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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act Of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to sec. 240.14a-11(c) or sec.240.14a-12
United Rentals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and show how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$
- --------------------------------------------------------------------------------
(5) Total fee paid:
$
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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[LOGO]
UNITED RENTALS, INC.
Four Greenwich Office Park
Greenwich, Connecticut 06830
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
----------------
TO OUR STOCKHOLDERS:
Notice is hereby given that a special meeting of stockholders of United
Rentals, Inc. (the "Company"), will be held at [ ], [ ], [ ], on [
], 1999, at 10:00 a.m. local time. At the meeting, you will be asked to
approve:
. the sale by the Company of 100,000 shares of its Series B Perpetual
Convertible Preferred Stock ("Series B Preferred") to Apollo Investment
Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (collectively
"Apollo"); and
. an amendment to the Certificate of Designation relating to the Company's
outstanding Series A Perpetual Convertible Preferred Stock ("Series A
Preferred"), for the purpose of eliminating an inconsistency between the
terms of the Series A Preferred (all outstanding shares of which are
owned by Apollo) and the terms of the Series B Preferred to be sold to
Apollo.
The meeting may be adjourned from time to time and at any reconvened meeting
action with respect to the matter specified in this notice may be taken
without further notice to stockholders except as may be required by our By-
laws. Stockholders of record at the close of business on July 16, 1999 are
entitled to notice of, and to vote on, all matters at the meeting and any
reconvened meeting following any adjournments thereof.
By Order of the Board of Directors,
John N. Milne
Corporate Secretary
July [ ], 1999
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information Concerning the Meeting............................... 1
Information Concerning the Proposed Issuance of Series B Preferred....... 4
Terms of the Series B Preferred.......................................... 6
Information Concerning the Charter Amendment Proposal.................... 9
Security Ownership by Certain Beneficial Owners and Management........... 11
Exhibit A--Form of Amendment to Certificate of Designation For Series A
Preferred............................................................... 14
</TABLE>
i
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UNITED RENTALS, INC.
Four Greenwich Office Park
Greenwich, Connecticut 06830
----------------
Proxy Statement
For Special Meeting of Stockholders
----------------
July [ ], 1999
The board of directors of United Rentals, Inc., a Delaware corporation (the
"Company"), is soliciting proxies to be voted at a special meeting of the
Company's stockholders that will be held on [ ], 1999, at 10:00 a.m. local
time. This Proxy Statement provides information concerning our solicitation,
the meeting and the proposals to be voted on at the meeting.
GENERAL INFORMATION CONCERNING THE MEETING
Purpose of the Meeting
The purpose of the meeting is to obtain stockholder approval for the two
proposals described below:
Sale of Series B Preferred to Apollo
The Company has entered into a Preferred Stock Purchase Agreement with
Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P.
(collectively, "Apollo"). This agreement provides for the Company to sell to
Apollo 100,000 shares of a new series of preferred stock to be designated by
the Company as its "Series B Perpetual Convertible Preferred Stock."
Stockholder approval for this transaction is required under the Rules of the
New York Stock Exchange as described below. Accordingly, you will be asked at
the meeting to approve this transaction (the "Share Issuance Proposal"). For
additional information concerning this transaction and the Series B Preferred,
see "Information Concerning the Proposed Issuance of Series B Preferred" and
"Terms of the Series B Preferred." By approving the Share Issuance Proposal,
you will also be approving the provisions of the purchase agreement described
under "Terms of the Series B Preferred--Right to Exchange Series B Preferred
for Different Series of Preferred Stock" and any issuance of shares to Apollo
pursuant to such provision.
Two directors of the Company, Leon D. Black and Michael S. Gross, are
affiliated with Apollo (as described under "--Interest of Certain Directors in
the Transaction"). Under the Rules of the New York Stock Exchange ("NYSE"),
the Company must obtain stockholder approval before engaging in certain
transactions with directors or their affiliates, including issuing to them any
securities convertible into common stock of the Company ("Common Stock") in
excess of 1% of the amount outstanding prior to the issuance. The Series B
Preferred to be sold to Apollo will be convertible into an aggregate of
3,333,333 shares of Common Stock (subject to adjustment as described herein),
which represents approximately 4.66% of the Common Stock outstanding as of the
record date for the meeting. Consequently, the rules of the NYSE require that
the Company obtain stockholder approval before issuing the Series B Preferred
to Apollo.
Amendment to Certificate of Designation for Series A Preferred
In January 1999, the Company sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo. There is an
inconsistency between the terms of the Series A Preferred and the terms of the
Series B Preferred. In connection with the proposed sale of the Series B
Preferred to Apollo, Apollo has agreed to an amendment of the Certificate of
Designation for the Series A Preferred (the "Series A Designation") to
eliminate this inconsistency (as well as to add an exception to the provision
requiring that the conversion price be adjusted in specified circumstances).
Stockholder approval of this amendment is required
1
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under Delaware law because the Series A Designation is part of the Company's
Certificate of Incorporation. Accordingly, you will be asked at the meeting to
approve this amendment (the "Charter Amendment Proposal"). For additional
information concerning this amendment, see "Information Concerning the Charter
Amendment Proposal."
Recommendation of the Board of Directors
The board of directors of the Company recommends that the stockholders vote
"for" approval of the Share Issuance Proposal and the Charter Amendment
Proposal.
Interest of Certain Directors in the Transaction
Apollo owns all the outstanding Series A Preferred issued by the Company.
The holders of the Series A Preferred, voting separately as a single class,
have the right to elect two directors of the Company. Pursuant to this right,
Apollo has elected Leon D. Black and Michael S. Gross as directors of the
Company. Messrs. Black and Gross are both principals in Apollo. As a result of
their affiliation with Apollo, Messrs. Black and Gross have an interest in the
proposed transaction with Apollo described herein.
Date, Time and Place of Meeting
The meeting will be held at [ ], [ ], on [ ], 1999, at 10:00
a.m. local time.
Record Date
The board has fixed the close of business on July 16, 1999 as the record
date (the "Record Date") for determining the stockholders of the Company
entitled to notice of, and to vote at, the meeting.
Shares Outstanding on Record Date
On the Record Date, the Company had outstanding (i) [ ] shares of Common
Stock and (ii) 300,000 shares of Series A Preferred. Each share of Series A
Preferred is convertible into Common Stock at a rate (subject to adjustment)
of 40 shares of Common Stock for each share of Series A Preferred. On the
Record Date, the outstanding shares of Series A Preferred were convertible
into an aggregate of 12,000,000 shares of Common Stock.
Quorum
The presence at the meeting, in person or represented by proxy, of a
majority of the outstanding shares entitled to vote thereat will constitute a
quorum for the transaction of business. Abstentions will be included in
determining the number of shares present.
Right to Vote
The holders of the Common Stock and the holders of the Series A Preferred
will have the right to vote together, as a single class, on the Share Issuance
Proposal and the Charter Amendment Proposal. With respect to these proposals,
(1) each holder of record of Common Stock as of the Record Date will be
entitled to one vote for each share held and (2) each holder of record of
Series A Preferred as of the Record Date will be entitled to 40 votes for each
share of Series A Preferred held (representing the number of shares of Common
Stock issuable upon conversion of a single share of Series A Preferred).
In addition, the holders of the Series A Preferred, voting separately as a
single class, will have the right to vote on the Charter Amendment Proposal.
2
<PAGE>
Required Vote
The Share Issuance Proposal
Under the rules of the NYSE, the Share Issuance Proposal will be considered
approved if (1) it is approved by a majority of the votes cast on the proposal
and (2) the total votes cast on the proposal represent over 50% of the shares
of the Company entitled to vote on the proposal. (For purposes of the
foregoing, each share of Series A Preferred will be treated as the equivalent
of 40 shares). Abstentions will have the same effect as a vote against
approving the Share Issuance Proposal.
The Charter Amendment Proposal
The Charter Amendment Proposal will be considered approved if it is approved
by:
. the affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote thereon (with each share of Series A Preferred
being treated as the equivalent of 40 shares of Common Stock); and
. the affirmative vote of a majority of the outstanding shares of Series A
Preferred.
Abstentions will have the same effect as a vote against the Charter Amendment
Proposal.
Voting Agreements
Certain officers and directors of the Company (Bradley Jacobs, Wayland
Hicks, John Milne, William Berry, Michael Nolan, John McKinney, Robert Miner
and Richard Colburn) have delivered (or are expected to deliver) to Apollo
irrevocable proxies authorizing Apollo to vote the shares of Common Stock
owned by these officers and directors in favor of the proposals described
herein. These officers and directors beneficially own an aggregate of
28,987,096 shares of the Company's outstanding Common Stock. Such shares,
together with the shares of Series A Preferred held by Apollo, represent
approximately 49% of the total number of votes entitled to be cast at the
meeting.
Voting and Revocation of Proxies
All properly executed proxies that are not revoked will be voted at the
meeting in accordance with the instructions contained therein. If you execute
and return a proxy and do not specify otherwise, the shares represented by
such proxy will be voted (1) "for" approval of the proposals described herein
and (2) in the discretion of the proxy holder with respect to any other matter
which may properly come before the meeting, including any adjournment or
postponement thereof.
If you execute and return a proxy, you may revoke it at any time before it
is voted at the meeting by (1) giving written notice to the Company of such
revocation, (2) voting in person at the meeting or (3) executing and
delivering to the Company a later-dated proxy. Written revocations and later-
dated proxies should be sent to United Rentals, Inc., Four Greenwich Office
Park, Greenwich, Connecticut 06830, Attention: Michael J. Nolan, Chief
Financial Officer.
Solicitation of Proxies
The accompanying proxy is solicited by the Company's board of directors for
use at the meeting or any adjournments or postponements thereof, for the
purposes set forth in this Proxy Statement and the attached notice of meeting.
This Proxy Statement and accompanying proxy were first sent to stockholders on
or about [ ], 1999.
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The Company is soliciting proxies by mail. In addition, directors and
officers of the Company may solicit proxies by personal interview, telephone,
telegram or otherwise.
The Company will pay all costs and expenses incurred in connection with the
printing and filing of this Proxy Statement and the solicitation of proxies.
The Company will also reimburse brokerage firms, fiduciaries, nominees and
others for their reasonable out-of-pocket expenses in forwarding proxy
materials to the beneficial owners of the shares of Common Stock held in their
names.
INFORMATION CONCERNING THE PROPOSED ISSUANCE OF SERIES B PREFERRED
Set forth below is certain information concerning the proposed issuance by
the Company of Series B Preferred. This information is not complete and is
qualified in its entirety by reference to the agreements relating thereto
which are filed as exhibits to the Company's Report on Form 8-K dated [ ],
1999.
General
The Company proposes to create a new series of preferred stock to be
designated as "Series B Perpetual Convertible Preferred Stock." The Series B
Preferred will be divided into two classes to be designated as Class B-1
Perpetual Convertible Preferred Stock ("B-1 Preferred") and Class B-2
Perpetual Convertible Preferred Stock ("B-2 Preferred"). The terms of the B-1
Preferred and the B-2 Preferred are substantially the same, except that the B-
2 Preferred does not have voting rights. See "Terms of the Series B
Preferred."
The Company has entered into a Preferred Stock Purchase Agreement with
Apollo (the "Apollo Purchase Agreement"). This agreement provides for the
Company to sell to Apollo 100,000 shares of B-1 Preferred (the "Apollo
Transaction").
Reasons For Issuing the Series B Preferred
The Company has agreed to sell the Series B Preferred in order to increase
the funds available to it for future acquisitions, capital expenditures and
general corporate purposes. See "--Use of Proceeds."
Use of Proceeds
The Company estimates that it will receive net proceeds of approximately $96
million from the Apollo Transaction (after deducting estimated offering
expenses payable by the Company). The Company expects to use such net proceeds
to repay outstanding indebtedness under its revolving credit facility (the
"Credit Facility"). The Company may reborrow amounts that it repays under the
Credit Facility. Consequently, the repayment of indebtedness under the Credit
Facility will give the Company additional flexibility to borrow funds under
the Credit Facility for future acquisitions, capital expenditures and general
corporate purposes.
Additional Information Concerning the Apollo Transaction
Shares to be Sold
The Company will sell to Apollo 100,000 shares of B-1 Preferred (50,000 to
Apollo Investment Fund IV, L.P. and 50,000 to Apollo Overseas Partners IV,
L.P.).
Purchase Price
Apollo has agreed to pay a purchase price of $1,000 per share for the B-1
Preferred ($100 million in the aggregate). However, the effective price will
be $990 per share ($99 million in the aggregate) after taking into account the
fee payable to Apollo as described below.
4
<PAGE>
Certain Payments to Apollo
If the Apollo Transaction is completed, the Company will be required to make
certain payments to, or on behalf of, Apollo as described below.
Payment of Fee. The Company will be required to pay to Apollo a fee of $1
million .
Payment of Certain Expenses. The Company will be required to pay 50% of the
reasonable itemized expenses incurred by Apollo in connection with the Apollo
Purchase Agreement and the Apollo Transaction (up to a maximum of $200,000).
Closing Date
Unless the parties agree otherwise, the closing of the Apollo Transaction
will take place on the first to occur of the following dates (or, if later,
the first business day following satisfaction of the closing conditions
described below):
. the 10th business day after the Company gives notice to Apollo that the
Company's Debt to Total Capitalization Ratio (as defined below) first
equals or exceeds 60%; and
. the 10th business day after the Company gives notice to Apollo that the
average closing price of the Company's Common Stock on the NYSE for the
preceding 20 trading day was in excess of $30 per share (in calculating
such average, the closing price for each day will be weighted based upon
the volume of the Company's Common Stock traded on the NYSE on such
day).
If the dates referred to above do not occur prior to December 25, 1999, the
closing will in all events take place on December 25, 1999 (subject to
satisfaction of the closing conditions referred to below).
For purposes of the foregoing, the Company's Debt to Total Capitalization
Ratio is defined as the quotient (expressed as a percentage) of (A) the sum of
the Company's and its subsidiaries' funded debt, consisting of notes, capital
leases, debentures (other than those issued to subsidiaries) and bank debt,
less cash and cash equivalents, divided by (B) the total capitalization
(funded debt, preferred stock of a subsidiary trust and stockholders' equity,
less cash and cash equivalents) of the Company and its subsidiaries, all as
set forth on a month end consolidated balance sheet of the Company prepared in
accordance with generally accepted accounting principles.
Conditions to Closing
The Apollo Purchase Agreement provides that the obligation of Apollo to
purchase the B-1 Preferred is subject to a number of conditions, including
among others that:
. the stockholders of the Company shall have approved the transaction as
contemplated by this Proxy Statement;
. the representations and warranties of the Company contained in the
Apollo Purchase Agreement shall be in all material respects correct when
made and at the time of the closing;
. the registration rights agreement between the Company and Apollo, in the
form contemplated by the Apollo Purchase Agreement, shall have been
entered into by the Company;
. there shall not be pending (or to the knowledge of the Company
threatened) any suit, action, investigation, inquiry or other proceeding
which questions the validity or legality of the transactions
contemplated by the Apollo Purchase Agreement, or seeks damages in
connection therewith; and
. the Company shall have paid to Apollo the fees described under "--
Certain Payments to Apollo".
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Termination
The Apollo Purchase Agreement may be terminated, whether before or after
approval of the stockholders of the Company, as follows:
. by the mutual written consent of Apollo and the Company at any time; or
. by Apollo or the Company if the closing is not consummated on or before
February 15, 2000 (provided that this termination right will not be
available to any party whose failure to perform any of its obligations
results in the closing not being consummated by such time).
Certain Effects on Rights of Existing Common Stockholders
The holders of B-1 Preferred will be entitled to vote together with the
holders of the Common Stock as a single class on all matters submitted to
stockholders of the Company for a vote (with each share of B-1 Preferred being
treated as 33.33 shares of Common Stock). Consequently, the issuance of the B-
1 Preferred will dilute the voting rights of the existing holders of Common
Stock.
The Series B Preferred will be convertible into shares of Common Stock.
Consequently, the issuance of the Series B Preferred has the potential to
dilute the ownership interest of the existing stockholders.
For additional information concerning the voting and conversion rights of
the Series B Preferred, see "Terms of the Series B Preferred."
TERMS OF THE SERIES B PREFERRED
Set forth below is a summary of certain terms of the Series B Preferred, as
well as certain rights relating to the B-1 Preferred provided for by the
Apollo Purchase Agreement. This summary is not complete and is qualified in
its entirety by reference to the Certificate of Designation for the Series B
Preferred (the "Designation") and the related agreements filed as exhibits to
the Company's Report on Form 8-K dated [ ], 1999.
Except where otherwise indicated, (1) the terms set forth below apply to
both the B-1 Preferred and B-2 Preferred and (2) each reference to the Series
B Preferred includes both the B-1 Preferred and B-2 Preferred.
Ranking
The Series B Preferred will (1) rank senior to the Common Stock with respect
to distributions upon the liquidation, winding-up or dissolution of the
Company and (2) rank the same as the Series A Preferred with respect to such
distributions.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company or reduction or decrease in its capital stock resulting in a
distribution of assets to the holders of any class or series of the Company's
capital stock, the holders of Series B Preferred will be entitled to payment
out of the assets of the Company available for distribution of an amount equal
to $1,000 per share of Series B Preferred (the "Liquidation Preference"), plus
accrued and unpaid dividends, if any, to the date fixed for liquidation,
dissolution, winding-up or reduction or decrease in capital stock, before any
distribution is made on the Common Stock. After payment in full of the
Liquidation Preference and such dividends, if any, to which holders of Series
B Preferred are entitled, such holders will not be entitled to any further
participation in any distribution of assets of the Company.
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Dividends
The Series B Preferred will not have a stated dividend. However, in the
event that the Company declares or pays any dividends or other distributions
upon the Common Stock, the Company must (subject to certain exceptions) also
declare and pay to the holders of the Series B Preferred, at the same time
that it declares and pays such dividends or other distributions to the holders
of the Common Stock, the dividends or distributions which would have been
declared and paid with respect to the Common Stock issuable upon conversion of
the Series B Preferred had all of the outstanding shares of Series B Preferred
been converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of Common Stock entitled to such dividends or distributions are
determined.
Conversion Rights.
Subject to possible adjustment as described below, each share of Series B
Preferred is convertible into 33.33 shares of Common Stock (representing a
conversion price of $30 per share of Common Stock based on the Liquidation
Preference of $1,000 per share of Series B Preferred).
The Designation provides that the conversion price is subject to specified
adjustments upon the occurrence of any of the following events:
. a distribution in the form of Common Stock is made on any class of
capital stock of the Company (see subsection 3(d)(v) of the
Designation); or
. a person other than the Company or a subsidiary purchases in a tender
offer not opposed by the Company more than 20% and less than 50% of the
Company's outstanding Common Stock and the tender offer price is less
than the conversion price in effect on the day the tender offer is
concluded (see subsection 3(d)(vi) of the Designation); or
. the Company issues certain rights, options or warrants to all holders of
Common Stock entitling them to acquire shares of Common Stock at a price
that is less than the then current market price for the Common Stock
(see subsection 3(d)(vii) of the Designation); or
. the outstanding shares of Common Stock are subdivided into a greater
number of shares of Common Stock (see subsection 3(d)(viii) of the
Designation); or
. the Company or any subsidiary makes a tender or exchange offer for any
of the Common Stock and the consideration paid per share of Common Stock
is greater than the market price for the Common Stock as of the trading
day next succeeding the expiration of the offer (see subsection 3(d)(ix)
of the Designation); or
. the Company issues to an affiliate (subject to certain exceptions)
Common Stock at a price per share that is less than the market price of
the Common Stock on the date of such issuance.
Redemption or Automatic Conversion
The Company has no obligation to redeem or repurchase the Series B
Preferred, except as described below.
Redemption or Automatic Conversion Relating to a Change of Control
If a Change in Control (as defined in the Designation) with respect to the
Company occurs (or the Company enters into a binding agreement relating
thereto), the following provisions will apply:
Transaction Not Accounted For as Pooling-of Interests. If the Change of
Control is not in connection with an acquisition that is accounted for under
the "pooling-of-interests" method of generally accepted accounting principles,
the Company must offer to purchase, within 10 business days after the Change
of Control, all of the then outstanding shares of Series B Preferred at a
purchase price per share, in cash, equal to the Liquidation Preference thereof
plus an amount equal to 6.25% of the Liquidation Preference, compounded
annually from the date of issuance of such share to the purchase date (the
"Call Price").
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Transaction Accounted For as Pooling-of Interests. If the Change of Control
is an acquisition that is accounted for under the "pooling-of-interests"
method of generally accepted accounting principles, then, upon the occurrence
of the Change in Control, all of the then outstanding Series B Preferred Stock
will be automatically converted into Common Stock having a market value equal
to 109.5% of the Call Price, valued at the closing price of the Common Stock
at the close of business on the business day prior to the date of the Change
in Control.
Redemption Relating to Certain Issuances of Securities
If, after 2 1/2 years following the date of the issuance of the Series B
Preferred, the Company issues for cash Common Stock or a series of preferred
stock convertible into Common Stock, in either a public offering or a bona
fide private financing, for a price for the Common Stock (including any amount
payable upon conversion of preferred stock) below the conversion price then in
effect for the Series B Preferred (each such offering being referred to as a
"Reduced Price Offering"), then the Company will be required to make an offer
to purchase the outstanding shares of Series B Preferred as follows:
If Offer to Purchase Series A Preferred is Not Required. If the Reduced
Price Offering is at a price that is not below the conversion price of the
Series A Preferred of $25, subject to adjustment (i.e., it does not also
trigger an obligation to offer to repurchase Series A Preferred), then the
Company will be required to offer to apply towards the purchase of Series B
Preferred at the Call Price an amount equal to 40% of the Specified Amount (as
hereinafter defined) with respect to such offering. The "Specified Amount"
with respect to any Reduced Price Offering shall equal the amount by which the
net cash proceeds from such Reduced Price Offering and for all other Reduced
Price Offerings consummated during the preceding 12 months (but excluding any
Reduced Price Offerings prior to December 31, 2001) exceeds an aggregate of
$50 million, less a credit for all amounts theretofore paid to the holders of
the Series A Preferred and the Series B Preferred for such purchases during
such 12-month period.
If Offer to Purchase Series A Preferred Stock is Also Required. If the
Reduced Price Offering is at a price that is below the conversion price of the
Series A Preferred of $25, subject to adjustment (i.e., it also triggers an
obligation to offer to purchase Series A Preferred), then the Company will be
required to offer to apply the Call Percentage (as defined below) of the
Specified Amount towards the purchase of both Series B Preferred and Series A
Preferred. In such event, the Specified Amount shall be allocated to the
purchase of Series B Preferred and Series A Preferred in proportion to the
aggregate liquidation amount of each such series of preferred stock (provided
that, if the aggregate liquidation amount of the Series B Preferred is in
excess of $500 million, such excess shall be ignored in calculating such
proportion). Any such purchase of Series B Preferred will be at the Call Price
and any purchase of Series A preferred will be at the price specified in the
certificate of designation for the Series A Preferred.
For purposes of the preceding paragraph, the "Call Percentage" will be a
function of the aggregate liquidation amount of the Series A Preferred and
Series B Preferred as set forth in following table:
<TABLE>
<CAPTION>
Aggregate
Liquidation Call
Amount Percentage
----------- ----------
<S> <C>
up to and including $500 million............................... 40%
more than $500 million to and including $550 million........... 43%
more than $550 million to and including $600 million........... 46%
more than $600 million to and including $650 million........... 50%
more than $650 million to and including $700 million........... 53%
more than $700 million to and including $750 million........... 56%
more than $750 million......................................... 60%
</TABLE>
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Voting
General Voting Rights
B-1 Preferred. Except as otherwise required by applicable law, the holders
of B-1 Preferred are entitled to vote together with the holders of the Common
Stock as a single class on all matters submitted to stockholders of the
Company for a vote. Each share of B-1 Preferred is entitled to one vote for
each share of Common Stock issuable upon conversion of such share of B-1
Preferred.
B-2 Preferred. Except as provided below under "--Class Voting Rights," the
holders of the B-2 Preferred are not entitled to vote on any matter to be
voted on by stockholders of the Company.
Class Voting Rights
The Company may not, without the affirmative vote or consent of the holders
of at least a majority of the shares of Series B Preferred then outstanding
voting or consenting as the case may be, as a separate class, take certain
actions specified in the Designation, including, among others, the declaration
or payment of an Extraordinary Dividend (as defined in the Designation).
Right to Exchange Between Classes of Series B Preferred
Subject to certain limitations set forth in the Designation, certain holders
of shares of B-2 Preferred shall be entitled, without the payment of any
additional consideration, to convert at any time and from time to time any or
all shares of B-2 Preferred held by such holder into the same number of shares
of B-1 Preferred and vice versa.
Right to Exchange Series B Preferred For Different Series of Preferred Stock
Under the terms of the Apollo Purchase Agreement, if the Company agrees, on
or before December 15, 1999, to issue to any person or persons more than $50
million aggregate liquidation preference of a series of convertible preferred
stock (other than (a) in connection with the acquisition of a business or the
acquisition of assets to be used in its business or (b) in a bona fide
underwritten public offering), then Apollo will be entitled at the closing of
such issuance to exchange its shares of Series B Preferred for shares of the
newly issued convertible preferred stock, with the Series B Preferred valued
at its liquidation amount.
Registration Rights
The Company will enter into a registration rights agreement with Apollo.
This agreement will grant to the holders of the shares of Common Stock
issuable upon conversion of the B-1 Preferred sold pursuant to the Apollo
Purchase Agreement certain rights to require the Company to register such
shares of Common Stock under the Securities Act of 1933. This agreement will
also provide that, under certain circumstances, if Bradley Jacobs (the
Chairman and Chief Executive Officer of the Company) sells any of his shares
of Common Stock he must afford Apollo the opportunity to sell on the same
terms and conditions a certain number of the shares of Common Stock owned by
Apollo.
INFORMATION CONCERNING THE CHARTER AMENDMENT PROPOSAL
The Company proposes to amend the Series A Designation as described below.
The form of the proposed amendment (the "Amendment") is attached as Exhibit A
hereto.
Amendment Relating to the Reduced Price Offerings
Under the terms of the Series B Preferred Designation, if the Company makes
an offering that constitutes a Reduced Price Offering under the terms of both
the Series A Preferred and Series B Preferred, the Company is
9
<PAGE>
required to offer to apply a certain amount towards the purchase of both
Series A Preferred and Series B Preferred on a pro rata basis (as described
under "Terms of the Series B Preferred--Redemption or Automatic Conversion--
Redemption Relating to Certain Issuances of Securities"). This provision is
inconsistent with the provision relating to Reduced Price Offerings contained
in the Series A Designation. In order to eliminate this inconsistency, the
Company proposes to amend the provisions of the Series A Designation
pertaining to Reduced Price Offerings. The Amendment in effect makes the
provisions of the Series A Designation relating to Reduced Price Offerings
consistent with those set forth in the Series B Preferred Designation.
Amendment Relating to Conversion Price Adjustment
The Series A Designation provides that the conversion price for the Series A
Preferred shall be adjusted in a specified manner if the Company issues to an
affiliate (subject to certain exceptions) Common Stock at a price per share
that is less than the market price of the Common Stock on the date of
issuance. The Amendment provides that an adjustment is not required for any
issuance upon the exercise of options or warrants or the conversion of
convertible securities, if such options, warrants or convertible securities
were issued for fair value at the time of their issuance.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
General
The table below and the notes thereto set forth as of June 30, 1999 (unless
otherwise indicated in the footnotes), certain information concerning the
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of the Common Stock by (i) each director and executive officer of
the Company, (ii) all executive officers and directors of the Company as a
group and (iii) each person known to the Company to be the owner of more than
5% of the Common Stock.
<TABLE>
<CAPTION>
Number of Shares of Percent of
Common Stock Common Stock
Name and Address(1) Beneficially Owned(2)(3) Owned(3)
- ------------------- ------------------------ ------------
<S> <C> <C>
Bradley S. Jacobs........................ 20,117,006(4) 25.8%
Wayland R. Hicks......................... 517,155(5) *
John N. Milne............................ 2,392,857(6) 3.3%
William F. Berry......................... 1,632,606(7) 2.2%
Michael J. Nolan......................... 1,028,911(8) 1.4%
John S. McKinney......................... 819,544(9) 1.1%
Robert P. Miner.......................... 441,904(10) *
Leon D. Black............................ 30,000(11) *
Richard D. Colburn....................... 13,808,662(12) 19.3%
Ronald M. DeFeo.......................... 73,000(13) *
Michael S. Gross......................... 30,000(14) *
Richard J. Heckmann...................... 90,000(15) *
Gerald Tsai, Jr.......................... 690,001(16) *
Christian M. Weyer....................... 102,000(17) *
All executive officers and directors as a
group
(14 persons)............................ 37,640,074(18) 45.5%
The Equitable Companies Incorporated..... 4,660,705(19) 6.5%
Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV L.P......... 12,000,000(20) 14.4%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, the address is c/o the Company.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of
any shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(3) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(4) Consists of 12,790,814 outstanding shares, 6,342,858 shares issuable upon
the exercise of currently exercisable warrants and 983,334 shares
issuable upon the exercise of currently exercisable options. Does not
include 1,966,667 shares issuable upon exercise of options which are not
currently exercisable. Mr. Jacobs has certain rights relating to the
disposition of certain shares and warrants that were issued prior to the
Company's initial public offering to certain officers and other employees
as described under "--Certain Agreements Relating to Securities Issued
Prior to the Company's IPO." By virtue of such rights, Mr. Jacobs is
deemed to share beneficial ownership (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) of the shares owned by such
persons. The shares that the table indicates are owned by Mr. Jacobs
include the shares with respect to which Mr. Jacobs is deemed to share
beneficial ownership as aforesaid. Excluding such shares, Mr. Jacobs is
deemed the beneficial owner of an aggregate
11
<PAGE>
of 15,983,434 shares of Common Stock (composed of 10,000,100 outstanding
shares, 5,000,000 shares issuable upon the exercise of currently
exercisable warrants and 983,334 shares issuable upon the exercise of
currently exercisable options).
(5) Consists of 108,822 outstanding shares and 408,333 shares issuable upon
the exercise of currently exercisable options. Does not include unissued
shares that the Company is required to pay Mr. Hicks as part of his base
salary pursuant to his employment agreement. Also does not include
816,667 shares issuable upon exercise of options which are not currently
exercisable.
(6) Consists of 1,428,571 outstanding shares, 714,286 shares issuable upon
the exercise of currently exercisable warrants and 250,000 shares
issuable upon the exercise of currently exercisable options. Does not
include 500,000 shares issuable upon exercise of options which are not
currently exercisable.
(7) Consists of 97 outstanding shares and 1,632,509 shares issuable upon the
exercise of currently exercisable options. Does not include 575,000
shares issuable upon exercise of options that are not currently
exercisable.
(8) Consists of 571,529 outstanding shares, 285,715 shares issuable upon the
exercise of currently exercisable warrants and 171,667 shares issuable
upon the exercise of currently exercisable options. Does not include
343,333 shares issuable upon exercise of options which are not currently
exercisable.
(9) Consists of 2,887 outstanding shares and 816,657 shares issuable upon the
exercise of currently exercisable options. Does not include 337,500
shares issuable upon exercise of options that are not currently
exercisable.
(10) Consists of 285,714 outstanding shares and 142,857 shares issuable upon
the exercise of currently exercisable warrants and 13,333 shares issuable
upon exercise of currently exercisable options. Does not include 66,667
shares issuable upon exercise of options which are not currently
exercisable.
(11) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Black disclaims beneficial ownership of certain shares as
described in footnote 20.
(12) Consists of 13,798,662 outstanding shares and 10,000 shares issuable upon
the exercise of currently exercisable options. These outstanding shares
are owned by a corporation wholly owned by Mr. Colburn. Does not include
20,000 shares issuable upon exercise of options that are not currently
exercisable. Mr. Colburn disclaims beneficial ownership of 290,000 shares
held by the Colburn Foundation which are not reflected in this table.
(13) Consists of 3,000 outstanding shares and 70,000 shares issuable upon the
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(14) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Gross disclaims beneficial ownership of certain shares as
described in footnote 20.
(15) Consists of 20,000 outstanding shares and 70,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(16) Consists of 270,001 outstanding shares and 420,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(17) Consists of 72,000 outstanding shares and 30,000 shares issuable upon
exercise of currently exercisable options.
(18) Consists of 26,561,383 outstanding shares, 6,242,858 shares issuable upon
the exercise of currently exercisable warrants and 4,835,833 shares
issuable upon the exercise of currently exercisable options. Does not
include 4,685,834 shares issuable upon exercise of options which are not
currently exercisable.
(19) The following information is as of December 31, 1998, and is based on
information contained in a Schedule 13G filed by the indicated
shareholder. Consists of shares beneficially owned by the following
subsidiaries of The Equitable Companies Incorporated, each of which
operates under independent management and makes independent decisions:
4,337,130 shares beneficially owned by Alliance Capital Management L.P.
(of which it is deemed to have shared power to vote or direct the vote
with respect to 3,853,200 shares); 120,800 shares beneficially owned by a
separate account of The Equitable Life
12
<PAGE>
Assurance Society of the United States; 46,011 shares beneficially owned
by Wood Struthers & Winthrop Management Corporation; and 156,764 shares
beneficially owned by Donaldson, Lufkin & Jenrette Securities Corporation
(of which it is deemed to have shared power to dispose or to direct the
disposition with respect to 155,802 shares). The address of the indicated
stockholder is 1290 Avenue of the Americas, New York, New York 10104.
(20) Consists of shares issuable upon conversion of outstanding shares of the
Company's Series A Preferred. Of the shares indicated, (i) 11,389,040
shares are owned by Apollo Investment Fund IV, L.P. ("AIFIV") and (ii)
610,960 shares are owned by Apollo Overseas Partners IV, L.P. ("Overseas
IV"). Apollo Advisors IV, L.P. ("Advisors IV") is the general partner of
AIFIV and the managing general partner of Overseas IV. Apollo Capital
Management IV, L.P. ("Capital Management IV") is the general partner of
Advisors IV. The directors and principal executive officers of Capital
Management IV are Leon D. Black and John J. Hannan. Messrs. Black and
Hannan are also limited partners of Advisors IV. Messrs. Black, Gross and
Hannan disclaim beneficial ownership of the shares owned by AIFIV and
Overseas IV. The address of both AIFIV and Overseas IV is c/o Apollo
Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577.
Securities to be Owned by Apollo After Issuance of the Series B Preferred
Following the issuance of the Series B Preferred to Apollo as described in
this Proxy Statement, Apollo will own 300,000 shares of Series A Preferred and
100,000 shares of Series B Preferred. These shares of preferred stock will be
convertible into an aggregate of 15,333,334 shares of Common Stock (subject to
adjustment), which represents 17.6% of the shares of Common Stock outstanding
as of June 30, 1999 (on a pro forma basis giving effect to the conversion into
Common Stock of the Series B Preferred to be issued to Apollo).
Certain Agreements Relating to Securities Issued Prior to the Company's IPO
Prior to the Company's initial public offering, certain officers and other
employees of the Company, among others, purchased Common Stock (and in certain
cases warrants) from the Company in private placements. All shares of Common
Stock and warrants purchased by the officers and other employees of the
Company prior to the Company's initial public offering (and any shares of
Common Stock acquired upon exercise of such warrants) are referred to as the
"Private Placement Securities."
Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has entered into an agreement with the Company and Mr. Jacobs that
provides that (1) if Mr. Jacobs sells any Private Placement Securities that he
beneficially owns in a commercial, non-charitable transaction, then Mr. Jacobs
is required to use his best efforts to sell (and has the right to sell subject
to certain exceptions) on behalf of such holder a pro rata portion of such
holder's Private Placement Securities at then prevailing prices, and (2)
except for sales that may be required to be made as aforesaid, the holder
shall not (without the prior written consent of the Company) sell or otherwise
dispose of the Private Placement Securities owned by such holder (subject to
certain exceptions for charitable gifts). The foregoing provisions of the
agreements terminate, depending on the individual, in either September or
October 2002.
13
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF DESIGNATIONS
PERPETUAL CONVERTIBLE PREFERRED STOCK, SERIES A
OF
UNITED RENTALS, INC.
----------------
Pursuant to Sections 151 and 242 of the General Corporation Law
of the State of Delaware
----------------
It is hereby certified that:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is United Rentals, Inc.
SECOND: The Certificate of Designations (the "Series A Certificate of
Designations") of Perpetual Convertible Preferred Stock, Series A, par
value $.01 per share (the "Series A Preferred Stock"), of the Corporation
was filed with the Secretary of State of the State of Delaware on January
7, 1999.
THIRD: The Board of Directors of the Corporation has duly adopted the
following resolutions amending Series A Certificate of Designations, by
unanimous consent dated as of , 1999:
RESOLVED, that the Series A Certificate of Designations be amended as
follows:
1. The parenthetical phrase in the first line of Section 3(xi) shall
be amended and restated in its entirety as follows: "(other than (a)
persons or entities who become Affiliates only as a result of such
issuance, (b) directors, officers or employees of the Company under
bona fide compensation or benefit arrangements or (c) upon the exercise
of options or warrants or the conversion of convertible securities,
issued for fair value at the time of any such issuance of options,
warrants or covertible securities)";
2. The following language shall be inserted in the first sentence of
Section 5(ii) in lieu of the phrase "40%": "the Call Percentage (as
hereinafter defined)"
3. The following language shall be inserted immediately following the
clause "for all amounts theretofore paid" in the first sentence of
Section 5(ii): "to the holders of the Series A preferred Stock and the
Series B Preferred Stock"
4. The following language shall be inserted immediately following the
first paragraph of Section 5(ii): "The term "Call Percentage" for any
Reduced Price Offering (i) shall mean 40%, if the Series B Preferred
Stock shall not be entitled to a portion of the cash proceeds of such
Reduced Price Offering and (ii) for all other Reduced Price Offerings,
shall be determined by reference to the following table, in which
"Liquidation Amount" means the aggregate liquidation amount of all
shares of Series A Preferred Stock and Series B Preferred Stock then
outstanding:
<TABLE>
<CAPTION>
Aggregate
Liquidation Call
Amount Percentage
----------- ----------
<S> <C>
up to and including $500 million............................... 40%
more than $500 to and including 550 million.................... 43
more than $550 to and including 600 million.................... 46
more than $600 to and including 650 million.................... 50
more than $650 to and including 700 million.................... 53
more than $700 to and including 750 million.................... 56
more than $750 million......................................... 60
</TABLE>
14
<PAGE>
Notwithstanding the foregoing, in the event that the Series B
Preferred Stock shall also be entitled to a portion of the net cash
proceeds of a Reduced Price Offering, then the net cash proceeds of
such Reduced Price Offering shall be applied towards the purchase pro
rata, based on their respective liquidation amounts, between the Series
A Preferred Stock and up to $500,000,000 liquidation amount of the
Series B Preferred Stock, and no portion of such net cash proceeds
shall be applied to Series B Preferred Stock in excess of such
$500,000,000 liquidation amount."
5. The following definition shall be added to Section 16: "Series B
Preferred Stock" shall mean the Perpetual Convertible Preferred Stock,
Series B, par value $.01 per share, of the Corporation.
RESOLVED, except as expressly amended above, no changes to the Series A
Certificate of Designations shall be made and all future references in
any certificate, document or agreement shall be deemed to be a
reference to the Series A Certificate of Designations, as amended
hereby.
FOURTH: The holders of the Series A Perpetual Convertible Preferred Stock
have duly approved the foregoing resolutions by unanimous consent in lieu
of meeting dated as of , 1999.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed this day of 1999.
UNITED RENTALS, INC.
By:
-----------------------------------
Name:
Title:
15
<PAGE>
UNITED RENTALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bradley S. Jacobs, John N. Milne, Michael
J. Nolan or any of them with full power of substitution, proxies to vote at the
Special Meeting of Stockholders of United Rentals, Inc. (the "Company") to be
held on [ ], 1999 at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, all shares
of Common Stock of the Company and all shares of Series A Perpetual Convertible
Preferred Stock of the Company held or owned by the undersigned as directed
below, and in their discretion upon such other matters as may come before the
meeting.
(To be Signed on Reverse Side)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PROPOSAL, THIS PROXY
WILL BE VOTED FOR SUCH PROPOSAL.
[X] Please mark your votes as in this example.
1. Ratification of sale of Series B
Perpetual Convertible Preferred
stock to Apollo [_] For [_] Against [_] Abstain
2. Ratification of amendment to
Certificate of Designation for
Series A Perpetual Convertible
Preferred Stock [_] For [_] Against [_] Abstain
SIGNATURE(S)____________________________________________ DATE _______________
NOTE: Please sign exactly as name appears hereon, joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
