01.12.2012

Ahern nears conclusion

The Ahern Rentals Chapter 11 process has been delayed a further seven days to allow current owner Don Ahern to reconsider the plan he presented to the Reno, Nevada bankruptcy court yesterday.

Ahern has offered two sets of lenders, holding $379.2 million in debt, a choice between accepting a discounted lump sum upfront as payment in full or agreeing rewritten loans for repayment over terms of up to seven years. With creditors being repaid in full Ahern would retain his 97 percent holding intact – his brother holds the balance.

Judge Bruce Beesley advised Ahern to think again in light of the fact that the plan forces losses on lenders without affecting his holding in the business. He has given him seven days to revise his position and negotiate with lenders before giving others the opportunity to present alternative plans.

The lenders say that the proposal forces a choice between two equally unacceptable options, with the rewritten loans offering wildly off-market terms. They say that the plan does not even provide a decent starting point for negotiations.

The judge said that he does not believe that the pay out over time satisfies the absolute priority rule, which places the previous owner at the bottom of the creditor list allowing that they only retain their holding intact if all other creditors have been paid in full. He added that the only apparent solution was for Ahern to inject a substantial amount of fresh cash into the business.

Vertikal Comment

It looks as though this might be the beginning of the end for Don Ahern’s bid to retain ownership of his Las Vegas based business. However what we do not know for certain is how much of this is posturing and negotiation on both sides.

Ahern is a canny operator and should never be underestimated, his problem this time though could hinge around the challenge of obtaining new funding at a time when current funders are angry and frustrated by the long drawn out Chapter 11 process and the way they feel they have been treated.

With the market continuing to improve there are also likely to be other interested parties, which is likely to encourage creditors that there are alternatives to what they have been offered. One of the creditors is Platinum Equity, owner of Maxim crane rental and utility aerial lift rental specialist Nesco. It had been looking to offload its notes at a discount, but having - we understand - failed to do so might be interested in gaining control of the business instead.