Ashtead Share Discussion Threads

[2flatpack] 03/8/2017 12:28

Afternoon fenners, bracke
bracke Ashtead cure for headache BUY on the PULLBACK'S .
I had made a contingency plan to buy at 1470 as always I live in hope.
.
fenners
I have a problem understanding your last post .
How doe's 4.25% become 10.55%.
It looked to me as if they had replaced a cheap loan with a very cheap loan.
Cheers
naive

[fenners66] 03/8/2017 11:04

ASHTEAD GROUP PLC

PRICING OF $1.2B OF SECOND PRIORITY SENIOR SECURED NOTES

3 August 2017

Further to the announcement regarding the notes offering issued yesterday, Ashtead Group plc ("Ashtead" or the "Company") announces the pricing of the offering of $600 million aggregate principal amount of 4.125% second priority senior secured notes due 2025 (the "2025 Notes") and $600 million aggregate principal amount of 4.375% second priority senior secured notes due 2027 (the "2027 Notes" and, together with the 2025 Notes, the "Notes") by Ashtead Capital, Inc. ("Ashtead Capital"), an indirect wholly owned subsidiary of Ashtead. The issue price is 100% of the principal amount of the 2025 Notes and 100% of the principal amount of the 2027 Notes, respectively. The offering is expected to close on 9 August 2017, subject to customary closing conditions. The Notes will be fully and unconditionally guaranteed on a senior secured basis by Ashtead and certain of Ashtead's direct and indirect subsidiaries.

Ashtead intends to use the net proceeds of the offering to (i) repurchase all or any of Ashtead Capital's outstanding 6.50% second priority senior secured notes (of which approximately $900 million in aggregate principal amount is outstanding) pursuant to a cash tender offer (the "Offer") commenced by Ashtead Capital yesterday, the details of which are provided in a separate announcement (ii) pay related fees and expenses and (iii) repay a portion of the outstanding amounts borrowed under its first priority senior secured credit facility. The closing of the offering will not be conditioned on consummation of the Offer.

Ashtead's chief executive, Geoff Drabble, commented:

"We are delighted with the support our new offering has commanded from investors. Good credit markets have enabled us to fix the cost of a significant tranche of our debt at attractive long-term rates. This new offering, combined with the recent extension of our $3.1 billion senior secured credit facility on the existing terms, which now matures in 2022, means our average debt maturity is almost 7 years. This enhances the flexibility of our debt package and further strengthens our balance sheet."

[bracke] 03/8/2017 10:40

Good day fenners and Naive

Not withstanding the Moody's article the market does not appear impressed with the transaction.

As an upstanding shareholder the part of the article which disturbed me was:

"On the other hand, negative pressure on the ratings could arise if (1) a sharp market reversal were to result in fleet utilization and margins decreasing at a higher rate than previously expected leading to adjusted leverage remaining above 2.5x, (2) liquidity deteriorates due to a significant capex spend while existing facilities are not upsized, or (3) the company loosens its net leverage targets or adopts a more aggressive shareholder return policy."

The current bull market has been running since 2008 so it's had a good run. We know that the run will end at some point what happens then?


Looking at the price action this morning shows little demand, so buyers not rushing to buy at the current level. What are these cheapskate carpetbaggers looking to buy at.......1580? 1550? surely not 1480!!!!

I've upset myself with that last paragraph I need to have a lie down.

[fenners66] 03/8/2017 09:51

Morning 2flat
Thanks

[2flatpack] 03/8/2017 08:25

Morning fenners
Thanks for the master class in city deals.
I simplistically thought a buy back of debt.
Change of name from Carpetbagger to Naive.
Cheers

[fenners66] 03/8/2017 07:06

Rating Action: Moody's assigns a Ba2 rating to Ashtead's new USD1,200 million notes due 2025 and 2027
Global Credit Research - 02 Aug 2017

London, 02 August 2017 -- Moody's Investors Service, ("Moody's") has today assigned Ba2 instrument ratings to the new USD1,200 million second priority senior secured notes due 2025 and 2027 (the notes due 2025 and 2027) to be issued by Ashtead Capital, Inc., a subsidiary of Ashtead Group plc (Ashtead).

The proceeds from the issuance of the notes due 2025 and 2027 will be used to (1) refinance the USD900 million second priority senior secured notes due 2022 including a USD29 million call premium, (2) repay a portion of the outstanding borrowings under the USD3,100 million first priority senior secured credit facility (the ABL Facility), and (3) pay transaction fees.

Ashtead's Ba1 corporate family rating (CFR) and Ba1-PD probability of default rating (PDR) and the Ba2 instrument rating on the USD900 million second priority senior secured notes due 2022 and USD500 million second priority senior secured noted due 2024 (the notes due 2024) both issued by Ashtead Capital, Inc. remain unchanged. The outlook on all ratings remains stable.

Moody's expects to withdraw the Ba2 rating on the USD900 million second priority senior secured notes due 2022 at the closing of the refinancing.

RATINGS RATIONALE

The notes due 2025 and 2027, which will rank pari passu with the notes due 2024, are rated Ba2, one notch below the CFR, reflecting the size of the ABL facility ranking ahead. The notes due 2024, 2025 and 2027 benefit from second lien guarantees from entities accounting for 99% of the group's combined assets as at 30 April 2017 and 99% of EBITDA for the fiscal year ending 30 April 2017 and second lien pledges over most of these guarantors' assets. The ABL facility benefits from the same guarantee and security package but on a first lien basis.

Moody's positively views the fact that the transaction will contribute to enhancing the group's liquidity profile to support its future capital expenditures needs as well as external growth through bolt-on acquisitions. Pro forma for the transaction, availability under the ABL facility (including letters of credit totaling USD41 million) will increase to USD1,559 million from USD1,305 million as of 30 April 2017.

The transaction will also contribute to improving the group's maturity profile thanks to the long-dated maturity of the new notes due 2025 and 2027 replacing the USD900 million second priority senior secured notes maturing in 2022.

The transaction will be relatively leverage neutral as the proceeds from the issuance of the notes will be mostly used to repay debt except for outflows to pay the call premium and transaction fees. Pro forma for the transaction, Moody's estimates that adjusted gross leverage (as adjusted by Moody's for operating leases and pension liabilities) will remain at 1.8x as of 30 April 2017.

Despite a significant increase in spend on acquisitions in fiscal year 2017 to GBP421 million from GBP68 million a year earlier, Ashtead was able to maintain adjusted leverage flat compared to fiscal year 2016 thanks to the strong revenue and EBITDA growth driven by the contribution from acquisitions and organic growth to a larger extent. In fiscal year 2017, revenues on a constant currency basis increased by 10% and EBITDA (as reported by the company) by 12% compared to prior year. Strong EBITDA growth as well as lower replacement capex needs enabled the group to generate positive free cash flow (FCF, as calculated by Moody's) of GBP196 million in fiscal year 2017 after a long period of negative FCF driven by growing capex spend.

The stable outlook assumes that the company will maintain a conservative financial policy with no major debt-funded acquisitions, excessive shareholder returns, or fleet overspending leading to lower utilization, and Moody's expectation for continued moderate growth in the industry.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's believe that further upward pressure is constrained due to the company's exposure to an inherently cyclical industry. While not expected in the near future, positive pressure could arise if (1) Ashtead further improves its client mix such that exposure to the cyclical construction industry reduces significantly, (2) the company tightens its publicly-stated net leverage target, and (3) the company maintains a good liquidity position.

On the other hand, negative pressure on the ratings could arise if (1) a sharp market reversal were to result in fleet utilization and margins decreasing at a higher rate than previously expected leading to adjusted leverage remaining above 2.5x, (2) liquidity deteriorates due to a significant capex spend while existing facilities are not upsized, or (3) the company loosens its net leverage targets or adopts a more aggressive shareholder return policy.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Equipment and Transportation Rental Industry published in April 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Ashtead is a London-based equipment rental company with national networks across North America and the UK. The company rents a full range of construction and industrial equipment across a wide variety of applications to a diverse customer base. Ashtead recorded revenues of GBP3,187 million and EBITDA of GBP1,504 million in fiscal year ending (FYE) 30 April 2017.

[bracke] 02/8/2017 18:49

Thanks fenners

"the spending part"
===================

Little doubt there will be further acquisitions...the concern is how much $.

[fenners66] 02/8/2017 18:37

The rate they offer today should be based on market rates vs say 5-10 year dated bonds.


US 10 year treasury at 2.3% add some for the PLC risk - even 3% you are looking at

$1.2bn at say 5.3% or less

BUT that is on top of the 6.5% rolled up to redemption + $2.7m + fees etc

It pains me every time I read about these ..... in years 8-10 they may save some money against the HUGE cost they are committing to now....

But what do I know....

[fenners66] 02/8/2017 18:37

Double post

[fenners66] 02/8/2017 18:31

Bracke its definitely going to cost more.

They will be paying interest twice on the $900m and a probably a higher rate on the senior facility.

But the argument from their " whispers in the ear advisers" will be that if they wait to renegotiate the facility in 2020 the market rates will by then be much higher and would they want to risk it?

I would say to that - pay down the damn debt and worry about the interest cost then on the peanuts you have remaining - but of course that would leave them without the flexibility to spend in the meantime and they know the spending part much better than I do.

However I have to say why stop at 2025 -27 up from 2022 make it 2032 and then we dont have the constant rolling over with all the associated fees, but what advisor is going to suggest not paying more advisor's fees???

[bracke] 02/8/2017 18:24

2flat

The share price has closed below the blue LP.

[fenners66] 02/8/2017 18:24

You can imagine their esteemed advisors...


" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

tick tock months maybe even a couple of years go by

" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

tick tock months maybe even a couple of years go by

" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

They are not rich bankers for nothing you know

[bracke] 02/8/2017 18:23

fenners

Excuse my ignorance but given that interest rates are likely to increase will not AHT have to offer a better rate on new borrowings as opposed to the notes they are buying back?

[fenners66] 02/8/2017 18:19

The other RNS says they are raising only $1.2bn which is to pay for the remainder of the $900m , fees and a proportion of the first priority senior debt.

That first priority debt is LIBOR + 1.5%

Longest dated $ LIBOR I can find is around 1.72% so they are probably at 3.22%

So all they are doing is rolling over the duration into a 2025 to 2027 offering at a combined cost of ....?

Some 3 year extension some 5 year extension

OK so the threat of a $2bn loan note and subsequent spending goes away....

BUT we are back to my first point about these notes NEVER being run to maturity and you can bet your bottom dollar the costs will "ADJUSTED" away. I really don't like that s hit.


So looks like its just a costly jobs for the boys exercise after all !

[bracke] 02/8/2017 18:18

To-days candle is Bearish Engulfing. What makes it concerning is that it closed below 1630 support.

[bracke] 02/8/2017 18:07

There are only two s/holders with more than a 5% holding. Both have just over 25 million shares apiece.

[fenners66] 02/8/2017 18:07

Hold the front page - I just noticed there are 2 RNS's so have to read the other one......

[fenners66] 02/8/2017 17:53

Yes we are thinking the same and maybe we are not alone.

But after the bolt on story for the last few years?

Why oh why?

I have to say that in the long run they got it right last time but it took a long time to come good.

It has to be close to $1bn acquisition or more to make it work I'd guess

[fenners66] 02/8/2017 17:40

Thanks Bracke I had not seen that.

Are the notes currently traded? If so at 6.5% I would be surprised if they could not be sold for more.

The price offered is $3 per thousand nominal over redemption yield (assuming 5 years to go to redemption)

So it will cost $2.7m + transaction costs to redeem early.

I had this beef a couple of years ago - where the cost of redeeming and reissuing loans was parked as exceptional - and was taken to adjusted profits so it could be ignored - when they do it nearly every time and by definition it then becomes the norm not exceptional.

Why redeem now?

There can be no gain in replacing them with a lower coupon - because they are paying ALL of the interest and more anyway. I have seen this manoeuvre elsewhere this year but it was a discount to redemption cost.


I can only imagine that they want to launch a much larger lower coupon bond /loan note etc and the covenants say that this remaining in place prevents that. I hope someone has properly done the maths on this one and its not just jobs for the boys.

Next question would be what are they needing to raise very large loan for?

Errrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrgh !

[discodave4] 02/8/2017 17:31

1550! thanks bracke :(

[bracke] 02/8/2017 17:23

fenners

What do you make of the cash tender offer for notes? (See news above).

Buying back debt?

[discodave4] 02/8/2017 16:14

Fenners,DiscoDave4 - 20 Jul 2017 - 12:23 - 54076 of 54137 - 0Still cannot find any financials for CRS.However, based on a couple of recent UK acquisitions (Liontrack Hire and Mather & Stuart), their purchase price came to twice their respective annual revenues. So whilst a bit of a finger in the air, the revenue for CRS could be circa £89m pa.Both in the same ball park on revenue for CRS.DD

[bracke] 02/8/2017 14:09

The share price has once again dropped back to support at 1630.

If it holds then another attempt at 1660. If it fails a fall to 1580 and probably 1550.