United Rentals to Redeem Senior Notes

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United Rentals, Inc. (URI), the provider of rental and leasing services, recently announced that its subsidiary, United Rentals (North America), Inc. (URNAF), will redeem its Senior Notes due 2019 with a coupon rate of 10.25%. The principal amount of the notes aggregate $200 million.

The company notified the holders that the redemption will take place on Jan 21, 2014. The redemption price of the Notes will equal 112.916% of the principal amount of the Notes plus accrued and unpaid interest up to the date of the redemption.

Wells Fargo Bank, National Association; a subsidiary of Wells Fargo & Company (WFC); worked as the trustee for the Notes.  URNA expects to use borrowings of around $226 million under its asset-based revolving credit facility to redeem the principal amount of the Notes. The amount under this facility rose by $400 million on Dec 19, 2013, resulting in an available combined amount of $2,300 million.

United Rentals reported third-quarter 2013 adjusted earnings of $1.63 per share, up 20.7% from the prior-year quarter. Adjusted earnings before interest, taxes, depreciation and amortization (:EBITDA) in the quarter improved 13% year over year to $642 million.

Time utilization for United Rentals increased 100 basis points year over year to 70.8%. The company also realized cost synergies of $64 million in the quarter from the RSC integration.

United Rentals reiterated its adjusted EBITDA guidance for full-year 2013 in the range of $2.25 billion–$2.35 billion. The company also reaffirmed its outlook for time utilization of around 68.0%. In addition, the projected cost synergies on a run-rate basis have been retained in the band of $230 million-$250 million.

Greenwich, CT-based United Rentals is the largest equipment rental company in the world, with an integrated network of 822 rentals. The company offers about 3,200 classes of equipment with a total original cost of $7.96 billion, for rent.

United Rentals currently has a Zacks Rank #2 (Buy). Other favorably-ranked stocks in the same industry include CaesarStone Sdot-Yam Ltd. (CSTE) and James Hardie Industries plc (JHX) with a Zacks Rank #1 (Strong Buy).

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