Moody's: United Rentals outlook developing

Moody's Investors Service said it changed the outlook for United Rentals, Inc. (New) and United Rentals (North America) Inc., (New) to developing from stable and placed the Caa1 senior unsecured and subordinated debt ratings of United Rentals (North America) Inc. and the Caa1 convertible quarterly income trust preferred securities (QUIPS) of United Rentals Trust I under review for possible upgrade.

The agency said the change in outlook considers the Nov. 14 announcement that Cerberus Capital Management, LP will not complete the leveraged acquisition of United Rentals as originally planned and seeks to negotiate a transaction on revised terms.

If the acquisition by Cerberus proceeds under the existing terms, the outlook for United Rentals, Inc. (New) would likely be changed to stable, Moody's said. If the transaction is ultimately terminated, the ratings on these entities would be withdrawn.

United Rentals (North America)'s ratings were downgraded on Nov. 7 when the ratings for the new acquisition debt were assigned. The downgrades considered the subordination, relative to the new acquisition debt, that would have occurred for any of these instruments that remained outstanding after the acquisition. However, the agency said that if the proposed acquisition is not consummated, the tender and consents will not become effective and the company's capital structure will remain unchanged.

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