United Rentals completed a $2.5 billion debt offering through its operating subsidiary, United Rentals (North America). The financing replaces $975 million of existing term loans, with the remaining proceeds intended for general corporate purposes, including reducing borrowings under the company’s credit agreement.
The offering adds debt in three maturities, from 2029 through 2036, at interest rates ranging from 5.55% to 6.20%. United Rentals received about $2.476 billion after discounts, commissions and estimated expenses.
Key details
- Three note issues: The subsidiary issued $700 million of notes bearing 5.55% interest and due October 15, 2029; $800 million at 5.75% due October 15, 2031; and $1 billion at 6.20% due October 15, 2036.
- Interest payments: Interest is payable twice a year, on April 15 and October 15. The first payment is scheduled for April 15, 2027.
- Use of proceeds: The company used the proceeds to repay in full $975 million of term loans. It plans to use the rest for general corporate purposes, including reducing borrowings under its credit agreement.
- Debt structure: The notes are senior unsecured obligations of the subsidiary, and United Rentals, Inc. guarantees them on a senior unsecured basis. The notes are not guaranteed by the subsidiary’s other subsidiaries.
- Priority of claims: The notes rank alongside the subsidiary’s other senior unsecured debt, but behind debt secured by assets to the extent of the value of that collateral. Because other subsidiaries do not guarantee the notes, their creditors would have claims ahead of noteholders on those subsidiaries’ assets.
- Early repayment terms: The subsidiary can redeem the notes before specified dates—September 15, 2029 for the 2029 notes, September 15, 2031 for the 2031 notes, and July 15, 2036 for the 2036 notes—at a price that includes a make-whole premium. After those dates, it can redeem them at par, plus accrued interest.
- Change-of-control protection: If a change of control is accompanied by a rating event, the company generally must offer to repurchase the affected notes for 101% of principal, plus accrued interest.
- Debt protections: The indenture includes limits on liens, sale-leaseback transactions, mergers and asset sales, as well as customary default provisions.
The financing repays the term loans and directs some proceeds toward reducing other borrowings, while adding unsecured notes that mature over a range of dates through 2036. The parent-company guarantee provides an additional claim against United Rentals, Inc., but the notes remain unsecured and are not backed by guarantees from the subsidiary’s other operating subsidiaries.