Loxam in Complex Refinancing Transaction

July 23, 2014

Cleary Gottlieb represented Loxam, a leading European equipment rental group focused primarily on the construction and civil engineering sectors, in connection with its offering of €660 million of high-yield notes and a new €50 million revolving credit facility. The transactions form part of a broader refinancing of Loxam’s existing indebtedness.

The transaction included an offering of €410 million of Loxam’s 4.875% senior secured notes due 2021 and €250 million of its 7.000% senior subordinated notes due 2022 pursuant to Rule 144A and Regulation S. The security package relating to the secured notes included first-priority security interests in the “Loxam” trademark and 100% of the share capital of two of its subsidiaries. The offering priced on July 18 and closed on July 23, and was lead managed by Deutsche Bank. The notes are expected to be listed on the Official List of the Luxembourg Stock Exchange and trade on the Euro MTF market.

The proceeds of the notes offering, together with cash on hand, were used to repay Loxam’s existing syndicated credit facility and certain of its bilateral credit facilities. In connection with the repayment of existing debt, Loxam also entered into a new €50 million revolving credit facility, which has a five-year maturity and is secured by a pledge of trade receivables equal to at least 120% of amounts drawn. The facility documentation was signed on July 18.

The transaction comes less than two years after Loxam’s previous high-yield issuance in January 2013; in light of market conditions favorable to issuers, the Company succeeded in significantly improving its restrictive covenant package vis-à-vis its 2013 issuance. In connection with this offering, Loxam also terminated its existing intercreditor agreement and entered into a new intercreditor agreement, presenting complexities including two separately secured creditor classes and an existing class of noteholders not party to the new intercreditor arrangements. Consistent with the goal of maximizing the Company’s flexibility, moreover, the intercreditor agreement creates the possibility for Loxam to incur additional secured debt and allow future creditors to share in the existing collateral, in addition to customary terms such as the standstill and turnover provisions applicable to subordinated creditors.