration date and consent deadline were extended from 11:59 p.m. ET on Dec. 15 and 5 p.m. ET on Dec. 2, respectively.

For each $1,000 principal amount of notes, investors were issued $450 principal amount of the term loan, including $50 for notes tendered by the consent deadline. Investors also received accrued interest to the settlement date, which was Dec. 16.

Holders who tendered were required to consent to amendments to the note indenture that would eliminate the restrictive covenants and some events of default.

The principal amount of notes outstanding is now $34 million, according to a company news release.

The offer was conditioned on obtaining the consent of lenders under the first-lien credit agreement and the receipt of tenders for at least one-half of the notes. The company received tenders for 86% of the notes.

Interest on the term loan is Libor plus an initial margin of 350 basis points.

Second-lien lenders displeased

Some lenders under Neff's second-lien credit facility filed a complaint in the Supreme Court of New York on Friday seeking to stop the exchange offer and consent solicitation, according to an 8-K filing with the Securities and Exchange Commission.

The complaint alleges that the exchange offer constitutes a breach of the second-lien credit agreement and the intercreditor agreement and of Neff's purported fiduciary duty to the lenders, the company said.

Following oral argument on Monday, a judge denied the plaintiffs' request for a temporary restraining order to enjoin the consummation of the offer.

Neff believes that the assertions in the complaint are without merit.

As previously reported, the company received a letter on Dec. 3 from a law firm purporting to represent lenders of a majority of the outstanding debt under the second-lien credit agreement.

The letter asserted that the second-lien credit agreement does not allow the elevation of the senior notes to senior secured debt status with lien priority superior to the liens securing the second-lien lenders.

Neff said the letter also asserted that the intercreditor agreement among Neff and other parties does not cover an exchange of senior notes for new term loans but instead the receipt of new money by the company in exchange for increased first-lien debt.

Miller Buckfire & Co., LLC (Attn: Adam Fitzner at 212 895-1865 or Ofir Nitzan at 212 895-1871) was the dealer manager, and D.F. King & Co., Inc. (800 628-8536 or 212 269-5550) was the information agent and exchange agent.

Neff is a Miami-based equipment rental company.

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