25.03.2012

Ahern ownership under pressure

Maxim Crane owner Platinum Equity is likely to make a move to gain a controlling interest in the troubled aerial lift and telehandler rental company Ahern rentals, which is currently in Chapter 11 bankruptcy.

Ahern’s current owner Don Ahern, has the exclusive right to come up with a restructuring deal, but that runs out in April. The company says that it will file for an extension to the exclusivity agreement which it can do for up to 18 months. However it must demonstrate that there is good reason and a real chance of coming up with a plan that will satisfy creditors.

Given the substantial improvement in the business there is a good chance that this happen. However Platinum Equity, which is controlled by Tom
Gores, owns a majority of Ahern’s loan notes and is therefore a major creditor, if not The major creditor, and has made it clear in the past that it wishes to acquire more rental companies and has designs on being a rental ‘consolidator’. It acquired Maxim Crane in Mid-2008 Click here to see Platinum buys Maxim

When the initial exclusivity period expires creditors are likely to push it to be opened up to others to put forward a plan. In such a case it is likely that creditors would look positively on a rights issue proposal in which the note holders and current owners would convert debt to equity or put in more money, in such a case Platinum could easily come out on top.

Vertikal Comment

Platinum Equity is certainly in a very strong position here and the bets in the investment community are on them getting Ahern, as reflected in the rising price for the outstanding notes.

However Don Ahern is a fighter and a ‘canny operator’ and the business is growing in profitability every month and likely to continue do so in the year ahead. As the incumbent he has the upper hand, but must convince all the other creditors that they are better staying with him, even though his plan may take a little longer to finalise, than accept a quick solution from another.

In spite of the tight time schedule this is still too close to call.