Certain Ahern Rentals noteholders who voted against the company’s proposed reorganization plan earlier this month will be allowed to change their vote and accept Ahern’s newly amended plan, which the company said now “provides for substantially better treatment of claims and equity interests than the noteholder plan.”
Indeed, an ad hoc group of noteholders that originally proposed its own reorganization plan for the company has now signed a plan-support agreement with Ahern, effectively eliminating the competition at a plan-confirmation hearing scheduled for June 5.
U.S. Bankruptcy Judge Bruce Beesley signed a May 24 order allowing new votes for certain Ahern creditors without forcing Ahern to resolicit votes from all creditors.
Ahern and the ad hoc group filed competing disclosure statements in March, both of which were approved by the court. Votes on the plans were due by May 13, and preliminary tabulations show second-lien noteholders rejected Ahern’s plan, according to court documents.
The ad hoc group, which includes Del Mar Master Fund Ltd., Feingold O’Keeffe Capital, Nomura Corporate Research & Asset Management, Och-Ziff Capital Management Group, Sphere Capital, and Wazee Street Capital Management, said at the time that its plan would pay all creditor claims in full, financed by a $450 million exit facility, while exchanging second-lien debt for 100% of the equity in the reorganized company. Under the noteholders’ proposal, the company’s shareholders – Don Ahern, who currently owns roughly 97% of the company, and his brother John Paul Ahern – would receive warrants. The two Aherns are sons of the company’s founder, also named John Ahern.
The company’s own plan, meanwhile, would have paid first-lien lenders in cash, second-lien lenders with a combination of cash and new debt, and leave the two Aherns’ equity interests intact (see “Ahern Rentals rival disclosure statements approved, confirmation set,” LCD News, March 13, 2013).
But following approval of the disclosure statements Ahern continued negotiations with various creditors and ultimately obtained sufficient exit financing to repay its debtor-in-possession credit facility, term loan claims, and to settle second-lien loan claims. Ahern secured nearly $500 million in exit financing – a $350 million asset-backed revolver and a $145 million term facility – and a $415 million senior secured bridge loan to repay its second-lien and term loan debt (see “Ahern Rentals secures new $415M senior bridge loan from Jefferies,” LCD News, May 21, 2013).
Under its latest plan, Ahern said second-lien holders would receive their pro rata share of $268 million (effectively a full recovery, minus post-petition interests and other costs) and the right to an additional $25 million if, among other things, there is a change of control at Ahern within two years of exiting Chapter 11. The second-lien noteholder group will also be paid $10 million in cash to cover legal expenses incurred during the bankruptcy proceedings. The Ahern brothers must now contribute $5 million to the estate in order to retain 100% of the company’s new equity.
The net book value of Ahern’s assets has grown substantially since the company filed for Chapter 11 in December 2011, according to Ahern lawyer William Noall. The net book value of its assets as of Nov. 30, 2011, was about $458.8 million. Ahern and its professionals now believe current fair market value of the company’s assets is more than $750 million, Noall said.
A hearing on the two reorganization plans is scheduled for June 5, in Reno, Nev. – John Bringardner