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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 1998
REGISTRATION NO. 333-65003
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ANTHONY CRANE RENTAL HOLDINGS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 7353 25-1814367
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
1165 CAMP HOLLOW ROAD
WEST MIFFLIN, PENNSYLVANIA 15122
TELEPHONE: (412) 469-3700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RAY G. ANTHONY
1165 CAMP HOLLOW ROAD
WEST MIFFLIN, PENNSYLVANIA 15122
TELEPHONE: (412) 469-3700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
LANCE C. BALK
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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(continued from previous page)
ANTHONY CRANE HOLDINGS CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7353 25-1817793
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
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PRELIMINARY PROSPECTUS
ANTHONY CRANE RENTAL HOLDINGS, L.P.
ANTHONY CRANE HOLDINGS CAPITAL CORPORATION
OFFER TO EXCHANGE THEIR SERIES B 13 3/8% SENIOR DISCOUNT DEBENTURES DUE
2009 FOR ANY AND ALL OF THEIR OUTSTANDING SERIES A 13 3/8% SENIOR DISCOUNT
DEBENTURES DUE 2009
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998,
UNLESS EXTENDED.
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Anthony Crane Rental Holdings, L.P., a Pennsylvania limited partnership
("Holdings"), and Anthony Crane Holdings Capital Corporation, a Delaware
Corporation and wholly owned subsidiary of Holdings ("AC Holdings Corp." and,
together with Holdings, the "Issuers"), hereby offer (the "Exchange Offer"),
upon the terms and conditions set forth in this Prospectus (the "Prospectus")
and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange $1,000 principal amount of its Series B 13 3/8% Senior Discount
Debentures due 2009 (the "Exchange Debentures"), which will have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus is a part, for
each $1,000 principal amount of its outstanding Series A 13 3/8% Senior
Discount Debentures due 2009 (the "Debentures"), of which $25,667,404 principal
amount is outstanding. The form and terms of the Exchange Debentures are the
same as the form and term of the Debentures (which they replace) except that
the Exchange Debentures will have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer and will not
contain certain provisions relating to an increase in the interest rate which
were included in the terms of the Debentures in certain circumstances relating
to the timing of the Exchange Offer. The Exchange Debentures will evidence the
same debt as the Debentures (which they replace) and will be issued under and
be entitled to the benefits of the Indenture, dated July 22, 1998, among the
Issuers and State Street Bank and Trust Company, as trustee (the "Indenture"),
governing the Debentures. See "The Exchange Offer" and "Description of Exchange
Debentures."
The Exchange Debentures will be general unsecured obligations of the Issuers,
will rank pari passu in right of payment to all existing and future senior
unsecured indebtedness of the Issuers and will rank senior in right of payment
to all existing and future subordinated indebtedness of the Issuers. The
Debentures, however, will be (i) effectively subordinated to all secured
obligations of the Issuers, to the extent of the assets securing such
obligations and (ii) structurally subordinated to all obligations of Holdings'
subsidiaries. As of September 30, 1998, after giving effect to the
Transactions, the Debentures have been effectively subordinated to $349.9
million of obligations of Holdings' subsidiaries (including a capital lease
obligation). The Indenture will permit additional borrowings under the Senior
Credit Facilities in the future. Neither Issuer has issued, and does not have
any current firm arrangements to issue, any indebtedness to which the Exchange
Debentures would rank senior or pari passu in right of payment. See "Risk
Factors--Holdings Company Structure; Effective Subordination."
The Issuers will accept for exchange any and all Debentures validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless
extended by the Issuers in their sole discretion (the "Expiration Date").
Notwithstanding the foregoing, the Issuers will not extend the Expiration Date
beyond , 1998. Tenders of Debentures may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. The Debentures were sold by the Issuers on July 22, 1998
(the "Debenture Offering") to the Initial Purchasers (as defined) in a
transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act. The Initial Purchasers subsequently placed
the Debentures with qualified institutional buyers in reliance upon Rule 144A
under the Securities Act and in offshore transactions pursuant to Regulation S
under the Securities Act. Accordingly, the Debentures may not be reoffered,
resold or otherwise transferred in the United States unless registered under
the Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Debentures are
being offered hereunder in order to satisfy the obligations of the Issuers
under the Registration Rights Agreement entered into by the Issuers in
connection with the offering of the Debentures. See "The Exchange Offer".
With respect to resales of Exchange Debentures, based on interpretations by
the staff of the Securities and Exchange Commission (the "Commission") set
forth in no-action letters issued to third parties, the Issuers believe the
Exchange Debentures issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is an "affiliate" of either Holdings or AC Holdings Corp.
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Debentures are acquired in the ordinary course of
such holder's business and such holder has no arrangement or understanding with
any person to participate in the distribution of such Exchange Debentures. See
"The Exchange Offer--Purpose and Effect of the Exchange Offer" and "The
Exchange Offer--Resales of the Exchange Debentures." Each broker-dealer (a
"Participating Broker-Dealer") that receives Exchange Debentures for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Debentures. The
Letter of Transmittal states that by so acknowledging and by delivering a
Prospectus, a participating Broker-Dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Exchange Debentures
received in exchange for Debentures where such Debentures were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities. The Issuers have agreed that, for a period of 180 days from
the consummation of the Exchange Offer, it will make this Prospectus available
to any Participating Broker-Dealer for use in connection with any such resale.
See "Plan of Distribution."
If any holder of Debentures is an affiliate of either Holdings or AC Holdings
Corp., is engaged in or intends to engage in or has any arrangement or
understanding with any person to participate in the distribution of the
Exchange Debentures to be acquired in the Exchange Offer, such holder (i)
cannot rely on the applicable interpretations of the Commission and (ii) must
comply with the registration requirements of the Securities Act in connection
with any resale transaction.
Holders of Debentures not tendered and accepted in the Exchange Offer will
continue to hold such Debentures and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Issuers
will pay all the expenses incurred by them incident to the Exchange Offer. See
"The Exchange Offer."
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SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR DEBENTURES IN THE
EXCHANGE OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
INFORMATION CONTAINED HEREIN SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
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(COVER PAGE CONTINUED)
The Issuers will not receive any proceeds from the Exchange Offer. The
Issuers have agreed to bear the expenses of the Exchange Offer. No underwriter
is being used in connection with the Exchange Offer.
There has not previously been any public market for the Debentures or the
Exchange Debentures. The Issuers do not intend to list the Exchange Debentures
on any securities exchange or to seek approval for quotation through any
automated quotation system. There can be no assurance that an active market
for the Exchange Debentures will develop. See "Risk Factors--Absence of a
Public Market." Moreover, to the extent that Debentures are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Debentures could be adversely affected.
Concurrent with the Debenture Offering, the Company (as defined) and AC
Capital Corp. (as defined) (together, the "Note Issuers"), sold (the "Initial
Note Offering," and together with the Debenture Offering, the "Initial
Offerings") $155.0 million in aggregate principal amount of their 10 3/8%
Senior Notes due 2008 (the "Senior Notes").
Concurrent with this Exchange Offer, the Note Issuers are offering to
exchange (the "Note Exchange Offer," and together with this Exchange Offer,
the "Exchange Offers") $1,000 principal amount at maturity of their Series B
10 3/8% Senior Notes due 2008 (the "Exchange Notes") registered under the
Securities Act pursuant to a Registration Statement, for each $1,000 principal
amount at maturity of their outstanding Notes, of which $155.0 million
aggregate principal amount at maturity is outstanding as of the date hereof.
The Senior Notes and the Exchange Notes are sometimes referred to herein
collectively as the "Senior Notes." See "The Transactions" and "Description of
Certain Indebtedness--Senior Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUERS ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF DEBENTURES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUERS.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE DEBENTURES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
The Exchange Debentures will be available initially only in book-entry form
and the Issuers expect that the Exchange Debentures issued pursuant to the
Exchange Offer will be issued in the form of a Global Note (as defined), which
will be deposited with, or on behalf of, The Depository Trust Company ("DTC")
and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global Note representing the Exchange Debentures
will be shown on, and transfers thereof will be effected through, records
maintained by DTC and its participants. After the initial issuance of the
Global Note, Exchange Debentures in certificated form will be issued in
exchange for the Global Note only under limited circumstances as set forth in
the Indenture. See "Description of the Exchange Debentures--Book-Entry;
Delivery and Form."
<PAGE>
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act, and the rules and regulations promulgated thereunder, covering
the Exchange Debentures being offered hereby. This Prospectus does not contain
all the information set forth in the Exchange Offer Registration Statement.
For further information with respect to the Issuers and the Exchange Offer,
reference is made to the Exchange Offer Registration Statement. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Exchange
Offer Registration Statement, reference is made to the exhibit for a more
complete description of the document or matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Exchange Offer Registration Statement, including the exhibits thereto, can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
the Regional Offices of the Commission at 75 Park Place, New York, New York
10007 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additionally, the Commission
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including the Issuers.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Issuers will become subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith will be required to file periodic reports
and other information with the Commission. The obligation of the Issuers to
file periodic reports and other information with the Commission will be
suspended if the Exchange Debentures are held of record by fewer than 300
holders as of the beginning of any fiscal year of the Issuers other than the
fiscal year in which the Exchange Offer Registration Statement is declared
effective. The Issuers will nevertheless be required to continue to file
reports with the Commission if the Exchange Debentures are listed on a
national securities exchange. In the event the Issuers cease to be subject to
the informational requirements of the Exchange Act, Holdings will be required
under the Indenture to continue to file with the Commission the annual and
quarterly reports, information, documents or other reports, including, without
limitation, reports on Forms 10-K, 10-Q and 8-K, which would be required
pursuant to the informational requirements of the Exchange Act. Under the
Indenture, the Issuers shall file with the Trustee annual, quarterly and other
reports within fifteen days after it files such reports with the Commission.
Further, to the extent that annual or quarterly reports are furnished by the
Issuers to holders of partnership interests generally it will mail such
reports to holders of Exchange Debentures. The Issuers will furnish annual and
quarterly financial reports to unitholders of the Issuers and will mail such
reports to holders of Exchange Debentures pursuant to the Indenture, thus
holders of Exchange Debentures will receive financial reports every quarter.
Annual reports delivered to the Trustee and the holders of Exchange Debentures
will contain financial information that has been examined and reported upon,
with an opinion expressed by an independent public or certified public
accountant. The Issuers will also furnish such other reports as may be
required by law.
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This Prospectus includes "forward-looking statements" which appear in a
number of places in this Prospectus and include statements regarding the
intent, belief or current expectations of the Issuers or their respective
officers with respect to, among other things, the ability to enter into and
borrow funds under the Senior Credit Facilities, the ability to successfully
implement operating strategies, including trends affecting the Company's
business, financial condition and results of operations. All statements other
than statements of historical facts included in this Prospectus, including,
without limitation, the statements under "Prospectus Summary," "Unaudited Pro
Forma Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," and located
elsewhere herein regarding industry prospects and the Company's financial
position are forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof.
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Although the Issuers believe that the expectations reflected in such forward-
looking statements are reasonable, they can give no assurance that such
expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Issuers' expectations (the
"Cautionary Statements") are disclosed in this Prospectus, including, without
limitation, in conjunction with the forward-looking statements included in
this Prospectus under "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business."
All subsequent written and oral forward-looking statements attributable to
the Issuers or persons acting on their behalf are expressly qualified in their
entirety by the Cautionary Statements and Risk Factors contained throughout
this Prospectus.
MARKET SHARE AND INDUSTRY DATA
The market share and industry data presented herein are based upon estimates
by management of the Company, utilizing various third party sources, where
available. While management believes that such estimates are reasonable and
reliable, in certain cases, such estimates cannot be verified by information
available from independent sources.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety, including information set forth under the heading
"Risk Factors." Unless the context otherwise requires, references herein to
"ACR" or the "Company" include Anthony Crane Rental, L.P., its subsidiaries and
affiliates after giving effect to the Transactions. References herein to other
companies include the subsidiaries and affiliates of such companies. See "The
Transactions."
HOLDINGS
Partnership interests of the Company and investment in the capital stock of
AC Holdings Corp. account for all of Holdings' assets. Holdings conducts all of
its business through the Company.
THE COMPANY
Anthony Crane Rental, L.P. is the largest provider of comprehensive crane and
lifting equipment rentals and services in North America. The Company believes,
based on the number and widespread location of its yards, that it is the only
national crane rental company in the highly fragmented U.S. crane rental
industry. The Company has a network of 25 crane rental yards that provide
services to over 8,000 customers in 41 states, Mexico and the Caribbean. The
Company owns approximately 2,500 pieces of lifting equipment, ranging from
1,000-ton mobile cranes to two-person aerial work platforms. The Company
believes that its crane fleet represented approximately 15% of the total U.S.
crane rental fleet in 1997. While its primary business is the rental of crane
and lifting equipment, approximately 15% of the Company's 1997 revenues were
derived from sales of new and used equipment. The Company has achieved 31
consecutive years of revenue growth and compound annual growth rates of
revenues and EBITDA (as defined) from 1993 to 1997 of 26.0% and 19.5%,
respectively. For the twelve months ended September 30, 1998, on a pro forma
basis ACR generated revenues and EBITDA of $198.2 million and $58.1 million,
respectively.
The Company has grown by pursuing an operating philosophy focused on serving
the crane and lifting needs of industrial customers in the petrochemical,
paper, steel, utility, mining and multiple other industries. These industrial
customers, which accounted for approximately 70% of the Company's 1997 rental
revenues, frequently rent cranes for regularly scheduled, non-deferrable plant
maintenance activities. These projects can require up to 100 cranes of varying
sizes at any one time and are often extremely time-sensitive because they
interrupt plant operations. As a result, industrial customers value
reliability, availability, safety and operator experience more than certain
other factors. The Company believes that its industrial customer base provides
stable crane rental demand as such customers tend to require a certain level of
predictable and necessary plant maintenance regardless of economic conditions.
The Company has also been successful in serving the needs of construction
contractors, which accounted for approximately 30% of 1997 rental revenues.
These construction customers rent cranes primarily for large, long-term public
infrastructure and commercial construction projects which are generally not
deferred once started.
INDUSTRY
The crane rental industry is an estimated $750 million market within the $16
billion general equipment rental industry. The general equipment rental
industry has grown at a compound annual growth rate of approximately 15% from
1991 to 1996. This growth has been driven by a combination of underlying end-
user growth and a trend toward outsourcing non-core operations in order to: (i)
reduce their capital investments; (ii) gain access to specialized equipment on
an economic basis; (iii) meet safety standards; and (iv) minimize the downtime,
maintenance, repair, storage and other operating costs associated with
equipment ownership.
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Growth in the crane rental industry has resulted from factors similar to
those driving growth in the general equipment rental industry, particularly the
trend toward further outsourcing. Rental companies are able to provide
customers with savings relative to owning cranes by capitalizing on volume-
driven equipment purchase discounts and high utilization rates. As evidence of
the outsourcing trend, the Company believes that approximately 80% of new
cranes sold in 1997 were purchased directly for the rental market, representing
an increase from 40% in the early 1980s. However, the Company believes rental
companies own less than one-half of the total installed base of cranes in the
United States. Management believes there is substantial growth potential from
the continued outsourcing of lifting equipment as an increasing number of end
users assess the "rent versus buy" decision.
The crane rental industry is highly fragmented and is served by a distinct
set of companies who focus almost exclusively on crane and lifting equipment
rental. ACR generally competes with a small number of regional crane rental
companies (who typically own less than 200 cranes) and hundreds of local crane
rental companies (who typically own less than 50 cranes). Management believes
that general equipment rental companies have not significantly participated in
the crane rental market because they are less able to meet the broad needs of
crane rental customers for several reasons, including: (i) the high levels of
expertise and commitment required to provide a full range of value-added
lifting services, such as highly qualified, well trained operators and lift
planning; (ii) the substantial amount of capital dedicated to cranes and
lifting equipment required to provide the fleet size and selection necessary to
meet the broad demands of larger customers; and (iii) the significant
maintenance programs required to ensure equipment reliability and safety. Given
the unique characteristics and fragmentation of the crane rental industry,
management believes there are substantial opportunities for ACR to leverage its
competitive advantages and further increase its market share through geographic
expansion and consolidation.
COMPETITIVE STRENGTHS
ACR believes that it benefits from the following competitive strengths:
LEADING MARKET POSITION AND NATIONAL SCOPE. ACR is the largest and only
national provider of comprehensive crane and lifting equipment rentals and
services in the United States. The Company estimates that its crane fleet
represented approximately 15% of the total U.S. crane rental fleet in 1997.
According to industry estimates, the Company's crane rental fleet is
significantly larger than that of its next largest competitor. Management
believes that, relative to the Company, most local and regional crane rental
competitors lack the fleet size necessary to provide customers with comparable
selection and availability. Furthermore, ACR's national scope, together with
the mobile nature of its fleet, affords it the ability to move assets in
response to varying levels of regional or seasonal demand and thus maximize its
fleet utilization.
LOW COST POSITION. ACR's leadership position results in economies of scale,
which management believes provide significant cost savings relative to its
competitors and thus allow the Company to provide superior services at
competitive prices. ACR's low cost position results from a number of factors.
First, ACR is the largest non-government buyer of cranes in the United States
and consequently benefits from volume-driven purchase discounts. Second, ACR
achieves superior utilization rates for its equipment due to its broad customer
base and ability to move equipment among both yards and regions. Third, ACR
realizes greater efficiency in its maintenance operations, which enables the
Company to realize longer equipment lives than many of its competitors.
Finally, ACR spreads operating and corporate overhead costs over a larger
revenue base. As a result of these advantages, management believes that the
Company generally earns higher margins and returns on its equipment investments
than its smaller local and regional competitors.
EMPHASIS ON INDUSTRIAL CUSTOMERS. The Company focuses on serving the crane
and lifting needs of industrial customers, who frequently rent cranes for
regularly scheduled, non-deferrable plant maintenance activities. Industrial
usage accounted for approximately 70% of the Company's rental revenues in 1997.
Management believes that, relative to its competitors, ACR is better positioned
to serve industrial customers for
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several reasons. First, ACR meets the quantity, availability and reliability
requirements of large industrial customers with its broad, well maintained
fleet which includes larger and more specialized cranes required for major
plant maintenance jobs and special applications. Second, the Company offers a
full range of lifting services and experienced crane operators, which are
increasingly important as customers outsource more of their crane and lifting
needs. Last, ACR minimizes downtime on a customer's site through both
preventative maintenance and field repair/replacement services. The Company
believes that its industrial customer base provides stable crane rental demand
as such customers tend to require a certain level of predictable and necessary
plant maintenance regardless of economic conditions.
MODERN, WELL MAINTAINED CRANE FLEET. ACR has a modern, well maintained fleet
with an average age of approximately five years as of September 30, 1998. From
January 1, 1994 through September 30, 1998, the Company has invested
approximately $298 million in rental equipment. As a result of these capital
investments, the Company has expanded its rental fleet by approximately 1,500
units over such four and three quarter year period. In addition, ACR spent over
$13 million on expensed fleet maintenance during 1997 and $10.7 million for the
nine months ended September 30, 1998, in order to maintain the value of its
fleet and exceed industry-accepted safety and reliability standards. By
regularly inspecting its cranes and investing in preventive maintenance, ACR is
able to minimize costly field repairs and downtime on customer sites.
Management believes that its strong maintenance programs enhance the long-term
value of its cranes over their 15 to 25 year average lives. From 1994 to 1997,
ACR sold its used equipment for an average of greater than 90% of its original
cost.
SUPERIOR FLEET MANAGEMENT. The Company believes that a key factor
contributing to its ability to generate consistent returns and strong resale
values on its rental fleet investment has been its proactive fleet management
program. Through this program, the Company uses a tracking system to monitor
and maximize asset utilization on a crane-by-crane basis. The Company's fleet
management program facilitates decisions regarding: (i) asset mix at individual
yards; (ii) movements of equipment on an intra-regional and inter-regional
basis; and (iii) relocation or divestiture of underperforming assets.
Management believes that as a result of its effective fleet management and high
utilization rates, the Company has generated consistent returns on its fleet
investment.
COMPREHENSIVE CRANE AND LIFTING EXPERTISE. Over its 30-year history, the
Company has developed significant lifting expertise. The Company provides a
full range of turnkey lift planning and execution services, including job
specification, equipment selection and skilled crane operation and rigging. The
Company's regional managers average over 27 years of crane rental experience.
The Company maintains a Crane Specialist at each yard and has several special
situation experts throughout its organization who typically have many years of
lifting and crane operating experience. In addition, the Company believes that
it has the ability to attract and retain superior operators which allows it to
strengthen customer relationships and provide superior execution. ACR believes
that its long history and reputation as a crane expert and total lifting
solution provider represents a significant competitive advantage, and the
majority of the Company's rentals include the value-added services described
above.
DIVERSE CUSTOMER BASE. The Company believes its diverse customer base
mitigates the impact of an economic downturn related to a particular customer,
industry or geographic region. In 1997, ACR served over 8,000 customers in 41
states, Mexico and the Caribbean. Examples of the Company's key customers
include: Hess Oil, USX Corp., Mobil Corp., Huntsman Corp., Florida Power and
Light Co., International Paper Co., Procter & Gamble Co. and Bayer AG. No
customer accounted for greater than 2% of the Company's rental revenues in
1997, other than a single industrial customer who represented 7% of 1997 rental
revenues and for whom the Company provides fleet management services under the
terms of an exclusive contract. The Company's customers cover a wide spectrum
of industries, and management estimates that of the end-user groups for which
it records data, no single industry accounted for more than 13% of rental
revenues in 1997. Additionally, no single region accounted for greater than 28%
of the Company's 1997 rental revenues.
3
<PAGE>
BUSINESS STRATEGY
ACR's business strategy is to serve the crane and lifting needs of industrial
and other large customers by providing a broad selection of modern, well
maintained lifting equipment, comprehensive lift planning and execution
services and highly qualified, well trained operators. The Company's leading
market position and track record of profitable internal growth are attributable
to the successful implementation of this business strategy. ACR intends to
achieve further growth and strengthen its competitive position through the
continued implementation of this strategy and the following initiatives:
LEVERAGE MARKET LEADERSHIP POSITION. The Company intends to leverage its
leadership position and build on its track record of profitable internal
growth. From 1993 to 1997, ACR achieved a compound annual revenue growth rate
of 26.0% primarily through internal growth. The Company intends to continue
this growth by: (i) expanding sales in existing yards through equipment
additions and marketing efforts targeted at new and existing customers; (ii)
opening satellite yards in contiguous geographic areas, which are currently
served by one of the Company's existing yards; and (iii) opening greenfield
("start-up") yards in selected noncontiguous markets where the Company does not
currently conduct business. Such greenfield yards cannot, in the short term,
benefit from economies that might result from coordination with existing
operations.
EMPHASIZE LONG-TERM CUSTOMER RELATIONSHIPS. Management believes that its
customers value the broad range of equipment and services that the Company
provides and many of its customers use ACR for predominantly all of their
lifting needs. The strength of ACR's customer relationships is evidenced by the
fact that 23 of the Company's top 25 customers in 1997 have been major
customers in each of the last five years. The Company capitalizes on its
presence on a customer's site by proactively anticipating and pursuing
incremental equipment rental opportunities and continuously strengthening this
customer relationship. In addition, as the only national provider of crane
rental services, the Company believes that it is uniquely positioned to serve
customers across multiple locations.
COMPLETE CALIFORNIA ROLLOUT. ACR intends to continue to invest in the Los
Angeles and San Diego markets, which it entered in 1997 with three new rental
yards. During the initial stages of infrastructure buildout, the Company
incurred significant start-up costs and experienced lower fleet utilization
than that of its more mature yards. The Company is increasing the fleet size of
these new yards in order to leverage its existing investment and meet the
diverse lifting needs of larger customers in these markets. Management expects
that these equipment additions will allow the Company to grow revenues in these
attractive markets and achieve fleet utilization and operating margins
consistent with those of the Company's more mature yards.
EXPAND THROUGH SELECTED ACQUISITIONS. The crane rental industry is highly
fragmented and the Company generally competes with a small number of regional
and hundreds of local crane rental companies. Management believes that there
are substantial opportunities for ACR to leverage its competitive strengths and
increase its market share through selected acquisitions. In evaluating
acquisition targets, the Company seeks acquisitions that would allow it to
penetrate new geographic markets or to solidify its position in certain
existing geographic markets, while generating attractive economic returns and
building on existing customer relationships.
RECENT DEVELOPMENTS
The Company has continued to experience growth in revenues and EBITDA since
December 31, 1997. For the ten months ended October 31, 1998, total revenues
increased 11.7%, from $154.7 million in 1997 to $172.9 million in 1998. Over
the same ten-month period, pro forma EBITDA increased 27.7%, from $40.5 million
to $51.7 million. A significant portion of this growth resulted from the full-
year impact of the capital expenditures for new rental equipment made in 1997
and the improved performance of the Company's new yards in California. See
"Unaudited Pro Forma Consolidated Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
4
<PAGE>
THE SPONSOR
Bain Capital, Inc. ("Bain") manages capital in excess of $3 billion and has
invested in more than 110 companies representing over $10 billion in purchase
price. Bain is one of the most experienced and successful private equity
investors in the United States and the firm's principals have extensive
experience working with companies in a wide range of industries. Bain's
investment strategy is to acquire companies in partnership with exceptional
management teams and to improve the long-term value of businesses. Bain
typically identifies companies with strong strategic positions and significant
opportunities for growth. Bain's investment in the Company is among its largest
to date.
As a result of the Transactions, certain of Bain's affiliates own
substantially all of the outstanding membership interests of the Equity
Investor. The Equity Investor, through its ownership of approximately 76% of
the outstanding membership interests of the General Partner, controls the
affairs and policies of Holdings and the Company. Certain employees of Bain,
consisting of Paul Edgerley, Robert C. Gay and Andrew B. Balson, serve as
members of the board of the General Partner. In addition, an affiliate of Bain
owns a portion of the outstanding Senior Notes and Debentures.
The General Partner is the general partner of both Holdings and the Company.
The General Partner is approximately 69% owned by affiliates of Bain,
approximately 13% owned by other unrelated parties and management and 18% owned
by Anthony Iron and Metal Company ("AIM"), of which Ray G. Anthony is the
controlling general partner. AIM also owns 17.82% of the limited common
partnership interests of Holdings in addition to its .18% interest through the
General Partner. The General Partner is governed by a Board of Managers, which
consists of the three representatives of Bain, three representatives of AIM
(Mr. Anthony, David W. Mahokey and William B. Kania), and one representative of
another shareholder (James E. Haas). Pursuant to Holdings' Agreement of Limited
Partnership, limited partners have voting rights equivalent to the respective
economic interests (equal in aggregate to 99% of the vote) and, through a
majority vote, can remove the General Partner.
THE TRANSACTIONS
Concurrent with the consummation of the Debenture Offering, the Company
consummated the Recapitalization (as defined) whereby, among other things: (i)
the Company and AC Capital Corp. completed the Note Offering; (ii) the Company
entered into and borrowed under the Senior Credit Facilities (as defined);
(iii) the Current Owners (as defined) received the Holdings Preferred Units (as
defined) with a liquidation value of approximately $22.5 million;
(iv) Bain/ACR, L.L.C., a Delaware limited liability company (the "Equity
Investor"), and certain members of senior management of the Company (the
"Management Investors") indirectly acquired through Holdings approximately 76%
and 6%, respectively of the outstanding common partnership interests of the
Company; and (v) the Current Owners (as defined) indirectly retained through
Holdings 18% of the outstanding common partnership interests of the Company.
See "The Transactions" and "Use of Proceeds."
5
<PAGE>
Set forth below is the organizational structure of the Company and Holdings,
and the percentage ownership of the common partnership interests thereof
following the Transactions. Substantially all of the limited liability company
units of the Equity Investor are owned by affiliates of Bain. See "Security
Ownership."
[GRAPHIC]
------------
The executive offices of Holdings are located at 1165 Camp Hollow Road, West
Mifflin, Pennsylvania 15122, and its telephone number is (412) 469-3700.
6
<PAGE>
THE DEBENTURE OFFERING
Debentures.................. The Debentures were sold (the "Debenture
Offering") by Holdings and AC Holdings Corp. on
July 22, 1998 to Donaldson, Lufkin & Jenrette and
Goldman, Sachs & Co. (the "Initial Purchasers")
pursuant to a Purchase Agreement dated July 16,
1998 (the "Purchase Agreement"). The Initial
Purchasers subsequently resold the Debentures to
qualified institutional buyers pursuant to Rule
144A under the Securities Act. AC Holdings Corp.
is a wholly owned subsidiary of Holdings that was
incorporated for the sole purpose of serving as a
co-issuer of the Debentures in order to
facilitate the Debenture Offering. AC Holdings
Corp. does not have any operations or assets of
any kind and will not have any revenues.
Prospective investors in the Exchange Debentures
should not expect AC Holdings Corp. to
participate in servicing the interest, principal
obligations or Liquidated Damages (as defined),
if any, on the Exchange Debentures. See
"Description of Exchange Debentures--Certain
Covenants."
Registration Rights Pursuant to the Purchase Agreement, the Issuers
Agreement.................. and the Initial Purchasers entered into a
Registration Rights Agreement, dated as of
July 22, 1998 (the "Registration Rights
Agreement"), which grants the holders of the
Debentures certain exchange and registration
rights. The Exchange Offer is intended to satisfy
such exchange and registration rights which
terminate upon the consummation of the Exchange
Offer.
THE EXCHANGE OFFER
Securities Offered.......... $48,000,000 in principal amount at maturity of
Series B 13 3/8% Senior Discount Debentures due
2009.
The Exchange Offer.......... $1,000 principal amount of the Exchange
Debentures in exchange for each $1,000 principal
amount of Debentures. As of the date hereof,
$25,667,404 aggregate principal amount of
Debentures are outstanding. The Issuers will
issue the Exchange Debentures to holders on or
promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Issuers believe that the
Exchange Debentures issued pursuant to the
Exchange Offer in exchange for Debentures may be
offered for resale, resold and otherwise
transferred by any holder thereof (other than any
such holder which is an "affiliate" of either
Holdings or AC Holdings Corp. within the meaning
of Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such Exchange Debentures are
acquired in the ordinary course of such holder's
business and that such holder does not intend to
participate and has no arrangement or
understanding with any person to participate in
the distribution of such Exchange Debentures.
7
<PAGE>
Each Participating Broker-Dealer that receives
Exchange Debentures for its own account pursuant
to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any
resale of such Exchange Debentures. The Letter of
Transmittal states that by so acknowledging and
by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in
connection with resales of Exchange Debentures
received in exchange for Debentures where such
Debentures were acquired by such Participating
Broker-Dealer as a result of market-making
activities or other trading activities. The
Issuers have agreed that, for a period of 180
days from the consummation of the Exchange Offer,
it will make this Prospectus available to any
Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose
of participating, in a distribution of the
Exchange Debentures could not rely on the
position of the staff of the Commission
enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in connection
with any resale transaction. Failure to comply
with such requirements in such instance may
result in such holder incurring liability under
the Securities Act for which the holder is not
indemnified by the Issuers.
Expiration Date............. 5:00 p.m., New York City time, on , 1998
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Interest on the Exchange
Debentures and the Each Exchange Debenture will accrete at a rate of
Debentures................. 13 3/8% per annum from its issuance date,
compounded semi-annually to an aggregate
principal amount of $48.0 million on August 1,
2003. Thereafter, interest on the Exchange
Debentures will accrue at the rate of 13 3/8% per
annum and will be payable semi-annually in
arrears on February 1 and August 1, commencing on
February 1, 2004, to holders of record on the
immediately preceding January 15 and July 15.
Interest on the Debentures accepted for exchange
will cease to accrete upon issuance of the
Exchange Debentures.
Conditions to the Exchange The Exchange Offer is subject to certain
Offer...................... customary conditions, which may be waived by the
Issuers. See "The Exchange Offer--Conditions."
Procedures for Tendering Each holder of Debentures wishing to accept the
Debentures................. Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
8
<PAGE>
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Debentures and any other required documentation
to the Exchange Agent (as defined) at the address
set forth herein. Delivery of the Debentures may
also be made by book-entry transfer in accordance
with the procedures described below. Confirmation
of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal or
effecting delivery by book-entry transfer, each
holder will represent to the Issuers that, among
other things, the Exchange Debentures acquired
pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person
receiving such Exchange Debentures, whether or
not such person is the holder, that neither the
holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such Exchange
Debentures and that neither the holder nor any
such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of either
Holdings or AC Holdings Corp. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer"
and "--Procedures for Tendering."
Untendered Debentures....... Following the consummation of the Exchange Offer,
holders of Debentures eligible to participate but
who do not tender their Debentures will not have
any further exchange rights and such Debentures
will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Debentures could
be adversely affected.
Consequences of Failure to The Debentures that are not exchanged pursuant to
Exchange................... the Exchange Offer will remain restricted
securities. Accordingly, such Debentures may be
resold only: (i) to the Issuers; (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act; (iii) outside the United States
to a foreign person pursuant to the requirements
of Rule 904 under the Securities Act; or (iv)
pursuant to an effective registration statement
under the Securities Act. See "The Exchange
Offer--Consequences of Failure to Exchange."
Shelf Registration If the Exchange Offer is not permitted under
Statement.................. applicable law or Commission policy or any holder
of the Debentures (other than any such holder
which is an "affiliate" of either Holdings or AC
Holdings Corp. within the meaning of Rule 405
under the Securities Act) is not eligible under
applicable securities laws to participate in the
Exchange Offer, and such holder has provided
information regarding such holder and the
distribution of such holder's Debentures to the
Issuers for use therein, the Issuers have agreed
to register the Debentures on a shelf
registration statement (the "Shelf Registration
Statement") and use its best efforts to cause it
to be declared effective by the Commission as
promptly as practicable on or after the
consummation of the Exchange Offer. The Issuers
have agreed to maintain the continuous
effectiveness of the Shelf
9
<PAGE>
Registration Statement for, under certain
circumstances, a period of at least two years, to
cover resales of the Debentures held by any such
holders.
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Debentures are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its
Debentures, either make appropriate arrangements
to register ownership of the Debentures in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time.
The Issuers will keep the Exchange Offer open for
not less than twenty business days in order to
provide for the transfer of registered ownership.
Guaranteed Delivery Holders of Debentures who wish to tender their
Procedures................. Debentures and whose Debentures are not
immediately available or who cannot deliver their
Debentures, the Letter of Transmittal or any
other documents required by the Letter of
Transmittal to the Exchange Agent (or comply with
the procedures for book-entry transfer) prior to
the Expiration Date must tender their Debentures
according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed
Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Debentures
and Delivery of Exchange The Issuers will accept for exchange any and all
Debentures................. Debentures which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Use of Proceeds............. There will be no cash proceeds to the Issuers
from the exchange pursuant to the Exchange Offer.
Exchange Agent.............. State Street Bank and Trust Company.
THE EXCHANGE DEBENTURES
General..................... The form and terms of the Exchange Debentures are
the same as the form and terms of the Debentures
(which they replace) except that: (i) the
Exchange Debentures bear a Series B designation;
(ii) the Exchange Debentures have been registered
under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof;
10
<PAGE>
and (iii) the holders of Exchange Debentures will
not be entitled to certain rights under the
Registration Rights Agreement, including the
provisions providing for an increase in the
interest rate on the Debentures in certain
circumstances relating to the timing of the
Exchange Offer, which rights will terminate when
the Exchange Offer is consummated. See "The
Exchange Offer--Purpose and Effect of the
Exchange Offer." The Exchange Debentures will
evidence the same debt as the Debentures and will
be entitled to the benefits of the Indenture. See
"Description of Exchange Debentures."
Securities Offered.......... $48.0 million in principal amount at maturity of
13 3/8% Senior Discount Debentures due 2009.
Issuers..................... The Exchange Debentures will be joint and several
obligations of Holdings and AC Holdings Corp. AC
Holdings Corp. is a wholly owned subsidiary of
Holdings formed in connection with the Debenture
Offering. AC Holdings Corp. has no assets, no li-
abilities (other than the Debentures) and no op-
erations and will be prohibited from engaging in
any business activities.
Maturity Date............... August 1, 2009.
Interest Rate............... The Exchange Debentures will accrete at a rate of
13 3/8% per annum, compounded semi-annually to an
aggregate principal amount of $48.0 million on
August 1, 2003. Thereafter, interest on the Ex-
change Debentures will accrue at the rate of 13
3/8% per annum and will be payable semi-annually
in arrears on February 1 and August 1, commencing
on February 1, 2004, to holders of record on the
immediately preceding January 15 and July 15.
Optional Redemption......... The Exchange Debentures will be redeemable at the
option of the Issuers, in whole or in part, at
any time on or after August 1, 2003 in cash at
the redemption prices set forth herein, plus ac-
crued and unpaid interest and Liquidated Damages,
if any, thereon to the date of redemption. In ad-
dition, at any time prior to August 1, 2001, the
Issuers may on any one or more occasions redeem
up to 35% of the aggregate principal amount at
maturity of Exchange Debentures originally issued
at a redemption price equal to 113.375% of the
Accreted Value thereof (as determined on the re-
demption date), plus Liquidated Damages, if any,
thereon to the redemption date, with the net cash
proceeds of one or more Equity Offerings; pro-
vided that at least 65% of the aggregate princi-
pal amount at maturity of Exchange Debentures
originally issued remains outstanding immediately
after the occurrence of any such redemption. See
"Description of Exchange Debentures--Optional Re-
demption."
Change of Control........... Upon the occurrence of a Change of Control, each
holder of Exchange Debentures will have the right
to require the Issuers to repurchase all or any
part of such holder's Exchange Debentures at an
offer price in cash equal to 101% of the Accreted
Value thereof on
11
<PAGE>
the date of repurchase (if such date of repur-
chase is prior to August 1, 2003) or 101% of the
aggregate principal amount thereof (if such date
of repurchase is on or after August 1, 2003),
plus, in each case, accrued and unpaid interest
and Liquidated Damages, if any, thereon to the
date of purchase. See "Description of Exchange
Debentures--Repurchase at the Option of Holders--
Change of Control." There can be no assurance
that, in the event of a Change of Control, the
Issuers would have sufficient funds to purchase
all Exchange Debentures tendered. See "Risk Fac-
tors--Limitations on Ability to Make Change of
Control Payment."
Ranking..................... The Exchange Debentures will be general unsecured
obligations of the Issuers, will rank pari passu
in right of payment to all existing and future
senior unsecured indebtedness of the Issuers and
will rank senior in right of payment to all ex-
isting and future subordinated indebtedness of
the Issuers. The Exchange Debentures, however,
will be effectively subordinated to all secured
obligations of the Issuers and all obligations of
Holdings' subsidiaries, including the Notes and
borrowings under the Senior Credit Facilities. As
of September 30, 1998, after giving effect to the
Transactions, the Exchange Debentures have been
effectively subordinated to $349.9 million of ob-
ligations of Holdings' subsidiaries (including a
capital lease obligation). The Indenture permits
additional borrowings under the Senior Credit Fa-
cilities in the future. See "Risk Factors--Hold-
ings Company Structure; Effective Subordination."
Original Issue Discount..... The Exchange Debentures are being issued with
original issue discount for U.S. federal income
tax purposes. Thus, although interest will not be
payable on the Exchange Debentures prior to Feb-
ruary 1, 2004, holders will be required to in-
clude amounts in gross income for U.S. federal
income tax purposes in advance of receipt of the
cash payments to which such income is attribut-
able. See "Certain U.S. Federal Income Tax Con-
siderations."
Certain Covenants........... The Indenture contains certain covenants that
will limit, among other things, the ability of
the Issuers to: (i) make distributions, except to
the extent required to pay taxes, redeem partner-
ship interests or make certain other restricted
payments or investments, (ii) incur additional
indebtedness or issue preferred equity interests,
(iii) merge, consolidate or sell all or substan-
tially all of its assets, (iv) create liens on
assets and (v) enter into certain transactions
with affiliates or related persons. See "Descrip-
tion of Exchange Debentures--Certain Covenants."
For additional information regarding the Exchange
Debentures, see "Description of Exchange Deben-
tures."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO
TENDER THEIR DEBENTURES IN THE EXCHANGE OFFER, SEE "RISK FACTORS."
12
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL AND OTHER
DATA
The following table sets forth: (i) summary historical consolidated financial
data of Holdings for the five years ended December 31, 1997, as of September
30, 1998 and for the nine months ended September 30, 1997 and 1998; and (ii)
summary unaudited pro forma consolidated financial data for the year ended
December 31, 1997 and for the nine months ended September 30, 1997 and 1998.
The summary historical consolidated financial data for the five years ended
December 31, 1997 were derived from the audited consolidated financial
statements of Holdings, which, for the three years ended December 31, 1997 are
included elsewhere herein. The summary historical consolidated financial data
as of September 30, 1998 and for the nine months ended September 30, 1997 and
1998 were derived from unaudited historical consolidated financial statements
of Holdings. The following table should be read in conjunction with "Selected
Historical Consolidated Financial Data," "Unaudited Pro Forma Consolidated
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the historical consolidated financial statements
and the notes related thereto of Holdings included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ --------------------
1993 1994 1995 1996 1997 1997 1998
STATEMENT OF INCOME DATA: (DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals...... $ 68,113 $ 85,369 $106,593 $128,161 $156,408 $116,044 $136,876
Equipment sales........ 4,814 7,762 9,419 19,444 27,400 23,127 16,655
-------- -------- -------- -------- -------- -------- --------
Total revenues......... 72,927 93,131 116,012 147,605 183,808 139,171 153,531
Cost of revenues:
Cost of equipment rent-
als................... 40,166 50,908 62,533 78,049 97,036 71,659 81,883
Cost of equipment
sales................. 3,345 5,206 7,039 13,643 15,541 13,153 12,878
-------- -------- -------- -------- -------- -------- --------
Total cost of reve-
nues.................. 43,511 56,114 69,572 91,692 112,577 84,812 94,761
Gross profit............ 29,416 37,017 46,440 55,913 71,231 54,359 58,770
Selling, general and
administrative......... 17,219 20,567 23,351 29,211 35,111 25,363 30,196
-------- -------- -------- -------- -------- -------- --------
Income from operations.. 12,197 16,450 23,089 26,702 36,120 28,996 28,574
Net income (loss)....... 7,923 10,009 14,128 16,000 23,801(1) 19,467(1) (3,201)
OTHER DATA:
Net cash provided by op-
erating activities..... $ 16,079 $ 22,410 $ 27,695 $ 32,411 $ 30,697 $ 21,998 $ 24,973
Net cash used in invest-
ing activities......... (35,254) (40,938) (36,907) (56,349) (66,976) (44,020) (68,661)
Net cash provided by fi-
nancing activities..... 27,180 11,013 8,722 26,370 32,066 16,568 47,173
EBITDA (2).............. 23,221 28,724 38,922 44,836 47,365 35,352 45,402
Total depreciation and
amortization (3)....... 12,300 14,408 17,653 22,061 21,904(1) 15,496(1) 19,561
Net gain on sales of
used rental
equipment ............. 1,276 2,134 1,820 3,926 10,659 9,140 2,733
Total capital expendi-
tures.................. 33,735 42,496 45,241 82,673 92,167 68,887 87,806
Original cost of prop-
erty and equipment..... 159,581 197,264 238,544 295,405 361,772 347,213 432,385
Original cost of rental
equipment.............. 142,823 174,090 201,972 248,406 295,297 285,951 364,712
PRO FORMA DATA:
Pro forma EBITDA........ $ 47,978 $ 35,636 $ 45,798
Cash interest expense
(4).................... 31,081 23,311 23,311
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
------------------------
ACTUAL (UNAUDITED)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 7,860
Total assets........................................... 384,997
Total debt............................................. 375,588
Total partners' capital (deficit)...................... (12,816)
</TABLE>
13
<PAGE>
- --------------------
(1) Reflects the decrease in depreciation expense of $5.7 million and $4.2
million for the year ended December 31, 1997 and for the nine months ended
September 30, 1997, respectively, for the revision in estimated salvage
values used for depreciating certain rental equipment.
(2) EBITDA represents income from operations less the net gain on sales of used
rental equipment plus depreciation and amortization. EBITDA is a widely
accepted financial indicator of a company's ability to service and incur
debt. EBITDA does not represent net income or cash flows from operations as
those terms are defined by generally accepted accounting principles
("GAAP") and does not necessarily indicate whether cash flows will be
sufficient to fund cash needs. The Company's measure of EBITDA may not be
comparable to those reported by other companies.
(3) Excludes amortization of deferred financing fees.
(4) Cash interest expense for all periods is calculated exclusive of any
amortization of deferred financing fees and accretion of original issue
discount on the Debentures.
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RISK FACTORS
Holders of the Debentures should carefully consider the risk factors set
forth below, as well as the other information appearing elsewhere in this
Prospectus, before tendering their Debentures in the Exchange Offer.
Certain statements, estimates, predictions and projections contained herein
under "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business," in
addition to certain statements contained elsewhere herein, are "forward-
looking statements" within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act. These forward-looking statements are
prospective, involving risks and uncertainties. While these forward-looking
statements, and any assumptions upon which they are based, are made in good
faith and reflect the Issuers' and the Company's current judgment regarding
the direction of the Company's business, actual results will almost always
vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Some important
factors (but not necessarily all factors) that could affect the Company's
revenues, growth strategies, future profitability and operating results, or
that otherwise could cause actual results to differ materially from those
expressed in or implied by any forward-looking statement, include the
following: substantial levels of indebtedness; restrictions imposed by the
terms of indebtedness; limitation on ability to make change of control
payments; inability to enter into and borrow under the Senior Credit
Facilities; changes in economic conditions; competition; and the other matters
referred to herein or elsewhere in this Prospectus. Prospective purchasers of
the Debentures are urged to carefully consider these factors in connection
with the forward-looking statements. Neither the Issuers nor the Company
undertake to release publicly any revisions to forward-looking statements that
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
RISKS RELATING TO THE DEBENTURES
SUBSTANTIAL LEVERAGE
Holdings and the Company incurred significant debt in connection with the
Transactions. As of September 30, 1998, after giving effect to the
Transactions, Holdings had outstanding consolidated indebtedness of $375.6
million, consisting of $25.7 million of the Debentures, $194.0 million drawn
under the Senior Credit Facilities, $155.0 million of the Senior Notes and a
capital lease obligation of $0.9 million. In addition, the Company had
available borrowings of up to an additional $131.0 million under the Revolving
Credit Facility. In addition, subject to restrictions in the Senior Credit
Facilities, the Notes Indenture (as defined) and the Indenture, Holdings and
the Company may incur additional indebtedness. For the year ended December 31,
1997, after giving pro forma effect to the Transactions, Holdings' ratio of
earnings to fixed charges would have been 1.0 to 1.
Holdings' and the Company's ability to make scheduled payments of principal
of, or to pay the premium, if any, interest or Liquidated Damages, if any, on,
or to refinance, its indebtedness (including the Exchange Debentures and the
Senior Notes), or to fund planned capital expenditures will depend on their
future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
that are beyond their control. Based upon the current level of operations and
certain anticipated improvements, management believes that cash flow from
operations and available cash, together with available borrowings under the
Senior Credit Facilities, will be adequate to meet Holdings' and the Company's
future liquidity needs for at least the next several years. There can be no
assurance that Holdings' and the Company's business will generate sufficient
cash flow from operations, that anticipated revenue growth and operating
improvements will be realized or that future borrowings will be available
under the Senior Credit Facilities in an amount sufficient to enable Holdings
and the Company to service their indebtedness, including the Exchange
Debentures and the Senior Notes, or to fund their other liquidity needs.
Holdings and the Company may be required to refinance all or a portion of the
principal of the Exchange Debentures and the Senior Notes, respectively, on or
prior to maturity. There can be no assurance, however, that such refinancings
would be available on commercially reasonable terms or at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
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The degree to which Holdings and the Company are leveraged could have
important consequences to holders of the Exchange Debentures and the Senior
Notes, including, but not limited to: (i) making it more difficult for
Holdings and the Company to satisfy their obligations with respect to the
Exchange Debentures and the Senior Notes; (ii) increasing Holdings' and the
Company's vulnerability to general adverse economic and industry conditions;
(iii) limiting Holdings' and the Company's ability to obtain additional
financing to fund future working capital, capital expenditures, research and
development and other general corporate requirements; (iv) requiring the
dedication of a substantial portion of Holdings' and the Company's cash flow
from operations to the payment of principal of, and interest on, its
indebtedness, thereby reducing the availability of such cash flow to fund
working capital, capital expenditures, research and development or other
general corporate purposes; (v) limiting Holdings' and the Company's
flexibility in planning for, or reacting to, changes in its business and the
industry in which it competes; and (vi) placing Holdings and the Company at a
competitive disadvantage compared to less leveraged competitors. In addition,
the Notes Indenture, the Indenture and the Senior Credit Facilities contain
financial and other restrictive covenants that limit the ability of Holdings
and the Company to, among other things, borrow additional funds. Failure by
Holdings and the Company to comply with such covenants could result in an
event of default which, if not cured or waived, could have a material adverse
effect on Holdings' and the Company's business, financial condition and
results of operations. If Holdings and the Company cannot generate sufficient
cash to meet their obligations as they become due or refinance such
obligations, Holdings and the Company may have to sell assets or reduce
capital expenditures. See "Description of Certain Indebtedness--Description of
Senior Credit Facilities" and "Description of the Exchange Debentures--
Repurchase at the Option of Holders--Change of Control."
HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION
Holdings is a holding company and does not have any material operations or
assets other than ownership of the Company. Accordingly, the Exchange
Debentures will be effectively subordinated to all existing and future
liabilities of Holdings' subsidiaries, including indebtedness under the Senior
Credit Facilities and the Senior Notes. As of September 30, 1998, after giving
effect to the Transactions, the aggregate amount of liabilities of Holdings'
subsidiaries to which holders of the Exchange Debentures are effectively
subordinated is approximately $349.9 million (including a capital lease
obligation). Holdings and its subsidiaries may incur additional indebtedness
in the future, subject to certain limitations contained in the instruments
governing their indebtedness.
As a result of the Transactions, the Equity Investor indirectly owns
approximately 76% of the outstanding common partnership interests of Holdings
and the General Partner. Thus, the Equity Investor, through the General
Partner, controls the affairs and policies of Holdings and the Company,
including the ability of the Company and its subsidiaries to pay dividends and
other distributions to Holdings. However, the Senior Credit Facilities and the
indenture governing the Senior Notes (the "Notes Indenture") impose, and
agreements entered into in the future may impose, significant restrictions on
the payment of such dividends or distributions.
Any right of Holdings to participate in any distribution of assets of its
subsidiaries upon the liquidation, reorganization or insolvency of any such
subsidiary (and the consequent right of the holders of the Exchange Debentures
to participate in the distribution of those assets) will be subject to the
prior claims of the respective subsidiary's creditors. See "Description of
Certain Indebtedness--Description of Senior Credit Facilities."
LIMITATION ON THE PAYMENT OF FUNDS TO HOLDINGS BY ITS SUBSIDIARIES
Holdings' cash flow, and consequently its ability to service its debt,
including its obligations under the Indenture, is dependent upon the cash
flows of its subsidiaries and the payment of funds by such subsidiaries to
Holdings in the form of loans, distributions or otherwise. Holdings'
subsidiaries have no obligations, contingent or otherwise, to pay any amounts
due pursuant to the Exchange Debentures or to make any funds available
therefor. In addition, the Senior Credit Facilities and the indenture
governing the Senior Notes (the "Notes Indenture") impose, and agreements
entered into in the future may impose, significant restrictions on
distributions and the making of loans by the Company to Holdings. Accordingly,
repayments of the Exchange
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Debentures may depend upon the ability of Holdings to effect an equity
offering or to refinance the Exchange Debentures.
ORIGINAL ISSUE DISCOUNT
The Debentures were issued at a substantial discount from their principal
amount. Consequently, holders generally will be required to include amounts in
gross income for U.S. federal income tax purposes in advance of receipt of any
cash payment on the Exchange Debentures to which the income is attributable.
In addition, the Exchange Debentures will be subject to the "applicable high
yield discount obligation" rules under the Internal Revenue Code of 1996, as
amended, which will defer and, in part, eliminate the ability to deduct
original issue discount that accrues with respect to the Exchange Debentures.
Prospective investors should consult their own tax advisors with respect to
the application of the original issue discount rules and, in particular, the
application of the "applicable high yield discount obligation" rules
(including the limited availability of a dividends received deduction for a
corporate holder). See "Certain U.S. Federal Income Tax Considerations" for a
more detailed discussion of the U.S. federal income tax considerations
relevant to holders with respect to the purchase, ownership and disposition of
the Exchange Debentures.
If a bankruptcy case is commenced by or against Holdings under the United
States Bankruptcy Code (the "Bankruptcy Code") after the issuance of the
Exchange Debentures, the claim of a holder of Exchange Debentures with respect
to the principal amount thereof will likely be limited to an amount equal to
the sum of (i) the Accreted Value (as defined in the Indenture) of the
Exchange Debentures as of the date of issuance of the Debentures and (ii) the
original issue discount that is not deemed to constitute "unmatured interest"
for the purposes of the Bankruptcy Code. Any original issue discount that was
not amortized as of any such bankruptcy filing would most likely constitute
"unmatured interest."
ASSET ENCUMBRANCES
The Revolving Credit Facility is secured by a first-priority perfected lien,
and the Term Loan is secured by a second-priority perfected lien, on all
partnership interests of the Company and all property and assets (tangible and
intangible) of the Company and each of its U.S. subsidiaries, including,
without limitation, all intercompany indebtedness, and all capital stock (or
similar equity interests) of each of the Company's direct and indirect
subsidiaries, whenever acquired and wherever located; provided, however, that
no more than 65% of the capital stock or similar equity interests of non-U.S.
subsidiaries are required to be pledged as security. In the event of a default
under the Senior Credit Facilities, the lenders thereunder could foreclose
upon the assets securing the Senior Credit Facilities and the holders of the
Exchange Debentures might not be able to receive any payments until any
payment default under the Senior Credit Facilities was cured or waived, any
acceleration was rescinded, or the indebtedness under the Senior Credit
Facilities was discharged or paid in full.
FRAUDULENT TRANSFER
A significant portion of the net proceeds of the Offering were used to
consummate the Recapitalization. Under applicable provisions of the United
States Bankruptcy Code or comparable provisions of state fraudulent transfer
or conveyance laws, if the Issuers, at the time they issued the Debentures (i)
incurred such indebtedness with intent to hinder, delay or defraud creditors
or (ii)(a) received less than reasonably equivalent value or fair
consideration for incurring such indebtedness and (b)(1) was insolvent at the
time of incurrence, (2) was rendered insolvent by reason of such incurrence
(and the application of the proceeds thereof), (3) was engaged or was about to
engage in a business or transaction for which the assets remaining with the
Issuers constituted unreasonably small capital to carry on its businesses or
(4) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature, then, in each case, a court of
competent jurisdiction could void, in whole or in part, the Exchange
Debentures or, in the alternative, subordinate the Exchange Debentures to
existing and future indebtedness of the Issuers. The measure of insolvency for
purposes of the foregoing will vary depending upon the law applied in such
case. Generally, however, a company would be considered insolvent if the sum
of its debts, including contingent liabilities, was greater than all of its
assets at fair valuation or if the present fair saleable value of its assets
was less than the amount that would be required to
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pay the probable liability on its existing debts, including contingent
liabilities, as they become absolute and matured. The Issuers believe that,
for purposes of all such insolvency, bankruptcy and fraudulent transfer or
conveyance laws, the Debentures were issued without the intent to hinder,
delay or defraud creditors and for proper purposes and in good faith and that
Holdings, after the issuance of the Debentures and the application of the
proceeds thereof, was solvent, and Holdings will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature.
There can be no assurance, however, that a court passing on such questions
would agree with the Issuers' view.
LIMITATIONS ON ABILITY TO MAKE CHANGE OF CONTROL PAYMENT
In the event of a Change of Control, the Issuers will be required to make an
offer in cash to repurchase the Exchange Debentures at an offer price in cash
equal to 101% of the Accreted Value thereof on the date of repurchase (if such
date of repurchase is prior to August 1, 2003) or 101% of the aggregate
principal amount thereof (if such date of repurchase is on or after August 1,
2003), plus, in each case, accrued and unpaid interest and Liquidated Damages,
if any, thereon to the date of purchase. The provisions of the Indenture may
not, however, afford holders of the Exchange Debentures protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving the Issuers that may adversely affect holders
of Debentures, if such transaction does not result in a Change of Control. A
Change of Control will result in an event of default under the Senior Credit
Facilities and may result in a default under other indebtedness of the Issuers
that may be incurred in the future. The Senior Credit Facilities prohibit the
purchase of outstanding Exchange Debentures prior to repayment of the
borrowings under the Senior Credit Facilities and any exercise by the holders
of the Exchange Debentures of their right to require the Issuers to repurchase
the Exchange Debentures will cause an event of default under the Senior Credit
Facilities. In addition, prior to repurchasing the Exchange Debentures upon a
Change of Control, the Issuers must either repay all outstanding indebtedness
under the Senior Credit Facilities or obtain the consent of the lenders. If
the Issuers do not obtain such consent or repay their outstanding indebtedness
under the Senior Credit Facilities, the Issuers would remain effectively
prohibited from offering to purchase the Exchange Debentures. Finally, there
can be no assurance that the Issuers will have the financial resources
necessary or be able to arrange financing to repay obligations under the
Senior Credit Facilities and the Indenture or to repurchase the Exchange
Debentures upon a Change of Control. See "Description of Exchange Debentures--
Repurchase at the Option of Holders--Change of Control."
ABSENCE OF PUBLIC MARKET
Prior to the Exchange Offer, there has been no public market for the
Debentures. The Debentures have not been registered under the Securities Act
and will be subject to restrictions on transferability to the extent that they
are not exchanged for Exchange Debentures by holders who are entitled to
participate in this Exchange Offer. The holders of Debentures (other than any
such holder that is an "affiliate" of either Holdings or AC Holdings Corp.
within the meaning of Rule 405 under the Securities Act) who are not eligible
to participate in the Exchange Offer are entitled to certain registration
rights, and the Issuers are required to file a Shelf Registration Statement
with respect to such Debentures. The Exchange Debentures are new securities
for which there currently is no market. The Exchange Debentures are eligible
for trading by qualified buyers in the Private Offerings, Resale and Trading
through Automated Linkages (PORTAL) market. The Issuers do not intend to apply
for listing of the Exchange Debentures on any securities exchange or for
quotation through the National Association of Securities Dealers Automated
Quotation System. Although the Exchange Debentures are eligible for trading
through PORTAL, the Exchange Debentures may trade at a discount from their
initial offering price, depending upon prevailing interest rates, the market
for similar securities, the Company's performance and other factors. The
Issuers have been advised by the Initial Purchasers that they currently intend
to make a market in the Exchange Debentures as permitted by applicable law and
regulations; however, the Initial Purchasers are not obligated to do so and
any such market-making activities, if commenced, may be discontinued at any
time without notice. In addition, such market-making activities may be limited
during the Exchange Offer and pendency of the Shelf Registration Statement.
Therefore, there can be no assurance that an active market for any of the
Exchange Debentures will develop, either prior to or after the Issuers'
performance of their obligations under the Registration Rights Agreement. See
"Description of Exchange Debentures."
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The Exchange Debentures generally will be permitted to be resold or
otherwise transferred (subject to the restrictions described under
"Description of Exchange Debentures") by each holder without the requirement
of further registration. The Exchange Debentures, however, will also
constitute a new issue of securities with no established trading market. The
Exchange Offer will not be conditioned upon any minimum or maximum aggregate
principal amount of Debentures being tendered for exchange. No assurance can
be given as to the liquidity of the trading market for the Exchange
Debentures, or, in the case of non-exchanging holders of Debentures, the
trading market for the Debentures following the Exchange Offer.
The liquidity of, and trading market for, the Exchange Debentures also may
be adversely affected by general declines in the market or by declines in the
market for similar securities. Such declines may adversely affect such
liquidity and trading markets independently of the financial performance of,
and prospects for, the Company.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Debentures in exchange for the Debentures pursuant
to the Exchange Offer will be made only after a timely receipt by the Issuers
of such Debentures, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the
Debentures desiring to tender such Debentures in exchange for Exchange
Debentures should allow sufficient time to ensure timely delivery. The Issuers
are under no duty to give notification of defects or irregularities with
respect to the tenders of Debentures for exchange. Debentures that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, certain
registration rights under the Registration Rights Agreement will terminate. In
addition, any holder of Debentures who tenders in the Exchange Offer for the
purpose of participating in a distribution of the Exchange Debentures may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transactions. Each Participating
Broker-Dealer that receives Exchange Debentures for its own account in
exchange for Debentures, where such Debentures were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Debentures. See "Plan of
Distribution." To the extent that Debentures are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Debentures could be adversely affected. See "The Exchange Offer."
COMPANY-SPECIFIC RISKS
COMPETITION
Certain of the Company's principal competitors are less leveraged than the
Company, may have greater financial resources and may be better able to
withstand market conditions within the crane rental industry. The Company
generally competes on the basis of, among other things: (i) quality and
breadth of service; (ii) expertise; (iii) reliability; and (iv) price. There
can be no assurance that the Company will not encounter increased competition
in the future, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--
Competition."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the continued services of its senior management
team. Although the Company believes it could replace key employees in an
orderly fashion should the need arise, the loss of such key personnel could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Management."
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LABOR RELATIONS
As of September 30, 1998, the Company had 752 full time employees.
Approximately 30 were employed at the corporate headquarters in West Mifflin,
Pennsylvania and were involved in administrative functions. The remaining
employees were located at ACR's various operating yards and were engaged in
management, sales and marketing, maintenance and administrative functions. In
addition, as of September 30, 1998, the Company contracted with approximately
790 crane operators on an as-needed basis. The majority of these crane
operators were unionized and, as of September 30, 1998, approximately 14% of
the Company's full time employees were unionized. The Company has never
experienced a material work stoppage and considers its overall relations with
its work force to be good. There can be no assurance, however, that the
Company will not, at some point, be subject to work stoppages by some of its
employees or crane operators and, if such events were to occur, that there
would not be a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Employees."
COMPUTER SYSTEM; YEAR 2000 ISSUE
The Company is evaluating the extent to which its computer operating systems
will be disrupted upon the turn of the century as a result of the widely-known
dating system flaw inherent in most operating systems (the "Year 2000 Issue").
While the Company believes that new software being installed into its computer
system will address the Year 2000 Issue, there can be no assurance that the
new software will be installed in time to remedy the Year 2000 Issue, that the
Company's computer operating systems will not be disrupted upon the turn of
the century or that such modifications will not require unanticipated capital
expenditures. Any such disruption, whether caused by the Company's systems or
those of any of its suppliers or customers, could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company is 100% complete on the remediation phase for all material
information technology systems and the Company's plans call for testing and
implementing its information technology systems. Completion of the testing
phase is expected by November 1998, with all remediated systems fully
implemented by December 31, 1998. The total cost of the Year 2000 project is
estimated at $650,000 and is being funded through operating cash flows. To
date, the Company has incurred approximately $635,000 for new systems and
equipment, the majority of which has been capitalized. The total remaining
project costs of approximately $15,000 are attributable to the purchase of new
operating equipment, which will be capitalized.
CYCLICALITY
The Company's business is affected by the U.S. economy and the varying
economic and business cycles of its customers. During recessionary periods,
the Company may be adversely affected by reduced demand for equipment rentals
and services, particularly from customers involved in construction. Downward
cycles may result in the reduction of equipment rentals and pricing, which may
materially and adversely impact the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Inflation and Cyclicality."
CONCENTRATION OF OWNERSHIP
As a result of the Transactions, the Equity Investor indirectly owns
approximately 76% of the outstanding common partnership interests of Holdings
and will control the affairs and policies of Holdings and the Company,
including the ability to amend the Partnership Agreements of Holdings or the
Company. Circumstances may occur in which the interests of the Equity Investor
could be in conflict with the interests of the holders of the Exchange
Debentures. In addition, the Equity Investor may have an interest in pursuing
acquisitions, divestitures or other transactions that, in its judgment, could
enhance its equity investment, even though such transactions might involve
risks to the holders of the Exchange Debentures. See "Security Ownership."
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ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS
The Company and its operations are subject to federal, state and local
environmental and occupational health and safety laws and regulations,
including laws and regulations governing petroleum storage, waste water
discharge, underground storage tanks, hazardous chemical reporting, and
hazardous waste disposal. Based upon the findings of an environmental
assessment conducted in connection with the Recapitalization, the Company
believes it is in material compliance with such requirements. The Company
expects to spend approximately $100,000 in 1998 to close and upgrade certain
underground storage tanks. The enactment of more stringent laws or regulations
or stricter interpretation of existing laws and regulations could require
additional expenditures by the Company, which could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company is subject to liability for the investigation and remediation of
environmental contamination (including contamination caused by other parties)
at the properties it owns or operates and at other properties where the
Company or its predecessors have arranged for the disposal of hazardous
substances. The amount of such liability could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company is currently investigating and delineating soil and groundwater
contamination at its Savannah, Georgia location that resulted from former
gasoline underground storage tanks. See "Business--Environmental, Health and
Safety Matters."
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THE TRANSACTIONS
OVERVIEW
Pursuant to a recapitalization agreement, dated as of June 1, 1998 (the
"Recapitalization Agreement"), among Anthony Crane Rental, L.P., a
Pennsylvania limited partnership (the "Company"), Bain/ACR, L.L.C., ACR
Management, L.L.C., a Delaware limited liability company and the general
partner of the Company following the Recapitalization (the "General Partner")
and the current owners named therein (the "Current Owners"), the Company and
Holdings, which became the direct owner of 99% of ACR's equity as part of the
Transactions, were recapitalized on July 22, 1998 (the "Recapitalization") in
a transaction in which the proceeds of the Initial Note Offering, together
with the proceeds from the Debenture Offering (as defined) and the Senior
Credit Facilities, the Current Owner Contribution (as defined) and the Equity
Investor and Management Investors Contribution (as defined), were used to
fund: (i) a cash distribution to the Current Owners in the amount of
$122.4 million and a non-cash distribution of Senior Preferred Units of
Holdings with a liquidation and fair value of approximately $22.5 million
("Holdings Preferred Units"); (ii) the refinancing of existing indebtedness of
the Company (the "Refinancing"), of approximately $233.5 million (including
accrued interest and prepayment penalties thereon); (iii) excess cash of $7.5
million; and (iv) estimated transaction expenses of $25.2 million.
Additionally, the Current Owners retained an 18% interest in the common
partnership interests of Holdings with an implied fair value of approximately
$7.4 million, (the "Current Owner Rollover Equity" and, together with the
Holdings Preferred Units, the "Current Owner Contribution"). Each of the
Transactions was conditioned upon each of the others and consummation of each
of the Transactions occurred simultaneously. The Recapitalization and the
transactions described above are collectively referred to herein as the
"Transactions."
STRUCTURE OF THE RECAPITALIZATION
In connection with the Recapitalization, Anthony Crane Sales & Leasing,
L.P., a Pennsylvania limited partnership in which the Company held a 97%
interest: (i) transferred its assets to a new limited partnership in which the
Company has a 99% interest; (ii) was distributed by the Company to the Current
Owners; and (iii) changed its name to Anthony Crane Rental Holdings, L.P. In
connection with the Transactions, Holdings became the direct and indirect
owner of 99% of the Company and each of its subsidiaries' equity, and the
remaining 1% ownership in the Company and each of its subsidiaries was held by
the General Partner, both of which in turn are owned 82% by the Equity
Investor and the Management Investors and 18% by the Current Owners. Following
the Transactions, the General Partner transferred its 1% interest in each of
the Company's subsidiaries, Anthony Crane International, L.P. and Anthony
Crane Sales & Leasing, L.P. to Anthony International Equipment Services
Corporation and Anthony Sales & Leasing Corporation, respectively, and those
corporations became wholly owned subsidiaries of the Company. All interests in
Holdings and the Company have voting rights equivalent to their respective
economic interests and limited partners, through a majority vote, can remove
the General Partner.
SOURCES OF FUNDS
In connection with the Transactions: (i) the Company and Anthony Crane
Capital Corporation, a Delaware corporation and wholly owned subsidiary of the
Company ("AC Capital Corp."), completed the offering of $155.0 million in
aggregate principal amount of 10 3/8% Senior Notes due 2008; and (ii) the
Company entered into two credit agreements (collectively, the "Senior Credit
Facilities") with a syndicate of financial institutions (the "Lenders") for
which Goldman Sachs Credit Partners L.P. acted as arranger and syndication
agent (the "Arranger"), DLJ Capital Funding, Inc. acted as documentation agent
and Fleet National Bank acted as administrative agent. The Debentures were
issued at a substantial discount from their principal amount and generated
aggregate gross proceeds to Holdings of approximately $25.0 million. The net
proceeds from the Debenture Offering of approximately $23.1 million were
contributed by Holdings to the Company to fund the Recapitalization. The
Senior Credit Facilities are comprised of a revolving credit facility of up to
$275.0 million (the "Revolving Credit Facility"), of which a net amount of
$125.0 million was drawn at Closing, and a term loan of $50.0 million (the
"Term Loan"). The borrowings under the Senior Credit Facilities, together with
the aggregate gross proceeds from the Initial Note Offering and the Debenture
Offering, Holdings Preferred Units and the Equity Investor Contribution were
used to consummate the Recapitalization and pay fees and expenses
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related to the Transactions. In addition, the Senior Credit Facilities will
provide financing for future working capital, capital expenditures and other
general corporate purposes. See "Description of Senior Credit Facilities."
In connection with the Recapitalization, the Current Owners retained
interests in Holdings consisting of an implied fair value of $7.4 million of
Current Owner Rollover Equity, representing 18% of Holdings common partnership
interests, and the Holdings Preferred Units with a liquidation and fair value
of approximately $22.5 million. In addition, the Equity Investor and the
Management Investors contributed $33.6 million of equity to fund the
Transactions (the "Equity Investor Contribution").
REFINANCING OF FORMER INDEBTEDNESS
The Company's former revolving credit facility (the "Former Credit
Agreement") and former senior notes (the "Old Notes" and, together with the
Former Credit Agreement, the "Former Indebtedness") was refinanced in
connection with the Transactions. As of July 22, 1998, $100.0 million was
outstanding under the Former Credit Agreement and $115.0 million was
outstanding under the Old Notes. Upon consummation of the Transactions,
borrowings under the Former Indebtedness, together with $15.1 million of
prepayment penalties and $3.4 million of accrued interest, was repaid with
proceeds from the Transactions. See "Capitalization" and "Description of
Senior Credit Facilities."
SOURCES AND USES
The sources and uses of proceeds in connection with the Transactions were as
follows:
<TABLE>
<CAPTION>
AS OF
JULY 22, 1998
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Senior Credit Facilities:
Revolving Credit Facility--Company(1)................. $125.0
Term Loan--Company.................................... 50.0
Senior Notes--Company................................... 155.0
Debentures--Holdings(2)................................. 25.0
Equity Investor and the Management Investor
Contribution--Holdings(3).............................. 33.6
------
Total sources......................................... $388.6
======
USES OF FUNDS:
Distribution proceeds to Current Owners--Company(4)..... $122.4
Refinancings (including accrued interest)--Company...... 218.4
Transaction expenses--Holdings/Company(6)............... 25.2
Prepayment penalties--Company........................... 15.1
Excess cash--Company(5)................................. 7.5
------
Total uses............................................ $388.6
======
</TABLE>
- ---------------------
(1) Following the Transactions, the Revolving Credit Facility had total
availability of $275.0 million, with $181.6 million initially drawn at
Closing, followed by an immediate $56.6 million paydown with the proceeds
from the cash contribution to the Company from Holdings (net drawdown at
closing of $125.0 million). See "Description of Senior Credit Facilities."
(2) Represents proceeds from the Debenture Offering which were contributed by
Holdings to the Company.
(3) The Equity Investor and the Management Investor Contribution consisted of
the purchase of common partnership interests of Holdings with a fair
market value of approximately $33.6 million, which was contributed by
Holdings to the Company.
(4) Reflects a gross cash distribution of $130.1 million (per the
Recapitalization Agreement) less contractually agreed adjustments for i)
the amount by which prepayment penalties exceeded $13.6 million ($1.5
million), and ii) the amount by which estimated consolidated net worth (as
defined in the Recapitalization Agreement) at closing was less than
targeted net worth (as defined in the Recapitalization Agreement) ($6.2
million). Excludes the non-cash Current Owner Contribution of $29.9
million, consisting of $7.4 million of Current Owner Rollover Equity at an
implied fair value and Holdings Preferred Units with a liquidation value
of approximately $22.5 million.
(5) Funding requirements as of the Closing were approximately $7.5 million
more than pro forma requirements as of July 22, 1998 due to expected
additional borrowings to fund capital expenditures.
(6) Reflects fees and expenses related to the Transactions (Holdings of $2.0
million and the Company of $23.2 million). See "Certain Relationships and
Related Transactions."
23
<PAGE>
USE OF PROCEEDS
The aggregate gross proceeds from the issuance of the Debentures, together
with the proceeds of the Initial Note Offering, the borrowings under the
Senior Credit Facilities, the Equity Investor and the Management Investors
Contribution and the Current Owner Contribution, were used to consummate the
Recapitalization and pay fees and expenses in connection with the
Transactions. See "The Transactions."
24
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The Unaudited Pro Forma Consolidated Financial Data of Holdings have been
derived by giving effect to the pro forma adjustments to the historical
consolidated financial statements of the Company appearing elsewhere in this
Prospectus. The unaudited pro forma consolidated statements of income for the
nine months ended September 30, 1998 and 1997 and the year ended December 31,
1997 give effect to the Transactions as if they were consummated at the
beginning of such periods.
The pro forma adjustments are described in the accompanying notes and are
based upon the available information and upon certain assumptions that
management believes are reasonable. The Unaudited Pro Forma Consolidated
Financial Data and accompanying notes should be read in conjunction with the
Consolidated Financial Statements of the Company and related notes, and other
financial information pertaining to Holdings and the Company, including
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," included elsewhere in this Prospectus.
The Unaudited Pro Forma Consolidated Financial Data and accompanying notes
are provided for informational purposes only and are not necessarily
indicative of the operating results that would have occurred had the
Transactions been consummated on the dates described above, nor are they
necessarily indicative of Holdings' or the Company's future results of
operations or financial position.
As a result of the Transactions, the Company incurred penalties associated
with the prepayment of the Old Notes of approximately $15.1 million and wrote-
off approximately $0.8 million of existing debt issuance costs. These costs
are non-recurring in nature and have therefore not been reflected in the
unaudited pro forma consolidated statements of income.
25
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
HISTORICAL THE TRANSACTIONS PRO FORMA
<S> <C> <C> <C>
Revenues:
Equipment rentals.................... $136,876 $ -- $136,876
Equipment sales...................... 16,655 -- 16,655
-------- --------- --------
Total revenues..................... 153,531 -- 153,531
Cost of revenues:
Cost of equipment rentals............ 81,883 -- 81,883
Cost of equipment sales.............. 12,878 -- 12,878
-------- --------- --------
Total cost of revenues............. 94,761 -- 94,761
-------- --------- --------
Gross profit........................... 58,770 -- 58,770
Selling, general and administrative
expenses.............................. 30,196 (396)(1) 29,800
-------- --------- --------
Income from operations................. 28,574 396 28,970
Interest expense..................... 16,377 11,221 (2) 27,598
Other income......................... (633) -- (633)
-------- --------- --------
Income before extraordinary item and
taxes................................. 12,830 (10,825) 2,005
Provision for state taxes.............. 220 -- 220
-------- --------- --------
Net income before extraordinary item... $ 12,610 $ (10,825) $ 1,785
======== ========= ========
</TABLE>
<TABLE>
<S> <C>
OTHER DATA:
EBITDA (3).......................................................... $ 45,798
Total depreciation and amortization................................. 19,561
Net gain on sales of used rental equipment.......................... 2,733
Total capital expenditures.......................................... 87,806
Ratio of earnings to fixed charges (4).............................. 1.1x
Ratio of EBITDA to cash interest expense (3)........................ 2.0x
</TABLE>
26
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
HISTORICAL THE TRANSACTIONS PRO FORMA
<S> <C> <C> <C>
Revenues:
Equipment rentals..................... $116,044 $ -- $116,044
Equipment sales....................... 23,127 -- 23,127
-------- -------- --------
Total revenues...................... 139,171 -- 139,171
Cost of revenues:
Cost of equipment rentals............. 71,659 -- 71,659
Cost of equipment sales............... 13,153 -- 13,153
-------- -------- --------
Total cost of revenues.............. 84,812 -- 84,812
-------- -------- --------
Gross profit............................ 54,359 -- 54,359
Selling, general and administrative
expenses............................... 25,363 (284)(1) 25,079
-------- -------- --------
Income from operations.................. 28,996 284 29,280
Interest expense...................... 9,931 17,667 (2) 27,598
Other income.......................... (480) -- (480)
-------- -------- --------
Income before extraordinary item and
taxes.................................. 19,545 (17,383) 2,162
Provision for state taxes............... 78 -- 78
-------- -------- --------
Net income before extraordinary item.... $ 19,467 $(17,383) $ 2,084
======== ======== ========
</TABLE>
<TABLE>
<S> <C>
OTHER DATA:
EBITDA(3)............................................................ $35,636
Total depreciation and amortization.................................. 15,496
Net gain on sales of used rental equipment........................... 9,140
Total capital expenditures........................................... 68,887
Ratio of earnings to fixed charges (4)............................... 1.1x
Ratio of EBITDA to cash interest expense (3)......................... 1.5x
</TABLE>
27
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS FOR
HISTORICAL THE TRANSACTIONS PRO FORMA
<S> <C> <C> <C>
Revenues:
Equipment rentals..................... $156,408 $ -- $156,408
Equipment sales....................... 27,400 -- 27,400
-------- -------- --------
Total revenues...................... 183,808 -- 183,808
Cost of revenues:
Cost of equipment rentals............. 97,036 -- 97,036
Cost of equipment sales............... 15,541 -- 15,541
-------- -------- --------
Total cost of revenues.............. 112,577 -- 112,577
-------- -------- --------
Gross profit............................ 71,231 -- 71,231
Selling, general and administrative
expenses............................... 35,111 (613)(1) 34,498
-------- -------- --------
Income from operations.................. 36,120 613 36,733
Interest expense...................... 13,962 22,836 (2) 36,798
Other income.......................... (1,739) -- (1,739)
-------- -------- --------
Income before taxes..................... 23,897 (22,223) 1,674
Provision for state taxes............... 96 -- 96
-------- -------- --------
Net income.............................. $ 23,801 $(22,223) $ 1,578
======== ======== ========
</TABLE>
<TABLE>
<S> <C>
OTHER DATA:
EBITDA (3)........................................................... $47,978
Total depreciation and amortization.................................. 21,904
Net gain on sales of used rental equipment........................... 10,659
Total capital expenditures........................................... 92,167
Ratio of earnings to fixed charges (4)............................... 1.0x
Ratio of EBITDA to cash interest expense (3)......................... 1.5x
</TABLE>
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
AND YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(1) Reflects the following pro forma cost savings offset by the annual
management fee to be paid to Bain for consulting and financial services to
be provided to the Company. See "Certain Relationships and Related
Transactions--Advisory Agreement":
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
1997 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
<S> <C> <C> <C>
Elimination of operating
costs for property
distributed to majority
current owner ............. $ (813) $ (458) $ (487)
Elimination of majority
current owner's life
insurance costs............ (400) (300) (217)
Elimination of terminated
employee costs............. (400) (276) (244)
Management fee to be paid to
Bain....................... 1,000 750 552
-------- ------- --------
Net decrease in selling,
general and administrative
expenses................... $ (613) $ (284) $ (396)
======== ======= ========
(2) The increase in pro forma interest expense as a result of the Transactions
is as follows:
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
1997 SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
<S> <C> <C> <C>
Elimination of historical
interest expense........... $(13,962) $(9,931) $(16,377)
-------- ------- --------
Interest on new borrowings:
Senior Credit
Facilities(a).............. 15,000 11,250 11,250
Senior Notes................ 16,081 12,061 12,061
-------- ------- --------
Cash interest expense..... 31,081 23,311 23,311
Debentures(b)............... 3,350 2,512 2,512
Amortization of deferred
financing fees(c).......... 2,367 1,775 1,775
-------- ------- --------
Total interest from the debt
requirements of the
Transactions............... 36,798 27,598 27,598
-------- ------- --------
Net increase in interest
expense.................... $ 22,836 $17,667 $ 11,221
======== ======= ========
</TABLE>
- ---------------------
(a) Represents interest expense on bank debt at the LIBO option (assumed to
be 5.75%) plus: (i) 2.25% for the Revolving Credit Facility ($125,000)
as well as an unused commitment fee of 0.50% on the unused portion of
the Revolving Credit Facility ($150,000); and (ii) 2.75% for the Term
Loan ($50,000).
(b) The Debentures will accrete at an annual rate of 13 3/8% for the first
five years after issuance and will accrue interest at the same rate
thereafter. The interest expense related to the Debentures will be
approximately $1.4 million, $3.6 million, $4.2 million, $4.7 million,
$5.4 million and $6.3 million in the years ended December 31, 1998,
1999, 2000, 2001, 2002 and 2003, respectively. Thereafter, annual
interest expense will be approximately $6.4 million.
(c) Represents the annual amortization expense assuming a weighted average
maturity on all borrowings of 8.4 years.
(3) Based on Holdings' pro forma EBITDA for the twelve-month period ended
September 30, 1998 of $58.1 million, the pro forma ratio of EBITDA to cash
interest expense would be 1.9 to 1. EBITDA represents income from
operations less the net gain on sales of used rental equipment plus
depreciation and amortization. EBITDA is a widely accepted financial
indicator of a company's ability to service and incur debt. EBITDA does
not represent net income or cash flows from operations as those terms are
defined by generally accepted accounting principles ("GAAP") and does not
necessarily indicate whether cash flows will be sufficient to fund cash
needs. The Company's measure of EBITDA may not be comparable to those
reported by other companies.
(4) For purposes of computing this ratio, earnings consist of income before
taxes plus fixed charges. Fixed charges consist of total interest expense,
the fixed dividend of 11% on the Holdings Preferred Units and the
estimated portion of rent expense.
29
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data of Holdings for the five years ended December 31, 1997 and for the nine
months ended September 30, 1997 and 1998. The selected historical consolidated
financial data for the five years ended December 31, 1997 were derived from
the audited consolidated financial statements of Holdings which for the three
years ended December 31, 1997 are included elsewhere in this Prospectus,
together with the report thereon of PricewaterhouseCoopers LLP, independent
accountants. The selected historical consolidated financial data for the nine
months ended September 30, 1997 and 1998 were derived from unaudited
historical consolidated financial statements of Holdings. The following table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical consolidated
financial statements and the notes related thereto of Holdings included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ ------------------
1993 1994 1995 1996 1997 1997 1998
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Revenues:
Equipment rentals...... $ 68,113 $ 85,369 $106,593 $128,161 $156,408 $116,044 $136,876
Equipment sales........ 4,814 7,762 9,419 19,444 27,400 23,127 16,655
-------- -------- -------- -------- -------- -------- --------
Total revenues.......... 72,927 93,131 116,012 147,605 183,808 139,171 153,531
Cost of revenues:
Cost of equipment
rentals............... 40,166 50,908 62,533 78,049 97,036 71,659 81,883
Cost of equipment
sales................. 3,345 5,206 7,039 13,643 15,541 13,153 12,878
-------- -------- -------- -------- -------- -------- --------
Total cost of revenues.. 43,511 56,114 69,572 91,692 112,577 84,812 94,761
Gross profit............ 29,416 37,017 46,440 55,913 71,231 54,359 58,770
Selling, general and
administrative
expenses............... 17,219 20,567 23,351 29,211 35,111 25,363 30,196
-------- -------- -------- -------- -------- -------- --------
Income from operations.. 12,197 16,450 23,089 26,702 36,120 28,996 28,574
Interest expense........ 3,961 6,281 8,482 10,873 13,962 9,931 16,377
Other (income) expense.. (125) 6 (104) (69) (1,739) (480) (633)
-------- -------- -------- -------- -------- -------- --------
Income before
extraordinary item and
taxes.................. 8,361 10,163 14,711 15,898 23,897 19,545 12,830
Provision (benefit) for
state taxes............ 438 154 583 (102) 96 78 220
-------- -------- -------- -------- -------- -------- --------
Income before
extraordinary item..... 7,923 10,009 14,128 16,000 23,801 19,467 12,610
Extraordinary item...... -- -- -- -- -- -- 15,811
Net income (loss)....... $ 7,923 $ 10,009 $ 14,128 $ 16,000 $ 23,801(1) $ 19,467 $ (3,201)
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
Net cash provided by
operating activities... $ 16,079 $ 22,410 $ 27,695 $ 32,411 $ 30,697 $ 21,998 $ 24,973
Net cash used in
investing activities... (35,254) (40,938) (36,907) (56,349) (66,976) (44,020) (68,661)
Net cash provided by
financing activities... 27,180 11,013 8,722 26,370 32,066 16,568 47,173
Ratio of earnings to
fixed charges(2)....... 3.1x 2.6x 2.7x 2.4x 2.5x 2.7x 1.7x
EBITDA(3)............... 23,221 28,724 38,922 44,836 47,365 35,352 45,402
Total depreciation and
amortization(4)........ 12,300 14,408 17,653 22,061 21,904 (1) 15,496 19,561
Net gain on sales of
used rental equipment.. 1,276 2,134 1,820 3,926 10,659 9,140 2,733
Total capital
expenditures........... 33,735 42,496 45,241 82,673 92,167 68,887 87,806
Original cost of
property and
equipment.............. 159,581 197,264 238,544 295,405 361,772 347,213 432,385
Original cost of rental
equipment.............. 142,823 174,090 201,972 248,406 295,297 285,951 364,712
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 14,160 $ 6,646 $ 6,156 $ 8,588 $ 4,375 $ 3,135 $ 7,860
Total assets............ 144,581 164,576 196,053 241,239 306,928 287,340 384,997
Total debt.............. 71,808 94,427 108,000 140,000 185,961 166,429 375,588
Total liabilities....... 80,614 100,444 115,908 150,378 205,512 185,891 397,813
Total partners' capital
(deficit).............. 63,967 64,132 80,145 90,861 101,416 101,448 (12,816)
</TABLE>
- ---------------------
(1) Reflects the decrease in depreciation expense of $5.7 million and $4.2
million for the year ended December 31, 1997 and for the nine months ended
September 30, 1997, respectively, for the revision in estimated salvage
values used for depreciating certain rental equipment.
(2) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represents income before taxes plus fixed charges. "Fixed
charges" consist of interest expense, amortization of deferred financing
cost and the component of rental expense that management believes is
representative of the interest component of rental expense.
(3) EBITDA represents income from operations less the net gain on sales of
used rental equipment plus depreciation and amortization. EBITDA is a
widely accepted financial indicator of a company's ability to service and
incur debt. EBITDA does not represent net income or cash flows from
operations as those terms are defined by generally accepted accounting
principles ("GAAP") and does not necessarily indicate whether cash flows
will be sufficient to fund cash needs. Holdings' measure of EBITDA may not
be comparable to those reported by other companies.
(4) Excludes amortization of deferred financing fees.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the more
detailed information and the historical consolidated financial statements and
pro forma consolidated financial data, including notes thereto, appearing
elsewhere in this Prospectus.
OVERVIEW
ACR is the largest crane rental company in North America. The Company's
primary source of revenue is the rental of cranes and lifting equipment for a
variety of applications, most of which involve industrial repair and
maintenance activity. Over the past thirty years, the Company has grown by
pursuing an operating philosophy focused on the crane and lifting equipment
needs of industrial companies in the petrochemical, paper, steel, utility,
mining and other industries, and major non-residential construction
contractors. In addition to its primary business of renting equipment, the
Company also derives revenue from sales of new equipment as a dealer for
selected manufacturers and used equipment as part of its fleet management
program. Equipment sales can fluctuate based on the Company's fleet management
program and market conditions. Fleet management, which is the process of
purchasing, dispatching, maintaining and selling rental equipment, is one of
the most critical operational elements for crane rental companies. The
Company's revenues are dependent on several factors, including the demand for
rental equipment, the amount of equipment available for rent, rental rates and
general economic conditions.
The Company's total revenues have increased by approximately 152.0% over the
past four years, and have increased in each of the past 31 years. Equipment
rental revenues increased by more than 20% in each of the last four years.
This revenue growth reflects several strengths of the Company. Most
importantly, ACR has the most extensive crane fleet and broadest geographic
coverage of any company in the highly fragmented U.S. crane rental industry.
Since 1995, the Company has grown by expanding its existing yards, opening new
yards and acquiring other crane rental companies. Typically, the costs
associated with the opening of new yards or the purchases of new equipment are
incurred up to 12 months prior to realizing the full benefit of the revenue
stream generated by such yards or equipment.
The Company is a limited partnership organized under the laws of
Pennsylvania, as a result of which (i) the Company is not itself subject to
federal and certain state (except for Texas) income tax, (ii) the taxable
income of the Company's businesses in the United States will be allocated to
the equity holders of Holdings, and (iii) such equity holders will be
responsible for income taxes on such taxable income. The Company intends to
make distributions to equity holders of Holdings to enable them to meet their
tax obligations with respect to income allocated to them by the Company.
Effective July 22, 1998, the Company completed a recapitalization whereby
the Company incurred new debt obligations, repaid its outstanding Senior Notes
and credit agreement obligations, restructured certain partnership interests
and distributed cash and property to the previous owners. See "The
Transactions" and "--Following the Recapitalization."
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997.
Equipment Rental Revenues. Revenues from equipment rentals increased $20.8
million, or 17.9% to $136.8 million for the nine months ended September 30,
1998 as compared to $116.0 million for the same period in the prior year. This
increase was largely due to the continued growth at the Company's existing
yards, reflecting the impact of the rental equipment purchased in 1997 and
1998 and the start up of six rental yards opened in 1997, including three
operations in California which are beginning to reach targeted operating
levels.
31
<PAGE>
Equipment Sales. Revenues from equipment sales decreased $6.5 million, or
28.0% to $16.6 million for the nine month period ended September 30, 1998 as
compared to $23.1 million for the same period in the prior year. The majority
of the decrease was attributable to the Company's decision to reduce sales of
used equipment in connection with its fleet management program.
Total Revenues. Based on the foregoing, total revenues increased $14.3
million, or 10.3% to $153.5 million for the nine months ended September 30,
1998 as compared to $139.2 million for the same period in the prior year.
Gross Profit. Gross profit from equipment rentals increased $10.6 million,
or 23.9% to $55.0 million for the nine months ended September 30, 1998 as
compared to $44.4 million for the same period in the prior year. The increase
was primarily the result of the increased equipment rental revenues as
previously discussed, offset in part by an increase in direct operating
expenses primarily associated with the rental yards opened during 1997. As a
percent of equipment rental revenues, gross profit from equipment rentals
increased to 40.2% for the nine months ended September 30, 1998 as compared to
38.3% for the same period in the prior year. This increase in gross profit
margin is primarily attributable to improved profitability of the rental yards
opened in 1997 as a result of better equipment utilization and management's
efforts to maintain and control costs.
Gross profit from equipment sales decreased $6.2 million or 62.1%, to $3.8
million for the nine months ended September 30, 1998 as compared to $10.0
million for the same period in the prior year. As a percent of equipment sales
revenues, gross profit declined to 22.7% for the nine months ended September
30 1998, compared to 43.1% for the same period in the prior year. The gross
profit and gross margin percentage decreases were due to the Company's
decision to sell a lesser amount of used rental equipment under its fleet
management program during the nine months ended September 30, 1998 compared to
the same period in the prior year, coupled with the unusually large margins
obtained on the sale of certain cranes in the nine months ended September 30,
1997.
Based on the foregoing, total gross profit increased $4.4 million, or 8.1%
to $58.8 million for the nine months ended September 30, 1998 as compared to
$54.4 million for the nine months ended September 30, 1997.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.8 million, or 19.1% to $30.2 million for
the nine months ended September 30, 1998 as compared to $25.4 million for the
same period in the prior year. This increase was primarily attributable to an
increase in salaries and wages and related benefit costs associated with the
new yards opened during 1997. As a percent of total revenues, selling general
and administrative expenses increased to 19.7% for the nine months ended
September 30, 1998 as compared to 18.2% for the same period in the prior year.
The increase in selling, general and administrative expenses as a percent of
total revenues was largely due to the decrease in revenues from equipment
sales during the nine months ended September 30, 1998. As a percent of
equipment rental revenues, selling, general and administrative expenses were
22.1% for the nine months ended September 30, 1998 compared to 21.9% for the
same period in the prior year.
Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA (as
defined to exclude net gains on sales of used equipment) increased $10.0
million, or 28.4% to $45.4 million for the nine months ended September 30,
1998, compared to $35.4 million, for the same period in the prior year. EBITDA
from equipment rentals (as defined to equal revenues from equipment rentals,
less costs of equipment rentals, less selling, general and administrative
expenses, plus depreciation and amortization) increased $9.9 million, or
28.5%, to $44.4 million for the nine months ended September 30, 1998, compared
to $34.5 million for the same period in the prior year. As a percent of
equipment rental revenues, EBITDA from equipment rentals increased to 32.4%
for the nine months ended September 30, 1998, compared to 29.7% for the same
period in the prior year. This increase is primarily due to the equipment
rental revenues factors discussed above.
Interest Expense. Interest expense increased $6.4 million, or 64.9%, to
$16.3 million for the nine months ended September 30, 1998, compared to $9.9
million for the same period in the prior year. This increase reflected
32
<PAGE>
the higher level of borrowings outstanding attributable to the Company's
recapitalization transaction consummated in July 1998 as well as the Company's
continued investment in rental equipment and the opening of new yards.
Other Income. Other income increased $0.1 million or 32.0% to $0.6 million
for the nine months ended September 30, 1998 compared to $0.5 million for the
same period in the prior year.
Extraordinary Items. In connection with the recapitalization transaction
consummated in July 1998, the Company recorded a one-time charge of $15.8
million primarily resulting from penalties associated with the prepayment of
the Company's old debt.
Net (Loss) Income. Net income decreased $22.7 million, or 116.4% to a net
loss of $3.2 million for the nine months ended September 30, 1998, compared to
net income of $19.5 million for the same period in the prior year as a result
of the factors discussed above.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
Equipment Rental Revenues. Revenues from equipment rentals increased $28.2
million, or 22.0%, to $156.4 million for the year ended December 31, 1997,
compared to $128.2 million for the year ended December 31, 1996. This increase
was largely due to the continued growth at the Company's existing rental yards
as a result of new rental equipment purchased in 1997, rental equipment
purchased in 1996 becoming more fully utilized and the start-up of six rental
yards, including three yards in California.
Equipment Sales. Revenues from equipment sales increased $8.0 million, or
40.9%, to $27.4 million for the year ended December 31, 1997 as compared to
$19.4 million for the year ended December 31, 1996. This increase was
primarily attributable to significantly higher levels of activity in the
Company's fleet management program through upgrading the fleet and selling
older and under-utilized cranes.
Total Revenues. Based on the foregoing, total revenues for the year ended
December 31, 1997 increased $36.2 million, or 24.5%, to $183.8 million as
compared to total revenues of $147.6 million for the prior year.
Gross Profit. Gross profit from equipment rentals increased $9.3 million, or
18.5%, to $59.4 million for the year ended December 31, 1997 as compared to
$50.1 million for the year ended December 31, 1996. The increase in gross
profit from equipment rentals was the result of the increased revenues as
previously discussed, offset in part by an increase in direct operating
expenses, primarily attributable to equipment lease expense (relating to a
sale/leaseback transaction in December 1996) of $3.2 million, or 2.0% of total
equipment rental revenues, as well as new yards opened in 1997. Gross profit
from equipment rentals was also impacted by the Company's decision in 1997 to
revise its estimate of the salvage values used for depreciating certain rental
equipment, which had the effect of improving gross profit by $5.7 million,
offset in part by an increase in depreciation expense of $5.4 million as a
result of the significant capital expenditures incurred in 1997 and 1996. As a
percent of equipment rental revenues, gross profit decreased to 38.0% for the
year ended December 31, 1997 from 39.1% for the year ended December 31, 1996.
This decrease was primarily attributable to the factors discussed above.
Gross profit from equipment sales increased $6.1 million, or 104.4%, to
$11.9 million for the year ended December 31, 1997 as compared to $5.8 million
for the year ended December 31, 1996. As a percent of equipment sales revenue,
gross profit increased to 43.3% for the year ended December 31, 1997, from
29.8% for the year ended December 31, 1996. These increases were attributable
to the increased equipment sales revenues, as previously discussed as well as
the unusually high margins earned on certain equipment sales during 1997.
Based on the foregoing, total gross profit increased $15.3 million, or
27.4%, to $71.2 million for the year ended December 31, 1997 as compared to
$55.9 million for the year ended December 31, 1996.
33
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.9 million, or 20.2%, to $35.1 million for
the year ended December 31, 1997 compared to $29.2 million for the year ended
December 31, 1996. This increase was primarily attributable to increased
salaries and wages and employee benefits associated with the new yards opened
during 1997. As a percent of total revenues, selling general and
administrative expenses decreased to 19.1% of total revenues for the year
ended December 31, 1997 as compared to 19.8% of total revenues for the year
ended December 31, 1996. The decrease in selling, general and administrative
expenses as a percent of total revenues was largely due to the significant
increase in revenues from equipment sales during 1997. As a percent of
equipment rental revenues, selling, general and administrative expenses
decreased to 22.4% for the year ended December 31, 1997 as compared to 22.8%
for the year ended December 31, 1996.
Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA (as
defined to exclude net gains on sales of used equipment) increased $2.6
million, or 5.6%, to $47.4 million for the year ended December 31, 1997 as
compared to $44.8 million for the year ended December 31, 1996. EBITDA from
equipment rentals (as defined to equal revenues from equipment rentals, less
costs of equipment rentals, less selling, general and administrative expenses,
plus depreciation and amortization) increased $3.2 million, or 7.5%, to $46.2
million
for the year ended December 31, 1997 as compared to $43.0 million for the year
ended December 31, 1996. These increases were primarily attributable to the
increase in rental revenues, as previously discussed. As a percent of
equipment rental revenues, EBITDA from equipment rentals decreased to 29.5%
for the year ended December 31, 1997 as compared to 33.5% for the year ended
December 31, 1996. This decrease was primarily attributable to the increase in
equipment lease expense as a result of a sale/leaseback transaction in
December 1996, as well as the new rental yards opened in 1997.
Interest Expense. Interest expense increased $3.1 million, or 28.4%, to
$14.0 million for the year ended December 31, 1997 as compared to $10.9
million for the year ended December 31, 1996. This increase reflected the
higher level of borrowings outstanding attributable to the Company's continued
investment in rental equipment and the new rental yards opened during 1997.
Other Income. Other income increased $1.6 million to $1.7 million for the
year ended December 31, 1997 as compared to $0.1 million for the year ended
December 31, 1996. This increase was primarily the result of a gain on the
sale of property purchased for resale by the Company.
Net Income. Net income increased $7.8 million, or 48.8%, to $23.8 million
for the year ended December 31, 1997 as compared to $16.0 million for the year
ended December 31, 1996. This increase reflected the factors discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
Equipment Rental Revenues. Revenues from equipment rentals increased $21.6
million, or 20.2%, to $128.2 million for the year ended December 31, 1996 as
compared to $106.6 million for the year ended December 31, 1995. The increase
in equipment rental revenues was attributable to the Company's increased
revenues at existing locations and its continued expansion efforts. During
1996, the Company opened a rental facility in California and expanded its
national accounts program by obtaining a long-term contract with a customer.
Equipment Sales. Revenues from equipment sales increased $10.0 million, or
106.4%, to $19.4 million for the year ended December 31, 1996 as compared to
$9.4 million for the year ended December 31, 1995. This increase was
principally attributable to the resale of rental equipment purchased in
connection with the contract discussed above and the effects of the Company's
existing fleet management program.
Total Revenues. Based on the foregoing, total revenues increased $31.6
million, or 27.2%, to $147.6 million for the year ended December 31, 1996 as
compared to $116.0 million for the year ended December 31, 1995.
34
<PAGE>
Gross Profit. Gross profit from equipment rentals increased $6.0 million, or
13.7%, to $50.1 million for the year ended December 31, 1996 as compared to
$44.1 million for the year ended December 31, 1995, primarily as a result of
the increased revenues previously discussed. As a percent of equipment rental
revenues, the gross profit from equipment rentals decreased to 39.1% for the
year ended December 31, 1996 from 41.3% for the year ended December 31, 1995.
The key factor contributing to this decrease was an increase in direct
operating expenses due to a management initiative to upgrade the Company's
ongoing preventive maintenance and inspection program.
Gross profit from equipment sales increased $3.4 million, or 143.7%, to $5.8
million for the year ended December 31, 1996 as compared to $2.4 million for
the year ended December 31, 1995. This increase was primarily attributable to
the increased level of equipment sales, as discussed above. As a percent of
equipment sales revenues, gross profit increased to 29.8% for the year ended
December 31, 1996 as compared to 25.3% for the year ended December 31, 1995.
This increase was primarily due to the margins generated on the equipment
purchased and subsequently resold in connection with the contract discussed
above.
Based on the foregoing, total gross profit increased $9.5 million, or 20.4%,
to $55.9 million for the year ended December 31, 1996 as compared to $46.4
million for the year ended December 31, 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.9 million, or 25.1%, to $29.2 million for
the year ended December 31, 1996 as compared to $23.4 million for the year
ended December 31, 1995. This increase was attributable to increased salaries
and wages and travel expenses related to the new locations opened in 1996 and
1995. As a percent of total revenues, selling, general and administrative
expenses decreased to 19.8% for the year ended December 31, 1996 as compared
to 20.1% for the year ended December 31, 1995.
Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA (as
defined to exclude net gains on sales of used equipment) increased $5.9
million, or 15.2%, to $44.8 million for the year ended December 31, 1996 as
compared to $38.9 million for the year ended December 31, 1995. This increase
was primarily attributable to the increased revenues discussed above. EBITDA
from equipment rentals (as defined to equal revenues from equipment rentals,
less costs of equipment rentals, less selling, general and administrative
expenses, plus depreciation and amortization) increased from $38.4 million in
1995 to $43.0 million in 1996, an increase of 12.0%. As a percent of equipment
rental revenues, EBITDA from equipment rentals decreased from 36.0% in 1995 to
33.5% in 1996. This decrease was principally attributable to the changes in
gross profit and selling, general and administrative expenses discussed above.
Interest Expense. Interest expense increased $2.4 million, or 28.2%, to
$10.9 million for the year ended December 31, 1996 as compared to $8.5 million
for the year ended December 31, 1995. This increase was reflective of the
Company's higher levels of borrowings to finance the continued growth of the
Company.
Net Income. Net income increased $1.9 million, or 13.3%, to $16.0 million
for the year ended December 31, 1996 as compared to $14.1 million for the year
ended December 31, 1995 as a result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL
During the nine months ended September 30, 1998 and the years ended December
31, 1997, 1996 and 1995, the Company's primary sources of funds consisted of
net cash provided by operating activities, proceeds from the sale of fixed
assets, including rental equipment and borrowings under its Former Credit
Agreement. Additionally, in 1996, proceeds of $24.1 million were received from
a sale/leaseback transaction, and in 1997, $59.0 million in proceeds from the
issuance of privately placed senior notes. Net cash provided by operating
activities for the nine months ended September 30, 1998 increased $3.0
million, or 13.5%, to $25.0 million from
35
<PAGE>
$22.0 million for the same period in the prior year. This increase was
primarily the result of an increase in income from operations before
consideration of non-cash components of net income. Net cash provided by
operating activities for the year ended December 31, 1997 declined to $30.7
million from $32.4 million as a result of an increase in working capital
partially offset by an increase in net income. Net cash provided by operations
for the year ended December 31, 1996 increased 17.0% to $32.4 million from
$27.7 million in 1995. This increase is primarily the result of increased net
income and an increase in certain operating liabilities.
For the nine months ended September 30, 1998, the Company's principal use of
cash for investing activities was for capital expenditures, primarily the
purchase of rental equipment for the Company's fleet. Total capital
expenditures for the nine months ended September 30, 1998 increased $21.1
million, or 36.0%, to $80.9 million, compared to $59.8 million for the same
period in the prior year. Of those amounts, $73.6 million and $40.2 million,
respectively, reflected the purchases of rental equipment both to increase the
size of the Company's fleet and to replace sold used rental equipment.
Proceeds from the sale of fixed assets, including rental equipment, for the
nine months ended September 30, 1998 decreased $10.4 million, or 53.0%, to
$9.2 million from $19.6 million for the same period in the prior year.
For the nine months ended September 30, 1998 and 1997, net cash provided by
financing activities was $47.2 million and $16.6 million, respectively. The
increase in net cash provided by financing activities was due to an increase
in net borrowings and equity proceeds as a result of the Recapitalization as
well as borrowings to fund capital expenditures, offset by an increase in
partner distributions, primarily related to the Recapitalization.
During the years ended December 31, 1997, 1996 and 1995, the Company's
principal uses of cash for investing activities, were for capital
expenditures, including expenditures for rental equipment. Total capital
expenditures during these periods were $85.6 million, $81.2 million and $44.8
million, respectively. Included in these totals were expenditures for rental
equipment totaling $64.2 million, $77.0 million, and $37.0 million,
respectively. These expenditures were made to increase the Company's total
investment in the rental fleet and to replace sold used rental equipment.
Total proceeds from the sale of fixed assets, including rental equipment,
increased 170.2% to $22.5 million for the year ended December 31, 1997 from
$8.3 million for the year ended December 31, 1996. Total proceeds from the
sale of fixed assets, including rental equipment, totaled $7.7 million for the
year ended December 31, 1995.
For the year ended December 31, 1997, net cash provided by financing
activities was $32.1 million compared to $26.4 million and $8.7 million for
the years ended December 31, 1996 and 1995, respectively. The increases in
1997 and 1996 were due to higher net borrowings to fund capital expenditures
and acquisitions, offset by an increase in partner withdrawals compared to
1995.
The Company has no long-term minimum purchase commitments for rental
equipment. Management has budgeted $95 million for gross fleet capital
expenditures for 1998. These expenditures will be partially offset by expected
proceeds from the sale of used equipment. The Company also expects to spend
approximately $8.0 million in 1998 on non-rental related capital expenditures
consisting of buildings, land, furniture and fixtures and machinery and tools.
In addition to the budgeted capital expenditures, the Company is currently
considering several potential acquisitions, although the Company does not
currently have any agreements with respect to the potential acquisitions. In
1997, the Company incurred approximately $3.1 million related to a
sale/leaseback transaction entered into in December 1996. This transaction
will require annual payments of approximately $3.1 million through January,
2004.
In connection with the Recapitalization, the Company and Holdings incurred
significant amounts of debt with interest and principal repayments on the
Discount Debentures, the Senior Notes and under the Senior Credit Facilities
representing significant obligations of the Company and Holdings. Holdings'
operations are conducted through its subsidiaries and Holdings is, therefore,
dependent upon the cash flow of its subsidiaries, including the Company, to
meet its debt service obligations. The Company's liquidity needs relate to
working capital, debt service, capital expenditures and potential
acquisitions.
36
<PAGE>
The Company intends to fund its working capital, capital expenditures and
debt service requirements through cash flows generated from operations and
borrowings under the Senior Credit Facilities. The Senior Credit Facilities
consist of a $275.0 million, non-amortizing revolving Credit Facility of which
a net amount of $144.0 million was drawn at September 30, 1998, and a $50.0
million non-amortizing Term Loan. Amounts under the Revolving Credit Facility
will be available on a revolving basis during the period commencing on July
22, 1998 (the date of the closing) and ending on the sixth anniversary of the
closing.
The Senior Credit Facilities, the Senior Notes and the Discount Debentures
contain certain covenants that limit, among other things, the ability of the
Company and Holdings to: (i) make distributions, redeem partnership interests
or make certain other restricted payments or investments other than
distributions to pay taxes; (ii) incur additional indebtedness or issue
preferred equity interests; (iii) merge, consolidate or sell all or
substantially all of its assets; (iv) create liens on assets; and (v) enter
into certain transactions with affiliates or related persons. In addition, the
Senior Credit Facilities require the Company to maintain specified financial
ratios and tests, among other obligations, including a minimum interest
coverage ratio. At September 30, 1998, the Company and Holdings were in full
compliance with the financial covenants and expects to remain in compliance
for the forseeable future, including with respect to the minimum interest
coverage ratio covenant.
IMPACT OF YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities.
Based on recent assessments, the Company determined that its information
technology systems will require modification or replacement of portions of
hardware and software so that those systems will properly utilize dates beyond
December 31, 1999. The Company presently believes that with modifications and
replacement of existing hardware and software, the Year 2000 Issue can be
mitigated. However, if such modifications and replacements are not made, or
are not completed timely, the Year 2000 Issue could have a material impact on
the operations of the Company. The Company does not have any significant non-
information technology systems.
The Company will utilize both internal and external resources to reprogram,
or replace, test, and implement the software and hardware for Year 2000
modifications. The total cost of the Year 2000 project is estimated at
$650,000 and is being funded through operating cash flows. To date, the
Company has incurred approximately $635,000 for new systems and equipment, the
majority of which has been capitalized. The total remaining project costs of
approximately $15,000 are attributable to the purchase of new operating
equipment, which will be capitalized.
The Company's plan to complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources,
and other factors. Estimates on the status of completion and the expected
completion dates are based on costs incurred to date compared to total
expected costs. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those plans.
Specific factors that might cause such material differences include, but are
not limited to, the availability and cost of personnel trained in this area,
the ability to locate and correct all relevant computer codes, and similar
uncertainties.
The Company's plan to resolve the Year 2000 Issue involves four phases:
assessment, remediation, testing, and implementation. To date, the Company has
fully completed its assessment of all material systems that could be affected
by the Year 2000 Issue. The completed assessment indicated that most of the
Company's significant information technology systems could be affected.
Further, the Company conducts a significant portion of its purchase
transactions with vendors involved in the business of crane and lifting
equipment manufacturing and repair. If these vendors are not Year 2000 ready,
the Company's ability to service its crane rental customers could be impaired.
37
<PAGE>
For its information technology exposures, to date, the Company is 100%
complete on the remediation phase for all material systems and is 98% complete
with testing and implementing its information technology systems. Completion
of the testing phase is expected by November 1998 with all remediated systems
fully implemented by December 31, 1998.
With respect to third parties, the Company does not utilize systems that
interface directly with significant vendors. The Company has queried its
important vendors, and to date, the Company is not aware of any problems that
would materially impact results of operations, liquidity, or capital
resources. The Company has no means of ensuring that their vendors will be
Year 2000 ready. The inability of those parties to complete their Year 2000
resolution process could materially impact the Company.
INFLATION AND CYCLICALITY
Although the Company cannot accurately anticipate the effect of inflation on
its operations, it does not believe that inflation has had, or is likely in
the foreseeable future to have, a material impact on its results of
operations. The Company's operating results may be adversely affected by
events or conditions in a particular region, such as regional economic,
weather and other factors. In addition, the Company's operating results may be
adversely affected by increases in interest rates that may lead to a decline
in economic activity, while simultaneously resulting in higher interest
payments by the Company under its variable rate credit facilities.
Although much of the Company's business is with customers in industries that
are cyclical in nature, management believes that certain characteristics of
the crane rental industry and the Company's operating strategies should help
to mitigate the effects of an economic downturn. These characteristics
include: (i) the flexibility and low cost offered to customers by renting,
which may be a more attractive alternative to capital purchases; (ii) the
Company's ability to relocate equipment during regional recessions; (iii) the
Company's high percentage of industrial customers who frequently rent cranes
for regularly scheduled, non-deferrable plant maintenance activities; and (iv)
the diversity of the Company's industry and customer base.
SUPPLEMENTARY FINANCIAL INFORMATION
The following table presents unaudited quarterly operating results for each
of the Company's last eleven quarters as well as the percentage of the
Company's total revenues represented by each item. This information has been
prepared by the Company on a basis consistent with the Company's audited
consolidated financial statements and includes all adjustments (consisting
only of normal recurring adjustments) that management considers necessary for
a fair presentation of the data. These quarterly results are not necessarily
indicative of future results of operations. This information should be read in
conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------- ------------- ----------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
Total revenues.......... $29,790 100.0% $34,663 100.0% $39,948 100.0% $43,204 100.0%
Gross profit............ 11,599 38.9 13,486 38.9 14,072 35.2 16,756 38.8
Income before income
taxes.................. 3,322 11.2 4,178 12.1 3,395 8.5 5,003 11.6
Net income.............. 3,342 11.2 4,205 12.1 3,417 8.6 5,036 11.7
1997:
Total revenues.......... $45,575 100.0% $44,278 100.0% $49,319 100.0% $44,636 100.0%
Gross profit............ 17,384 38.2 16,164 36.5 20,811 42.2 16,872 37.8
Income before income
taxes.................. 7,629 16.8 4,594 10.4 7,323 14.9 4,351 9.8
Net income.............. 7,599 16.7 4,576 10.3 7,293 14.8 4,333 9.7
1998:
Total revenues.......... $48,463 100.0% $51,086 100.0% $53,982 100% -- --
Gross profit............ 17,551 36.3 20,271 39.7 20,948 38.8% -- --
Income (loss) before
income taxes........... 4,564 9.5 5,765 11.3 (13,310)(a) (24.7%) -- --
Net income (loss)....... 4,504 9.3 5,765 11.3 (13,470)(a) (25.0%) -- --
</TABLE>
- ---------------------
(a) Includes an extraordinary loss of $15,811 associated with refinancing
indebtedness in connection with the Recapitalization.
38
<PAGE>
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components. SFAS No. 130 requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. The
provisions of SFAS No. 130 have been adopted in the nine month period ended
September 30, 1998 and all years presented have been adjusted to reflect the
adoption.
The FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and related disclosures about products and services,
geographic areas and major customers. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. Accordingly, the Company is not
required to adopt this standard until the fiscal year ending December 31,
1998. Management is currently evaluating the impact of this standard on the
consolidated financial statements.
The FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits," which revises employers' disclosures about
pension and other postretirement benefit plans by standardizing the disclosure
requirements for pensions and other postretirement benefits to the extent
practicable, requiring additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminating certain disclosures that are no longer as useful.
SFAS No. 132 is effective for fiscal years beginning after December 15, 1997.
Accordingly, the Company is not required to adopt this standard until the
fiscal year ending December 31, 1998. Management is currently evaluating the
impact of this standard on the consolidated financial statements.
39
<PAGE>
BUSINESS
Anthony Crane Rental, L.P. is the largest provider of comprehensive crane
and lifting equipment rentals and services in North America. The Company
believes, based on the number and widespread location of its yards, that it is
the only national crane rental company in the highly fragmented U.S. crane
rental industry. The Company has a network of 25 crane rental yards that
provide services to over 8,000 customers in 41 states, Mexico and the
Caribbean. The Company owns approximately 2,500 pieces of lifting equipment,
ranging from 1,000-ton mobile cranes to two-person aerial work platforms. The
Company believes that its crane fleet represented approximately 15% of the
total U.S. crane rental fleet in 1997. While its primary business is the
rental of crane and lifting equipment, approximately 15% of the Company's 1997
revenues were derived from sales of new and used equipment. The Company has
achieved 31 consecutive years of revenue growth and compound annual growth
rates of revenues and EBITDA (as defined) from 1993 to 1997 of 26.0% and
19.5%, respectively. For the twelve months ended September 30, 1998, on a pro
forma basis ACR generated revenues and EBITDA of $198.2 million and $58.1
million, respectively.
The Company's two subsidiaries, Anthony Crane Sales & Leasing, L.P. ("Sales
& Leasing") and Anthony Crane International, L.P. ("AC International") conduct
business solely in the Virgin Islands under the terms of a contract with a
single customer. The principal activity of Sales & Leasing is the rental of
cranes and lifting equipment. AC International provides labor services for the
operation, management and maintenance of the equipment.
ACR was founded by Ray G. Anthony, who entered the crane rental business in
1966 when he took over the family business, a small scrap yard south of
Pittsburgh. Mr. Anthony initially purchased a crane to facilitate moving scrap
metal and shortly thereafter began receiving calls from parties interested in
renting the crane. As such calls became more frequent, Mr. Anthony purchased
additional cranes and incorporated Anthony Crane Rental, Inc. in 1973. Since
that time, the Company has grown largely through controlled and disciplined
geographic expansion.
OPERATING PHILOSOPHY
The Company has grown by pursuing an operating philosophy focused on serving
the crane and lifting needs of industrial customers in the petrochemical,
paper, steel, utility, mining and multiple other industries. These industrial
customers, which accounted for approximately 70% of the Company's 1997 rental
revenues, frequently rent cranes for regularly scheduled, non-deferrable plant
maintenance activities. These projects can require up to 100 cranes of varying
sizes at any one time and are often extremely time-sensitive because they
interrupt plant operations. As a result, industrial customers value
reliability, availability, safety and operator experience more than certain
other factors. The Company believes that its industrial customer base provides
stable crane rental demand as such customers tend to require a certain level
of predictable and necessary plant maintenance regardless of economic
conditions. The Company has also been successful in serving the needs of
construction contractors, which accounted for approximately 30% of 1997 rental
revenues. These construction customers rent cranes primarily for large, long-
term public infrastructure and commercial construction projects which are
generally not deferred once started.
CRANE RENTAL INDUSTRY
The crane rental industry is an estimated $750 million market within the $16
billion general equipment rental industry. The general equipment rental
industry has grown at a compound annual growth rate of approximately 15% from
1991 to 1996. This growth has been driven by a combination of underlying end-
user growth and a trend toward outsourcing non-core operations in order to:
(i) reduce their capital investments; (ii) gain access to specialized
equipment on an economic basis; (iii) meet safety standards; and (iv) minimize
the downtime, maintenance, repair, storage and other operating costs
associated with equipment ownership.
Growth in the crane rental industry has resulted from factors similar to
those driving growth in the general equipment rental industry, particularly
the trend toward further outsourcing. Rental companies are able to provide
customers with savings relative to owning cranes by capitalizing on volume-
driven equipment purchase discounts and high utilization rates. As evidence of
the outsourcing trend, the Company believes that approximately 80% of new
cranes sold in 1997 were purchased directly for the rental market,
representing an increase from 40% in
40
<PAGE>
the early 1980s. However, the Company believes rental companies own less than
one-half of the total installed base of cranes in the United States.
Management believes there is substantial growth potential from the continued
outsourcing of lifting equipment as an increasing number of end users assess
the "rent versus buy" decision.
Generally, cranes are rented by two sets of customers: (i) industrial
customers who typically use cranes for regularly-scheduled, non-deferrable
plant maintenance activities; and (ii) contractors who generally utilize
cranes in public infrastructure or commercial construction projects. Crane
lifting services are required in many plant maintenance and construction
projects but typically represent only a small fraction of a project's total
cost. In addition, plant maintenance programs often require the suspension of
production. Consequently, effective, timely and safe crane operation is
critical to avoid prolonged, costly production suspensions and construction
delays. As a result, crane rental companies are held to stringent safety,
availability and uptime standards and well trained, experienced operators and
lifting expertise are highly valued. As crane rental customers weigh the
average cost of crane rental relative to the all-in-cost of ownership, safety
violations and lengthened project delays or plant shutdowns, they typically
value reliability, availability, safety record and technical skill over other
factors.
The crane rental industry is highly fragmented and is served by a distinct
set of companies who focus almost exclusively on crane and lifting equipment
rental. ACR generally competes with a small number of regional crane rental
companies (who typically own less than 200 cranes) and hundreds of local crane
rental companies (who typically own less than 50 cranes). Management believes
that general equipment rental companies have not significantly participated in
the crane rental market because they are less able to meet the broad needs of
crane rental customers for several reasons, including: (i) the high levels of
expertise and commitment required to provide a full range of value-added
lifting services, such as highly qualified, well trained operators and lift
planning; (ii) the substantial amount of capital dedicated to cranes and
lifting equipment required to provide the fleet size and selection necessary
to meet the broad demands of larger customers; and (iii) the significant
maintenance programs required to ensure equipment reliability and safety.
Given the unique characteristics and fragmentation of the crane rental
industry, management believes there are substantial opportunities for ACR to
leverage its competitive advantages and further increase its market share
through geographic expansion and consolidation.
COMPETITIVE STRENGTHS
ACR believes that it benefits from the following competitive strengths:
LEADING MARKET POSITION AND NATIONAL SCOPE. ACR is the largest and only
national provider of comprehensive crane and lifting equipment rentals and
services in the United States. The Company estimates that its crane fleet
represented approximately 15% of the total U.S. crane rental fleet in 1997.
According to industry estimates, the Company's crane rental fleet is
significantly larger than that of its next largest competitor. Management
believes that, relative to the Company, most local and regional crane rental
competitors lack the fleet size necessary to provide customers with comparable
selection and availability. Furthermore, ACR's national scope, together with
the mobile nature of its fleet, affords it the ability to move assets in
response to varying levels of regional or seasonal demand and thus maximize
its fleet utilization.
LOW COST POSITION. ACR's leadership position results in economies of scale,
which management believes provide significant cost savings relative to its
competitors and thus allow the Company to provide superior services at
competitive prices. ACR's low cost position results from a number of factors.
First, ACR is the largest non-government buyer of cranes in the United States
and consequently benefits from volume-driven purchase discounts. Second, ACR
achieves superior utilization rates for its equipment due to its broad
customer base and ability to move equipment among both yards and regions.
Third, ACR realizes greater efficiency in its maintenance operations, which
enables the Company to realize longer equipment lives than many of its
competitors. Finally, ACR spreads operating and corporate overhead costs over
a larger revenue base. As a result of these advantages, management believes
that the Company generally earns higher margins and returns on its equipment
investments than its smaller local and regional competitors.
EMPHASIS ON INDUSTRIAL CUSTOMERS. The Company focuses on serving the crane
and lifting needs of industrial customers, who frequently rent cranes for
regularly scheduled, non-deferrable plant maintenance activities. Industrial
usage accounted for approximately 70% of the Company's rental revenues in
1997. Management believes that, relative to its competitors, ACR is better
positioned to serve industrial customers for
41
<PAGE>
several reasons. First, ACR meets the quantity, availability and reliability
requirements of large industrial customers with its broad, well maintained
fleet which includes larger and more specialized cranes required for major
plant maintenance jobs and special applications. Second, the Company offers a
full range of lifting services and experienced crane operators, which are
increasingly important as customers outsource more of their crane and lifting
needs. Last, ACR minimizes downtime on a customer's site through both
preventative maintenance and field repair/replacement services. The Company
believes that its industrial customer base provides stable crane rental demand
as such customers tend to require a certain level of predictable and necessary
plant maintenance regardless of economic conditions.
MODERN, WELL MAINTAINED CRANE FLEET. ACR has a modern, well maintained fleet
with an average age of approximately five years as of September 30, 1998. From
January 1, 1994 through September 30, 1998, the Company has invested
approximately $298 million in rental equipment. As a result of these capital
investments, the Company has expanded its rental fleet by approximately 1,500
units over such four and three quarter year period. In addition, ACR spent
over $13 million on expensed fleet maintenance during 1997 and $10.7 million
for the nine months ended September 30, 1998, in order to maintain the value
of its fleet and exceed industry-accepted safety and reliability standards. By
regularly inspecting its cranes and investing in preventive maintenance, ACR
is able to minimize costly field repairs and downtime on customer sites.
Management believes that its strong maintenance programs enhance the long-term
value of its cranes over their 15 to 25 year average lives. From 1994 to 1997,
ACR sold its used equipment for an average of greater than 90% of its original
cost.
SUPERIOR FLEET MANAGEMENT. The Company believes that a key factor
contributing to its ability to generate consistent returns and strong resale
values on its rental fleet investment has been its proactive fleet management
program. Through this program, the Company uses a tracking system to monitor
and maximize asset utilization on a crane-by-crane basis. The Company's fleet
management program facilitates decisions regarding: (i) asset mix at
individual yards; (ii) movements of equipment on an intra-regional and inter-
regional basis; and (iii) relocation or divestiture of underperforming assets.
Management believes that as a result of its effective fleet management and
high utilization rates, the Company has generated consistent returns on its
fleet investment.
COMPREHENSIVE CRANE AND LIFTING EXPERTISE. Over its 30-year history, the
Company has developed significant lifting expertise. The Company provides a
full range of turnkey lift planning and execution services, including job
specification, equipment selection and skilled crane operation and rigging.
The Company's regional managers average over 27 years of crane rental
experience. The Company maintains a Crane Specialist at each yard and has
several special situation experts throughout its organization who typically
have many years of lifting and crane operating experience. In addition, the
Company believes that it has the ability to attract and retain superior
operators which allows it to strengthen customer relationships and provide
superior execution. ACR believes that its long history and reputation as a
crane expert and total lifting solution provider represents a significant
competitive advantage, and the majority of the Company's rentals include the
value-added services described above.
DIVERSE CUSTOMER BASE. The Company believes its diverse customer base
mitigates the impact of an economic downturn related to a particular customer,
industry or geographic region. In 1997, ACR served over 8,000 customers in 41
states, Mexico and the Caribbean. Examples of the Company's key customers
include: Hess Oil, USX Corp., Mobil Corp., Huntsman Corp., Florida Power and
Light Co., International Paper Co., Procter & Gamble Co. and Bayer AG. No
customer accounted for greater than 2% of the Company's rental revenues in
1997, other than a single industrial customer who represented 7% of 1997
rental revenues and for whom the Company provides fleet management services
under the terms of an exclusive contract. The Company's customers cover a wide
spectrum of industries, and management estimates that of the end-user groups
for which it records data, no single industry accounted for more than 13% of
rental revenues in 1997. Additionally, no single region accounted for greater
than 28% of the Company's 1997 rental revenues.
BUSINESS STRATEGY
ACR's business strategy is to serve the crane and lifting needs of
industrial and other large customers by providing a broad selection of modern,
well maintained lifting equipment, comprehensive lift planning and
42
<PAGE>
execution services and highly qualified, well trained operators. The Company's
leading market position and track record of profitable internal growth are
attributable to the successful implementation of this business strategy. ACR
intends to achieve further growth and strengthen its competitive position
through the continued implementation of this strategy and the following
initiatives:
LEVERAGE MARKET LEADERSHIP POSITION. The Company intends to leverage its
leadership position and build on its track record of profitable internal
growth. From 1993 to 1997, ACR achieved a compound annual revenue growth rate
of 26.0% primarily through internal growth. The Company intends to continue
this growth by: (i) expanding sales in existing yards through equipment
additions and marketing efforts targeted at new and existing customers; (ii)
opening satellite yards in contiguous geographic areas, which are currently
served by one of the Company's existing yards; and (iii) opening greenfield
("start-up") yards in selected noncontiguous markets where the Company does
not currently conduct business. Such greenfield yards cannot, in the short
term, benefit from economies that might result from coordination with existing
operations.
EMPHASIZE LONG-TERM CUSTOMER RELATIONSHIPS. Management believes that its
customers value the broad range of equipment and services that the Company
provides and many of its customers use ACR for predominantly all of their
lifting needs. The strength of ACR's customer relationships is evidenced by
the fact that 23 of the Company's top 25 customers in 1997 have been major
customers in each of the last five years. The Company capitalizes on its
presence on a customer's site by proactively anticipating and pursuing
incremental equipment rental opportunities and continuously strengthening this
customer relationship. In addition, as the only national provider of crane
rental services, the Company believes that it is uniquely positioned to serve
customers across multiple locations.
COMPLETE CALIFORNIA ROLLOUT. ACR intends to continue to invest in the Los
Angeles and San Diego markets, which it entered in 1997 with three new rental
yards. During the initial stages of infrastructure buildout, the Company
incurred significant start-up costs and experienced lower fleet utilization
than that of its more mature yards. The Company is increasing the fleet size
of these new yards in order to leverage its existing investment and meet the
diverse lifting needs of larger customers in these markets. Management expects
that these equipment additions will allow the Company to grow revenues in
these attractive markets and achieve fleet utilization and operating margins
consistent with those of the Company's more mature yards.
EXPAND THROUGH SELECTED ACQUISITIONS. The crane rental industry is highly
fragmented and the Company generally competes with a small number of regional
and hundreds of local crane rental companies. Management believes that there
are substantial opportunities for ACR to leverage its competitive strengths
and increase its market share through selected acquisitions. In evaluating
acquisition targets, the Company seeks acquisitions that would allow it to
penetrate new geographic markets or to solidify its position in certain
existing geographic markets, while generating attractive economic returns and
building on existing customer relationships.
OPERATIONAL OVERVIEW
ACR is headquartered in West Mifflin, Pennsylvania and organized into four
regions: Northeast (based in Pittsburgh, PA), Southeast (based in Atlanta,
GA), Central (based in Beaumont, TX), and West (based in Phoenix, AZ). Each of
these regions is headed by a regional manager who supervises five to eight
yards and oversees the movement of equipment within and across regions. These
managers have responsibility for sales and profitability for an individual
region and for the Company as a whole and receive bonuses for local, regional
and company-wide performance. This cooperative management style ensures proper
fleet deployment and optimal utilization on a company-wide basis.
Additionally, regional managers are responsible for locating promising growth
opportunities, new national customers and new yard sites in their respective
regions. The Company's regional managers average over 27 years of crane rental
experience.
Each yard serves an area within a radius of approximately 150 miles.
Depending on its size, each yard utilizes 20 to 40 skilled crane operators who
have undergone an intensive four-year training and apprenticeship program to
develop their expertise, which is a critical success factor for the Company.
The majority of these operators are used on an as-needed basis, which provides
ACR with a significant degree of operational and financial flexibility. In
addition, each yard is supervised by its respective regional manager and
staffed with a
43
<PAGE>
Yard Manager, Crane Specialist, Dispatcher, two to four sales people, an in-
house maintenance department and a small financial and administrative staff.
The Yard Manager oversees the day-to-day management of equipment, employees
and local customers and approves all pricing decisions.
Throughout its history, the Company has continually reviewed its options to
expand both within and across regions by adding new yards, often at the
initial request of one of its existing customers. ACR evaluates these
opportunities, applying financial and market-related criteria, and if
appropriate, enters a market through a single yard. As the Company gains new
customers in this market, it continues to build the size of its fleet and,
correspondingly, its market share. This initial yard then serves its market
and adjoining markets until the Company develops a sufficient revenue base to
support further expansion, at which point ACR opens a new yard in a contiguous
market. ACR has used this disciplined expansion strategy to expand regionally
into the Southeast and Central regions, and more recently to enter the West
region. Management believes that there are significant opportunities to expand
operations and grow revenue within the geographic scope of its current
operations.
One of the Company's primary performance measures is utilization, which it
defines as equipment rental revenue (excluding ancillary services such as
labor, freight and rigging which have historically generated additional
revenues) expressed as a percentage of original equipment cost. Since 1990,
ACR has consistently achieved utilization rates at or near its target of 30%,
even as it has expanded into new markets. For a particular class of equipment,
ACR's utilization rates tend to be relatively constant throughout its useful
life. Utilization in 1997 was below average primarily due to the Company's
substantial investment in new equipment and the start-up of new yards in
California. The Company's improved utilization rate in the nine months ended
September 30, 1998 reflects increased utilization achieved related to these
investments.
Fleet management, which is the process of purchasing, dispatching,
maintaining and selling rental equipment, is one of the most critical
operational elements for crane rental companies. As part of its fleet
management program, the Company monitors utilization on a crane-by-crane
basis, using a tracking system that indicates, by yard, the number of cranes
currently utilized or reserved and the number and types of cranes available.
The Company's fleet management program facilitates decisions regarding: (i)
asset mix at individual yards; (ii) movements of equipment on an intra-
regional and inter-regional basis; and (iii) relocation and divestiture of
underperforming assets. The Company believes that as a result of its effective
fleet management and high utilization rates, it has generated consistent
returns on its fleet investment.
CRANE SALES
While the majority of its revenues result from crane rentals and services,
the Company engages in two forms of crane sales and has a dedicated staff
focused on maximizing returns in this business. First, the Company purchases
cranes directly from manufacturers and acts as a dealer in sales to third
parties, which has historically generated a relatively small percentage of the
Company's total revenues (4.7% in 1997). As a dealer and the largest non-
government crane purchaser in the United States, the Company benefits from
both wholesale and volume-driven purchase discounts. Additionally, by
participating in the new crane sales business, the Company has access to up-
to-date crane market and product information, which aids ACR in marketing its
used equipment and in advising its rental customers regarding equipment
selection.
Second, the Company's proactive fleet management program is designed to
match the Company's rental product offerings with regional market demand. As
part of this program, once management determines that a piece of equipment is
being underutilized in a particular yard, the equipment is either relocated to
achieve higher utilization rates or sold. The Company's preventative
maintenance programs and its knowledge of the global market for crane sales
allow it to generate consistent average returns on sales of used equipment to
both domestic and international purchasers. For example, from 1994 to 1997,
ACR sold its used equipment for an average of greater than 90% of its original
cost. The Company has historically reinvested these sales proceeds in new
equipment selected to meet customer demand and maintain optimal fleet mix.
44
<PAGE>
CUSTOMERS, SALES AND MARKETING
The Company's broad and stable customer base consists of over 8,000
customers in 41 states, Mexico and the Caribbean. Examples of the Company's
key customers include: Hess Oil, USX Corp., Mobil Corp., Huntsman Corp.,
Florida Power and Light Co., International Paper Co., Proctor & Gamble Co. and
Bayer AG.
Over 60% of the Company's rental revenues are derived from customers who
rent cranes on an operated and maintained basis, which means that the rentals
include an experienced operator. These types of rentals also tend to include
value-added services, such as the services of a Crane Specialist who provides
equipment recommendations and specifications for a potential lift. The
remainder of ACR's rental revenues are on a bare basis (i.e., without an
operator). Additionally, approximately 75% of ACR's rentals are for greater
than one month, with the majority lasting for two to four months.
In 1997, approximately 70% of the Company's rental revenues were derived
from industrial customers. The Company believes that its industrial customer
base provides stable demand for crane rentals as such customers tend to
require a certain level of predictable and necessary plant maintenance
regardless of economic conditions. Approximately 30% of the Company's rental
revenues in 1997 were from construction contractors, who primarily utilize
cranes for public infrastructure and commercial construction for a wide
variety of industries. These construction projects tend to be large, long-term
projects that generally demand value-added services and lifting expertise, and
which are generally not deferred once started.
The Company believes its diverse customer base mitigates the impact of an
economic downturn related to a particular customer, industry or geographic
region. Management estimates that in 1997, of the specific end-user groups for
which it records such data, no single industry accounted for over 13% of
rental revenues. In 1997, no single customer accounted for over 2% of rental
revenues, except for one industrial customer who represented 7% of rental
revenues and for whom the Company provides fleet management services under the
terms of an exclusive contract. The Company's customer base is also
diversified by geography, which helps to insulate the Company from regional
economic downturns and seasonality and enables ACR to optimize fleet
utilization as equipment can be moved in response to fluctuations in demand
across ACR's markets. No single region accounted for greater than 28% of the
Company's 1997 rental revenues.
The Company has created and continues to develop its diverse and extensive
customer base through a proactive marketing strategy. The Company employs an
experienced staff of over 70 full-time sales personnel to reach new customers
and maintain existing relationships. ACR believes that its marketing approach
fosters long-term relationships and multi-location or national crane rental
contracts, and enables the Company to drive market share gains and consolidate
its position as the number one choice in crane rental services. This strategy
differs from those of the Company's smaller local and regional competitors,
whose marketing efforts have traditionally been limited to yellow pages and
other print advertising which typically attracts sporadic and smaller users of
cranes and lifting services.
COMPETITION
The crane rental industry is highly fragmented and is served by a distinct
set of companies who focus almost exclusively on crane and lifting equipment
rental. ACR generally competes with a small number of regional crane rental
companies (who typically own less than 200 cranes) and hundreds of local crane
rental companies (who typically own less than 50 cranes). Management believes
that general equipment rental companies have not significantly participated in
the crane rental market because they are less able to meet the broad needs of
crane rental customers for several reasons, including: (i) the high levels of
expertise and commitment required to provide a full range of value-added
lifting services, such as highly qualified, well trained operators and lift
planning; (ii) the substantial amount of capital dedicated to cranes and
lifting equipment required to provide the fleet size and selection necessary
to meet the broad demands of larger customers; and (iii) the significant
maintenance programs required to ensure equipment reliability and safety.
Given the unique characteristics and fragmentation of the crane rental
industry, management believes there are substantial opportunities for ACR to
leverage its competitive advantages and further increase its market share
through geographic expansion and consolidation.
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<PAGE>
ACR is the largest and only national provider of comprehensive crane and
lifting equipment rentals and services in the United States. The Company
estimates that its crane fleet represented approximately 15% of the total U.S.
crane rental fleet in 1997. According to industry estimates, the Company's
crane rental fleet is significantly larger than that of its next largest
competitor. Management believes that, relative to the Company, most local and
regional crane rental competitors lack the fleet size necessary to provide
customers with comparable selection and availability. Furthermore, ACR's
national scope, together with the mobile nature of its fleet, affords it the
ability to move assets in response to varying levels of regional or seasonal
demand and thus maximize its fleet utilization.
EQUIPMENT
The Company has a total of approximately 4,300 pieces of equipment, of which
approximately 2,500 pieces are comprised of cranes and lifting equipment, with
the remainder comprised of support vehicles (including tractors, trailers and
mechanics' vehicles). As of September 30, 1998, the original cost of the
Company's equipment, in the aggregate, was greater than $395 million. ACR is
the largest non-government purchaser of cranes in North America and
consequently benefits from volume-driven purchase discounts. The large scale of
the Company's fleet, in conjunction with its broad geographic coverage and
customer base, allow it to purchase specialized, often expensive equipment that
smaller competitors or individual crane users could not justify.
PROPERTIES
The following table sets forth certain information regarding significant
facilities operated by the Company as of September 30, 1998:
<TABLE>
<CAPTION>
FACILITY
SQUARE
LOCATION ACRES FOOTAGE PURPOSE OWNED OR LEASED
<S> <C> <C> <C> <C>
CALIFORNIA
Fontana........................ 5.0 7,200 Regional Office Leased
Richmond....................... 5.3 12,000 Regional Office Owned
San Diego...................... 4.3 6,000 Regional Office Leased
Wilmington..................... 6.4 26,420 Regional Office Owned
ARIZONA
Phoenix........................ 8.7 33,800 Regional Office Owned
TEXAS
Beaumont....................... 8.8 21,000 Regional Office Owned
Dallas......................... 3.1 5,380 Regional Office Owned
Jacinto........................ 13.2 20,720 Maintenance Owned
La Porte....................... 5.4 9,940 Regional Office Owned
North Houston.................. 3.6 18,000 Regional Office Owned
LOUISIANA
West Lake...................... 6.5 21,962 Regional Office Owned
NORTH CAROLINA
Charlotte...................... 1.5 500 Regional Office Leased
SOUTH CAROLINA
Columbia....................... 4.5 16,800 Regional Office Owned
GEORGIA
Atlanta........................ 32.0 34,884 Regional Office Owned
Augusta........................ 12.6 12,556 Regional Office Owned
Savannah....................... 14.9 26,390 Regional Office Owned
FLORIDA
Miami.......................... 2.1 160 Regional Office Leased
Pompano........................ 3.4 15,440 Regional Office Owned
West Palm Beach................ 3.0 15,100 Regional Office Leased
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
FACILITY
SQUARE
LOCATION ACRES FOOTAGE PURPOSE OWNED OR LEASED
<S> <C> <C> <C> <C>
U.S. VIRGIN ISLANDS
St. Croix.............. N/A N/A Contract Office Customer Facility
PENNSYLVANIA
Mercer................. 17.6 18,050 Regional Office Owned
Monroeville............ 5.9 39,100 Regional Office Owned
Philadelphia........... 8.0 19,350 Regional Office Owned
West Mifflin (Pitts- 28.5 45,760
burgh)................ Corp. & Reg. Offices Owned
WEST VIRGINIA
Nitro (Charleston)..... 5.8 29,220 Regional Office Owned
</TABLE>
To the extent any such properties are leased, the Company expects to be able
to renew such leases or lease comparable facilities on terms commercially
acceptable to the Company. Management believes that the Company's facilities
are suitable for its operations and provide sufficient capacity to meet the
Company's requirements for the foreseeable future.
LEGAL PROCEEDINGS
Various claims and legal proceedings generally incidental to the normal
course of business are pending or threatened against the Company. While the
Company cannot predict the outcome of these matters, in the opinion of
management, any liability arising thereunder will not have a material adverse
effect on the Company's business, financial condition and results of
operations after giving effect to provisions already recorded.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
The Company and its operations are subject to federal, state and local
environmental and occupational health and safety laws and regulations,
including laws and regulations governing petroleum storage, waste water
discharge, underground storage tanks, hazardous chemical reporting, and
hazardous waste disposal. Based upon the findings of an environmental
assessment conducted in connection with the Recapitalization, the Company
believes it is in material compliance with such requirements. The Company
expects to spend approximately $100,000 in 1998 to close and upgrade certain
underground storage tanks to comply with the U.S. EPA 1998 deadline for
attaining certain technical standards for such tanks. The Company does not
anticipate any material capital expenditures in 1999 for environmental
controls. The enactment of more stringent laws or regulations or stricter
interpretation of existing laws and regulations could require additional
expenditures by the Company, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Like all businesses, the Company is subject to liability for the
investigation and remediation of environmental contamination (including
contamination caused by other parties) at the properties it owns or operates
and at other properties where the Company or its predecessors have arranged
for the disposal of hazardous substances. The amount of such liability could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company is currently investigating and delineating soil and groundwater
contamination at its Savannah, Georgia location that resulted from former
gasoline underground storage tanks that were removed in 1994. These activities
are being conducted under the oversight of the Georgia Department of Natural
Resources. Following delineation, either active remediation or continued
monitoring of contamination will likely be required. The cost of such work is
not yet known, but the Company expects that it will receive reimbursement for
such costs from the Georgia Underground Storage Tank Trust Fund. To date, the
Company has been approved for reimbursement for $80,000 to delineate the
contamination. The reimbursement limit under the Trust Fund is $1 million. The
Company believes that it is unlikely that its costs will exceed the
reimbursement limit.
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In connection with the Recapitalization, the Current Owners have agreed to
indemnify the Company for matters that breach the environmental
representations and warranties set forth in the Recapitalization Agreement.
Such indemnification is limited to claims submitted within four years
following the Recapitalization, subject to a $1.6 million deductible and a $16
million cap, when aggregated with other indemnified matters. There can be no
assurance that the Current Owners will have the ability to fulfill their
indemnification obligations if called upon to do so by the Company.
EMPLOYEES
As of September 30, 1998, the Company had 752 full time employees.
Approximately 30 were employed at the corporate headquarters in West Mifflin,
Pennsylvania and were involved in administrative functions. The remaining
employees were located at ACR's various operating yards and were engaged in
management, sales and marketing, maintenance and administrative functions. In
addition, as of September 30, 1998, the Company contracted with approximately
790 crane operators on an as-needed basis. The majority of these crane
operators were unionized and, as of September 30, 1998, approximately 14% of
the Company's full time employees were unionized. The Company has never
experienced a material work stoppage and considers its overall relations with
its work force to be good.
The Company believes that its employees are an invaluable source of industry
expertise. ACR's ability to draw upon the vast experience of its employees
enables the Company to provide extensive, value-added services. In-house
training ensures that ACR's operators are at the forefront of industry best
practices and are able to operate the best available equipment in a safe,
efficient manner. The Company's employees and operators also provide ACR with
substantial market data, which contributes to more efficient fleet utilization
and consequently stronger financial results.
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<PAGE>
MANAGEMENT
BOARD OF MANAGERS OF THE GENERAL PARTNER AND EXECUTIVE OFFICERS OF HOLDINGS
AND THE COMPANY
The executive officers of Holdings and the Company serve at the discretion
of the General Partner, acting through its board of managers (the "GP Board").
Neither Holdings nor the Company has a board of managers or similar body. The
following table sets forth information concerning executive officers of the
Company and Holdings and the members of the GP Board (those executive officers
indicated by a "*" following their name are executive officers of Holdings):
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Ray G. Anthony*................ 59 Chairman and Chief Executive Officer
David W. Mahokey*.............. 39 Member of the GP Board and Chief Operating
Officer
Dale A. Buckwalter*............ 40 Chief Financial Officer
Albert C. Bove................. 51 Senior Vice President--West Region
Joseph M. Connelly............. 51 Senior Vice President--Northeast Region
Richard Ferchak, Sr............ 53 Senior Vice President--Central Region
Ray Graham..................... 49 Senior Vice President--Regional Development
Michael Corn................... 50 Senior Vice President--Southeast Region
Frank Hanjorgiris.............. 36 Senior Vice President of Sales and Marketing
Arthur J. Innamorato*.......... 44 General Counsel
Paul Edgerley.................. 41 Member of the GP Board
Robert C. Gay.................. 46 Member of the GP Board
Andrew B. Balson*.............. 31 Member of the GP Board
James E. Haas.................. 62 Member of the GP Board
William B. Kania............... 66 Member of the GP Board
</TABLE>
Ray G. Anthony is the founder of Anthony Crane Rental, L.P. and currently
serves as its Chairman and Chief Executive Officer. His primary focus is to
aid senior management in reviewing fleet management strategies and to coach
and develop yard managers.
David W. Mahokey has a total of 16 years of experience in the crane rental
business, all of which have been with ACR. As the Chief Operating Officer, Mr.
Mahokey oversees the daily operations of the Company, including all equipment
acquisition and disposition decisions, fleet management, sales and marketing
and personnel issues. He has a direct dialogue with the four regional senior
vice presidents and works closely with them regarding the key operations
issues at the Company. Mr. Mahokey was appointed Chief Operating Officer upon
consummation of the Recapitalization. Prior to that time, he served as the
Company's Chief Financial Officer, a position he held since 1991.
Dale A. Buckwalter has four years of public accounting experience and over
11 years of investment banking experience. He has served as the financial
advisor to ACR for the past five years and has been primarily responsible for
the Company's financial activities during this time. Mr. Buckwalter became the
Company's Chief Financial Officer upon the consummation of the
Recapitalization.
Albert C. Bove has more than 26 years of experience in the crane rental and
general construction industries, 21 of which have been with ACR. Since 1996,
Mr. Bove has served as the Senior Vice President--West Region. Prior to this
time, Mr. Bove served as the Yard Manager of the Company's Phoenix yard, a
position he held since 1992.
Richard Ferchak, Sr. has 31 years experience in the crane rental industry,
all with ACR. Mr. Ferchak is responsible for the operations of the Company's
Central region as Senior Vice President--Central Region. He has been Yard
Manager of the Pittsburgh, Carnegie and Beaumont yards. He was one of the
first ACR employees and has experience in all phases of the crane rental
business.
49
<PAGE>
Ray Graham has 27 years of experience in the crane rental industry, the last
nine of which have been with ACR. Mr. Graham started his career as a crane
operator and has been in a management position for the past 16 years. For the
past three years, Mr. Graham has been responsible for the Southeast region. In
1998, he assumed responsibility as a regional development officer and is
responsible for developing operating plans for any facilities which are deemed
by Management as being underperforming.
Michael Corn has 13 years of experience in the crane rental industry, all of
which have been with ACR. Mr. Corn ran the operations in the Southeast from
1986 to 1995. For the past three years he has managed the Company's Virgin
Islands operation and recently returned to assume operating responsibilities
for the Southeast region.
Joseph M. Connelly has nearly 26 years of experience in construction and
engineering, the last seven of which have been with ACR. Mr. Connelly has
responsibility for the Company's quality control programs and oversees the
operations of the Company's Northeast region.
Frank Hanjorgiris has 10 years of industry sales experience and has been
employed by the Company for four years. Since 1996, Mr. Hanjorgiris has been
Vice President of Sales and Marketing and his primary responsibility has been
the sales of new and used equipment. Mr. Hanjorgiris joined the company as a
salesman of new and used equipment in 1994 and was promoted to Corporate Sales
Manager in 1995. Prior to his employment with the Company, Mr. Hanjorgiris was
employed by Brambles Equipment and American High Reach as a salesman.
Arthur J. Innamorato has 20 years of legal and public accounting experience
and has been a valued advisor to the Company for the past five years. He
assumed the position as General Counsel upon the consummation of the
Recapitalization and is responsible for managing the legal affairs of the
Company. Mr. Innamorato is also involved in strategic planning and the
Company's external growth initiatives.
Paul Edgerley has been Managing Director of Bain since 1993. Since 1990, he
has been a General Partner of Bain Venture Capital, and from 1988 to 1990 he
was a Principal of Bain Venture Capital. He serves on the Boards of Directors
of Steel Dynamics, Inc., GS Technologies Corporation, AMF Group Inc. and Sealy
Corporation.
Robert C. Gay has been a Managing Director of Bain since 1993 and has been a
General Partner of Bain Venture Capital since 1989. From 1988 to 1989, Mr. Gay
was a Principal of Bain Venture Capital. Mr. Gay is Vice Chairman of the Board
of Directors of IHF Capital, Inc., parent of ICON Health & Fitness Inc. Mr.
Gay also serves as a director of Alliance Entertainment Corp., GT Bicycles,
Inc., Physio-Control International Corporation, Cambridge Industries, Inc.,
Nutraceutical Corporation, American Pad & Paper Company, GS Technologies
Corporation, Small Fry Snack Foods Limited and Alliance Laundry Holdings LLC.
Andrew B. Balson has been a Principal of Bain since June 1998 and was an
Associate of Bain from 1996 to 1998. From 1994 to 1996, Mr. Balson was a
Consultant for Bain & Company. Previously, he was an Associate with SBC
Australia.
James E. Haas has been Vice President and Director of Sensical Corporation,
a printing company, since 1993. From 1990 to 1993, Mr. Haas was President,
Chief Executive Officer and Director of Edgecomb Metals, a metals distributor.
Mr. Haas is a Director of GS Technologies Corporation.
William B. Kania has been Senior Partner of W.B. Kania & Associates, CPAs
since 1987. Mr Kania is a Director of BT Financial Corporation, Chairman of
North Fayette County Municipal Authority and Vice Chairman of Fayette County
Industrial Development Authority. He was also a Director of Fayette Bank &
Trust Company from 1989 to 1997.
50
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company for 1997 of
those persons who served as (i) the chief executive officer during 1997 and
(ii) the other four most highly compensated executive officers of the Company
or its predecessor for 1997 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
<S> <C> <C> <C> <C>
Ray G. Anthony, Chairman and Chief
Executive Officer..................... 1997 $266,000 $ -- $ --
Frank Hanjorgiris, Vice President of
Sales and Marketing................... 1997 65,600 17,500 332,474
Sam R. Anthony, Executive Vice
President(2).......................... 1997 100,160 191,280 --
Albert C. Bove, Senior Vice President--
Western Region........................ 1997 104,000 116,067 53,362
Michael Corn, Vice President........... 1997 122,681 65,300 50,768
</TABLE>
- ----------
(1) Represents commissions earned on the sale of new and used rental equipment
and deferred compensation.
(2) Sam Anthony is no longer an Executive Vice President but acts as a
consultant on strategic acquisitions to the Board. Mr. Anthony's
consulting agreement provides for annual compensation of $240,000.
PENSION PLANS
All non-union and certain union employees of the Company are eligible to
participate in the Company's profit sharing defined contribution plan. Under
the plan, the Company contributes an amount determined by the Company (1% of
eligible participant's compensation in 1997). The plan also includes a 401(k)
savings plan feature which enables employees to make voluntary salary
reduction contributions up to 15% of eligible compensation to the plan. The
Company will match fifty percent of the contributions, up to six percent of
participant's compensation.
MULTI-EMPLOYER BENEFIT PLANS
Union employees of the Company are covered by various union-sponsored,
collectively bargained, benefit plans. The Company's contributions to these
multi-employer plans are based on specified amounts per hours worked by the
covered union employees. One such plan is currently in reorganization and the
unfunded amount is being funded through ongoing contributions by all
sponsoring companies. Under certain circumstances, the Company may have to
accelerate such funding. In 1997, the Company paid approximately $600,000
towards its share of the unfunded plan.
EMPLOYMENT AGREEMENTS
In connection with the Transactions, the Company entered into an employment
agreement with Ray G. Anthony. Such agreement provides for : (i) a five year
employment term (subject to earlier termination in certain circumstances);
(ii) a minimum base salary and a bonus following the end of each fiscal year;
(iii) severance benefits in certain circumstances; (iv) non-compete and non-
solicitation agreements; and (v) other terms and conditions of Mr. Anthony's
employment.The Company may, from time to time, enter into employment
agreements with certain other members of senior management.
51
<PAGE>
MANAGEMENT EQUITY PARTICIPATION
In connection with the Transactions, it is expected that the Equity Investor
will offer certain members of management the opportunity to purchase up to an
aggregate of 10% of the common partnership interests of Holdings, including
approximately 6% of which was purchased at the Closing and 4% of which is
expected to be purchased in the future. In addition, in order to provide
additional financial incentives to management, certain members of management
are expected to be granted options to purchase up to 10% of the common
partnership interests of Holdings. Such additional options are expected to be
granted periodically and all options vest and become exercisable upon the
occurrence of certain events. The terms of management's equity participation
will be determined following the Offering.
COMPENSATION OF MEMBERS OF THE GP BOARD
Members of the GP Board will not be compensated in connection with services
provided in such capacity. Members of the GP Board will be reimbursed for any
out-of-pocket expenses incurred in traveling to and from meetings of the GP
Board.
COMPENSATION AND AUDIT COMMITTEES
The GP Board has established an Audit Committee and a Compensation
Committee. The current members of the Audit Committee are Messrs. Balson and
Haas. The Audit Committee oversees actions taken by the Company's independent
auditors, recommends the engagement of auditors and reviews the Company's
internal accounting policies and practices. The current members of the
Compensation Committee are Messrs. Edgerley and Haas. The Compensation
Committee approves the compensation of executives of the Company and makes
recommendations to the GP Board with respect to standards for setting
compensation levels.
52
<PAGE>
SECURITY OWNERSHIP
Holdings owns 99% of the outstanding common partnership and voting interests
of the Company and the General Partner owns the remaining 1% of the common
partnership and voting interests. The following table sets forth certain
information regarding the actual beneficial ownership of Holdings' common
partnership interests to be held by (i) each person (other than directors and
executive officers of Holdings) known to Holdings to own more than 5% of the
outstanding common partnership interests of Holdings and (ii) certain
executive officers and members of the Board of Holdings.
<TABLE>
<CAPTION>
NUMBER OF COMMON PERCENTAGE OF COMMON
PARTNERSHIP INTERESTS ON A PARTNERSHIP INTERESTS ON A
NAME AND ADDRESS OF BENEFICIAL OWNER FULLY DILUTED BASIS FULLY DILUTED BASIS
<S> <C> <C>
Bain/ACR, L.L.C.(1)........ 3,444,444.44 75.6%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Anthony Iron and Metal Com-
pany...................... 820,000.00 18.0%
c/o Anthony Crane Rental,
L.P.
1165 Camp Hollow Road
West Mifflin, PA 15122
Ray G. Anthony(2).......... 820,000.00 18.0%
c/o Anthony Crane Rental,
L.P.
1165 Camp Hollow Road
West Mifflin, PA 15122
David W. Mahokey........... 182,222.22 4.0%
c/o Anthony Crane Rental,
L.P.
1165 Camp Hollow Road
West Mifflin, PA 15122
Paul Edgerley(1)........... 3,058,197.35 67.1%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Robert C. Gay(1)........... 3,128,700.42 68.7%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Andrew B. Balson(1)........ 150,177.65 2.4%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
James E. Haas(3)........... 233,333.33 5.1%
c/o Haas Family Limited
Partnership
745 Beach View Drive
Boca Grande, FL 33921
Albert C. Bove............. 45,555.56 1.0%
c/o Anthony Crane Rental,
L.P.
1165 Camp Hollow Road
West Mifflin, PA 15122
William B. Kania........... 17,777.78 0.4%
c/o Anthony Crane Rental,
L.P.
1165 Camp Hollow Road
West Mifflin, PA 15122
All directors and executive
(1)(2)(3) ................ 4,493,671.51 98.6%
officers as a group
(12 persons)
</TABLE>
53
<PAGE>
- --------
(1) The limited liability company units of Bain/ACR, L.L.C. will be held by
Bain Capital Fund VI, L.P. ("Fund VI"), BCIP Trust Associates II ("BCIP
Trust II"), BCIP Trust Associates II-B ("BCIP Trust II-B"), BCIP
Associates II ("BCIP II"), BCIP Associates II-B ("BCIP II-B"), BCIP
Associates II-C ("BCIP II-C") and certain unrelated entities. Messrs.
Edgerley and Gay are: (i) Managing Directors of Bain Capital Investors VI,
Inc., the General Partner of Bain Capital Partners VI, L.P., which is the
General Partner of Fund VI; (ii) General Partners of BCIP II; (iii)
General Partners of BCIP Trust II; and (iv) affiliated with BCIP II-C. Mr.
Edgerley is a General Partner of BCIP Trust II-B. Mr. Gay is a General
Partner of BCIP II-B. Mr. Balson is a General Partner of BCIP II-B and
BCIP Trust II-B. Each of Messrs. Edgerley, Gay and Balson may be deemed to
beneficially own units held by entities in which they have an interest
and, accordingly, to beneficially own the common partnership interests of
Holdings held by such entities. Each such person disclaims beneficial
ownership of any such interests in which he does not have a pecuniary
interest.
(2) Mr. Anthony is a General Partner of Anthony Iron and Metal Company
("AIM"). Accordingly, Mr. Anthony may be deemed to beneficially own
interests owned by AIM. Mr. Anthony disclaims beneficial ownership of any
such interests in which he does not have a pecuniary interest.
(3) Mr. Haas is a General Partner of Haas Family Limited Partnership ("HFLP"),
a member of the Equity Investor. Accordingly, Mr. Haas may be deemed to
beneficially own interests beneficially owned by HFLP. Mr. Haas disclaims
beneficial ownership of any such interests in which he does not have a
pecuniary interest.
54
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SECURITYHOLDERS AGREEMENT
Upon the consummation of the Recapitalization, Holdings, the General
Partner, the Equity Investor and the Current Owners entered into a
securityholders agreement (the "Securityholders Agreement"). The
Securityholders Agreement: (i) restricts the transfer of the equity interests
of Holdings; (ii) grants tag-along rights on certain transfers of equity
interests of Holdings; (iii) requires each of the Equity Investor and the
Current Owners to consent to a sale of Holdings to an independent third party
if such sale is approved by a majority of the then outstanding equity
interests of Holdings; and (iv) grants preemptive rights on certain issuances
of equity interests of Holdings. The foregoing provisions of the
Securityholders Agreement will terminate upon the consummation of an Initial
Public Offering (as defined in the Securityholders Agreement) or a Liquidity
Event. For purposes of the Securityholders Agreement, "Liquidity Event" means
(a) any sale to an Independent Third Party of all or substantially all (as
defined in the Model Business Corporation Act) of the assets of Holdings and
its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (b) any sale to an Independent Third Party of all or
substantially all of the Common Units (as defined) (or a transaction having a
similar effect as contemplated by Section 13.9 of the Holdings Partnership
Agreement (as defined)) in one transaction or series of related transactions,
but excluding any sales of Common Units in a Public Sale (as defined in the
Securityholders Agreement) or (c) a merger or consolidation or other
transaction which accomplishes one of the foregoing. Certain equity holders
and directors of the Issuers, including Bain, and certain other related
parties received one-time transaction fees aggregating $8.8 million upon
consummation of the Transactions.
ADVISORY AGREEMENT
In connection with the Transactions, the Company entered into an advisory
agreement (the "Advisory Agreement") with Bain pursuant to which Bain agreed
to provide: (i) general executive and management services; (ii)
identification, support, negotiation and analysis of acquisitions and
dispositions; (iii) support, negotiation and analysis of financial
alternatives; and (iv) other services agreed upon by the Company and Bain. In
exchange for such services, Bain will receive (i) an annual management fee of
$1.0 million, plus reasonable out-of-pocket expenses (payable quarterly) and
(ii) a transaction fee in an amount in accordance with the general practices
of Bain at the time of the consummation of any additional acquisition or
divestiture by the Company and of each financing or refinancing. The Advisory
Agreement has an initial term of ten years subject to automatic one-year
extensions (unless the Company or Bain provides written notice of
termination), provided that the Advisory Agreement will terminate
automatically upon the consummation of a transaction involving a sale of all
or substantially all of the assets or partnership interests of the Company.
REGISTRATION RIGHTS AGREEMENT
Upon the consummation of the Recapitalization, Holdings, the General
Partner, the Equity Investor and the Current Owners entered into a
registration rights agreement (the "Registration Rights Agreement"). Under the
Registration Rights Agreement, the holders of a majority of the Registrable
Securities (as defined in the Registration Rights Agreement) owned by the
Equity Investor and General Partner have the right, subject to certain
conditions, to require Holdings to register any or all of their common equity
interests of Holdings under the Securities Act at Holdings' expense. In
addition, all holders of Registrable Securities are entitled to request the
inclusion of any common equity interests of Holdings subject to the
Registration Rights Agreement in any registration statement at Holdings'
expense whenever Holdings proposes to register any of its common equity
interests under the Securities Act. In connection with all such registrations,
Holdings has agreed to indemnify all holders of Registrable Securities against
certain liabilities, including liabilities under the Securities Act.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Holdings and each of the Equity Investor, General Partner and certain of the
Current Owners (collectively, the "Partners") entered into an Amended and
Restated Agreement of Limited Partnership of Holdings (the
55
<PAGE>
"Holdings Partnership Agreement"). The Holdings Partnership Agreement governs
the relative rights and duties of the Partners.
Partnership Units. The ownership interests of the Partners consist of the
Holdings Preferred Units and common units (the "Common Units"). The Common
Units have voting rights and represent the common equity of Holdings. Holders
of the Holdings Preferred Units do not have voting rights but are entitled to
payment of unpaid yield and a return of capital contributions prior to any
distributions made to holders of the Common Units.
Distributions. Subject to any restrictions contained in any financing
agreements to which Holdings or any of its Affiliates (as defined in the
Holdings Partnership Agreement) is a party, the Board may make distributions,
whether in cash, property or securities of Holdings, at any time or from time
to time pursuant to an order of priority set forth in the Holdings Partnership
Agreement. In addition, Holdings may distribute to each holder of units within
75 days after the close of each fiscal year such amounts as determined by the
Board to be appropriate to enable each holder of units to pay estimated income
tax liabilities.
Management. General Partner, as general partner of Holdings, will conduct,
direct and exercise full control over all activities of Holdings; however,
limited partners have voting rights equivalent to their respective economic
interests and, through a majority vote, can remove the General Partner.
HOLDINGS PREFERRED UNITS
Upon the consummation of the Recapitalization, Holdings issued the Holdings
Preferred Units with a liquidation preference and fair value of approximately
$22.5 million to the Current Owners. The Holdings Preferred Units are not
redeemable and have a yield of 11.0% per annum, compounded quarterly. Subject
to any restrictions contained in any financing agreements to which Holdings or
any of its Affiliates is a party, the holders of the Holdings Preferred Units
are entitled to receive distributions from Holdings, including payment of the
accrued interest thereon, prior to distributions in respect to any other
partnership interests of Holdings. See "--Amended and Restated Agreement of
Limited Partnership."
ESCROW AGREEMENT
Upon the consummation of the Recapitalization, the Company and the Current
Owners entered into an Escrow Agreement (the "Escrow Agreement") pursuant to
which the Company deposited an aggregate of $4.0 million with an escrow agent
in connection with certain distribution amount adjustment provisions and
certain indemnification provisions for the benefit of the Company pursuant to
the Recapitalization Agreement. The Escrow Agreement provides for the payment
of a distribution amount adjustment to the Company or the Current Owners based
on a targeted level of Consolidated Net Worth (as defined in the
Recapitalization Agreement) for the Company as of the Closing Date. In
addition, the Escrow Agreement provides for the payment of indemnity claims to
either the Equity Investor, the Company or the Current Owners upon any breach
by another party of any representation, warranty, covenant or agreement made
in the Recapitalization Agreement. If, upon payment of the distribution amount
adjustment and indemnity claims, if any, the escrow fund holds greater than
$2.0 million, such amount in excess of $2.0 million shall be distributed to
the Current Owners.
OTHER RELATED PARTY TRANSACTIONS AND POTENTIAL CONFLICTS OF INTEREST
The Company periodically rents and sells equipment to affiliated companies.
Rental revenues from such transactions totaled approximately $682,000,
$423,000 and $639,000 and gross proceeds from equipment sales totaled
approximately $119,000, $45,000 and $22,000 in 1997, 1996 and 1995,
respectively. In addition, the Company rents equipment, utilizes personnel and
purchases equipment from affiliated companies. Expenses from such transactions
totaled approximately $652,000, $198,000 and $366,000 in 1997, 1996 and 1995,
respectively, and purchases of equipment totaled approximately $218,000 and
$50,000 in 1997 and 1996, respectively. See Note 6 to the Consolidated
Financial Statements.
56
<PAGE>
The Company has periodically made advances to Mr. Anthony. Such advances,
which totaled approximately $4.0 million at December 31, 1997 and 1996, had no
specific repayment terms and have been treated as a distribution to Anthony
Iron and Metal Company and have been classified as a reduction of partners'
capital. In addition, during 1997, advances and other receivables due from Mr.
Anthony totaling $806,000 were treated as a distribution to Anthony Iron and
Metal Company and have been charged to the partners' capital account.
Certain employees of the Company have from time to time received equity
interests in entities controlled by Mr. Anthony in conjunction with their
affiliation with the Company.
The GP Board is expected to adopt a Corporate Compliance Policy for the
Company. Such policy will be administered by a Corporate Compliance Officer.
Pursuant to such policy, the Company will prohibit its employees from engaging
in any activity or conduct which appears to conflict with the interests of the
Company, its customers or its suppliers. Reports of any violations of the
policy will be investigated by the Company.
57
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR NOTES
The Senior Notes are limited in aggregate principal amount to $255.0
million, of which $155.0 million was issued in the Initial Note Offering, and
will mature on August 1, 2008. The Senior Notes were issued pursuant to the
Indenture (the "Note Indenture"), and are senior, general unsecured
obligations of the Company. Interest on the Senior Notes accrues at the rate
of 10 3/8% per annum from the issue date and is payable semi-annually in
arrears on each February 1 and August 1 commencing February 1, 1999, to the
holders of record on the immediately preceding January 15 and July 15,
respectively. Additional Senior Notes may be issued from time to time after
the Initial Note Offering, subject to the provisions of the Note Indenture.
The Senior Notes are not redeemable at the Issuers' option prior to August
1, 2003. Thereafter, the Senior Notes are subject to redemption at any time at
the option of the Issuers, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon to the applicable redemption date, if redeemed
during the twelve month period beginning on August 1 of the years indicated
below:
<TABLE>
<CAPTION>
PERCENTAGE OF
YEAR PRINCIPAL AMOUNT
---- ----------------
<S> <C>
2003........................................................ 105.188%
2004........................................................ 103.458%
2005........................................................ 101.729%
2006 and thereafter......................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to August 1, 2001, the
Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Senior Notes originally issued under the Note Indenture at
a redemption price of 110.375% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages (as defined in the Note Indenture)
thereon, if any, to the redemption date, with the net cash proceeds of any
Equity Offering (as defined in the Note Indenture); provided that at least 65%
of the aggregate principal amount of Senior Notes originally issued remain
outstanding immediately after the occurrence of such redemption (excluding
Senior Notes held by the Company and its Subsidiaries (as defined in the Note
Indenture); and provided further that such redemption shall occur within 120
days of the date of the closing of any such Equity Offering.
Upon the occurrence of a Change of Control (as defined in the Note
Indenture), each holder of Senior Notes will have the right to require the
Company to repurchase all or any part of such holder's Senior Notes at an
offer price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to
the date of purchase.
The Note Indenture contains certain covenants that will limit, among other
things, the ability of the Company to: (i) make distributions, except to the
extent required to pay taxes, redeem partnership interests or make certain
other restricted payments or investments, (ii) incur additional indebtedness
or issue preferred equity interests, (iii) merge, consolidate or sell all or
substantially all of its assets, (iv) create liens on assets and (v) enter
into certain transactions with affiliates or related persons. The Note
Indenture contains certain customary events of default, which include the
failure to pay interest and principal, the failure to comply with certain
covenants in the Senior Notes or the Note Indenture, a default under certain
indebtedness, the imposition of certain final judgements and certain events
occurring under bankruptcy laws. See "Risk Factors--Holding Company Structure;
Effective Subordination" and "--Limitation on the Payment of Funds to Holdings
by its Subsidiaries."
58
<PAGE>
SENIOR CREDIT FACILITIES
In connection with the Transactions, the Company entered into the Senior
Credit Facilities with the Lenders for which Goldman Sachs Credit Partners
L.P. acted as arranger and syndication agent, DLJ Capital Funding, Inc. acted
as documentation agent and Fleet National Bank acted as administrative agent.
The following is a summary of the material terms and conditions of the Senior
Credit Facilities and is subject to the detailed provisions of the Senior
Credit Facilities and the various related documents entered into in connection
therewith.
Loans; Interest Rates. The Senior Credit Facilities consist of up to a
$275.0 million six-year non-amortizing Revolving Credit Facility and a $50.0
million eight-year non-amortizing Term Loan. Borrowings of $175.0 million
under the Senior Credit Facilities, together with the proceeds of the Note
Offering and the Debenture Offering, provided a portion of the financing for
the Transactions and certain expenses related to the Transactions, and will
provide financing for future working capital, capital expenditures and other
general corporate purposes including acquisitions.
The Revolving Credit Facility is available on a revolving basis subject to a
borrowing base during the period commencing on the date of the Closing and
ending on the date that is six years after the date of the Closing. At the
Company's option, loans made under the Revolving Credit Facility bear interest
at either (i) the Base Rate (defined as the highest of (x) the rate of
interest announced publicly by Fleet National Bank from time to time, as its
prime rate and (y) the Federal funds effective rate from time to time plus
0.50%) plus a margin of 1.25%, subject to adjustment based on a leverage test,
or (ii) the reserve-adjusted London Interbank Offered Rate ("LIBO") plus a
margin of 2.25%, subject to adjustment based on a leverage test. The entire
Term Loan was drawn at Closing and, at the Company's option, bears interest at
either (i) the Base Rate plus a margin of 1.75%, or (ii) the reserve-adjusted
LIBO rate plus a margin of 2.75%.
Repayment. Revolving loans may be borrowed, repaid and reborrowed from time
to time until six years after the closing of the Senior Credit Facilities. The
Term Loan may be repaid at any time but is subject to certain call protections
and must be repaid in full eight years after the closing of the Senior Credit
Facilities.
Security. The Revolving Credit Facility is secured by a first-priority
perfected lien, and the Term Loan is secured by a second-priority perfected
lien, on all partnership interests of the Company and all property and assets
(tangible and intangible) of the Company and each of its material
subsidiaries, including, without limitation, all intercompany indebtedness,
and all capital stock (or similar equity interests owned by the Company) of
each of the Company's direct and indirect material subsidiaries, whenever
acquired and wherever located; provided, however, that no more than 65% of the
capital stock or similar equity interests of non-U.S. subsidiaries will be
required to be pledged as security in the event that a pledge of a greater
percentage would result in increased tax or similar liabilities for the
Company and its subsidiaries on a consolidated basis or would violate
applicable law.
Guarantees. The obligations of the Company under the Senior Credit
Facilities are guaranteed by all material existing, direct and indirect
domestic and foreign subsidiaries of the Company and by Holdings and will be
guaranteed by all material future, direct and indirect domestic and foreign
subsidiaries of the Company.
Prepayments. The Senior Credit Facilities provide for mandatory repayments,
subject to certain exceptions, of the Revolving Credit Facility and the Term
Loan based on certain net asset sales outside the ordinary course of business
of the Company and its subsidiaries and the net proceeds of certain debt and
equity issuances.
Outstanding loans under the Revolving Credit Facility and the Term Loan
(subject to certain call protections) are voluntarily pre-payable without
penalty; provided, however, that LIBO breakage costs, if any, shall be borne
by the Company.
59
<PAGE>
Conditions and Covenants. The obligations of the lenders under the Senior
Credit Facilities are subject to the satisfaction of certain conditions
precedent customary for similar credit facilities or otherwise appropriate
under the circumstances. The Company, Holdings and each of its Subsidiaries
are subject to certain negative covenants contained in the Senior Credit
Facilities, including without limitation covenants that restrict: (i) the
incurrence of additional indebtedness and other obligations and the granting
of additional liens; (ii) mergers, consolidations, amalgamations,
liquidations, dissolutions and dispositions of assets; (iii) investments,
loans and advances; (iv) dividends, stock repurchases and redemptions; (v)
prepayment or repurchase of subordinated indebtedness and amendments to
certain agreements governing indebtedness, including the Indenture and the
Exchange Notes; (vi) engaging in transactions with affiliates; and (vii) sales
and leasebacks. The Senior Credit Facilities also contain customary
affirmative covenants, including compliance with environmental laws,
maintenance of corporate existence and rights, maintenance of insurance,
property and interest rate protection, financial reporting, inspection of
property, books and records, and the pledge of additional collateral and
guarantees from certain new subsidiaries. In addition, the Revolving Credit
Facility requires the Company to maintain a minimum interest coverage ratio
and maximum leverage ratios. Certain of these financial, negative and
affirmative covenants are more restrictive than those set forth in the
Indenture.
Events of Default. The Senior Credit Facilities also include events of
default that are typical for senior credit facilities and appropriate in the
context of the Transactions, including, without limitation, nonpayment of
principal, interest, fees or reimbursement obligations with respect to letters
of credit, violation of covenants, inaccuracy of representations and
warranties in any material respect, cross default to certain other
indebtedness and agreements, bankruptcy and insolvency events, material
judgments and liabilities, defaults or judgements under ERISA and change of
control. The occurrence of any of such events of default could result in
acceleration of the Company's obligations under the Senior Credit Facilities
and foreclosure on the collateral securing such obligations, which could have
material adverse results to holders of the Exchange Notes.
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DESCRIPTION OF EXCHANGE DEBENTURES
GENERAL
The Exchange Debentures will be issued pursuant to an Indenture (the
"Indenture") among the Issuers and State Street Bank and Trust Company, as
trustee (the "Trustee"). The Indenture is governed under the laws of the state
of New York. The Exchange Debentures will be issued in a private transaction
that is not subject to the registration requirements of the Securities Act.
See "Notice to Investors." The terms of the Exchange Debentures include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Exchange
Debentures are subject to all such terms, and Holders of Exchange Debentures
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of the material provisions of the Indenture and
the Registration Rights Agreement does not purport to be complete and is
qualified in its entirety by reference to the Indenture and the Registration
Rights Agreement, including the definitions therein of certain terms used
below. Copies of the proposed form of Indenture and Registration Rights
Agreement are available as set forth below under "--Additional Information."
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions." For purposes of this summary, the term
"Holdings" refers only to Anthony Crane Rental Holdings, L.P. and not to any
of its Subsidiaries.
The Exchange Debentures will be general senior unsecured obligations of the
Issuers, will rank pari passu in right of payment to all existing and future
senior unsecured Indebtedness of the Issuers and will rank senior in right of
payment to all existing and future subordinated indebtedness of the Issuers.
The Exchange Debentures, however, will be effectively subordinated to all
secured obligations of the Issuers and all obligations of Holdings'
subsidiaries, including the Senior Notes and borrowings under the Senior
Credit Facilities. As of September 30, 1998, after giving effect to the
Transactions, the Exchange Debentures have been effectively subordinated to
$349.9 million of obligations of Holdings' subsidiaries (including a capital
lease obligation). The Indenture will permit additional borrowings under the
Senior Credit Facilities in the future. See "Risk Factors--Holdings Company
Structure; Effective Subordination."
Anthony Crane Holdings Capital Corporation is a Wholly Owned Subsidiary of
Holdings that was incorporated in Delaware for the purpose of serving as a co-
issuer of the Debentures in order to facilitate the Debenture Offering. The
Issuers believe that certain prospective purchasers of the Exchange Debentures
may be restricted in their ability to purchase debt securities of
partnerships, such as Holdings, unless such debt securities are jointly issued
by a corporation. Anthony Crane Holdings Capital Corporation will not have any
operations or assets and will not have any revenues. It is expected that the
Exchange Debentures will be repaid by Holdings and Holdings will have no
contribution or similar rights against Anthony Crane Holdings Capital
Corporation with respect thereto. As a result, prospective purchasers of the
Exchange Debentures should not expect Anthony Crane Holdings Capital
Corporation to participate in servicing the interest and principal Obligations
on the Exchange Debentures.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Debentures will be limited in aggregate principal amount at
maturity to $48.0 million and will mature on August 1, 2009. The Exchange
Debentures will accrete at a rate of 13 3/8% per annum, compounded semi-
annually to an aggregate principal amount of $48.0 million on August 1, 2003.
Thereafter, interest on the Exchange Debentures will accrue at the rate of 13
3/8% per annum and will be payable semi-annually in arrears on February 1 and
August 1, commencing on February 1, 2004, to Holders of record on the
immediately preceding January 15 and July 15. No cash interest will be payable
on the Exchange Debentures prior to August 1, 2003. Interest on the Exchange
Debentures will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from August 1, 2003. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, interest and Liquidated Damages, if any, on the
Exchange Debentures will be payable at the office or agency of the Issuers
maintained for such purpose within the City and State of New York or, at the
option of the Issuers, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders of the Exchange Debentures at their
respective addresses set forth in the register of Holders of Exchange
Debentures; provided that all payments of
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principal, premium, interest and Liquidated Damages with respect to Exchange
Debentures, the Holders of which have given wire transfer instructions to the
Issuers, will be required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof. Until otherwise
designated by the Issuers, the Issuers' office or agency in New York will be
the office of the Trustee maintained for such purpose. The Exchange Debentures
will be issued in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
The Exchange Debentures will not be redeemable at the Issuers' option prior
to August 1, 2003. Thereafter, the Exchange Debentures will be subject to
redemption at any time at the option of the Issuers, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued
and unpaid interest and Liquidated Damages thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
August 1 of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL
YEAR AMOUNT
<S> <C>
2003.............................................................. 106.688%
2004.............................................................. 104.458%
2005.............................................................. 102.229%
2006 and thereafter............................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to August 1, 2001, the
Issuers may on any one or more occasions redeem up to 35% of the aggregate
principal amount at maturity of Exchange Debentures originally issued under
the Indenture at a redemption price of 113.375% of the Accreted Value thereof
(as determined on the redemption date), plus Liquidated Damages thereon, if
any, to the redemption date, with the net cash proceeds of any Equity
Offerings; provided that at least 65% of the aggregate principal amount at
maturity of Exchange Debentures originally issued remain outstanding
immediately after the occurrence of such redemption (excluding Exchange
Debentures held by Holdings and its Subsidiaries); and provided further that
such redemption shall occur within 120 days of the date of the closing of any
such Equity Offering.
SELECTION AND NOTICE
If less than all of the Exchange Debentures are to be redeemed at any time,
selection of Exchange Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which the Exchange Debentures are listed, or, if the
Exchange Debentures are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided that no
Exchange Debentures of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Exchange Debentures to be
redeemed at its registered address. Notices of redemption may not be
conditional. If any Exchange Debenture is to be redeemed in part only, the
notice of redemption that relates to such Exchange Debenture shall state the
portion of the principal amount at maturity thereof to be redeemed. A new
Exchange Debenture in principal amount at maturity equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Exchange Debenture. Exchange Debentures called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Exchange Debentures or portions
of them called for redemption.
MANDATORY REDEMPTION
The Issuers are not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Debentures.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange
Debentures will have the right to require the Issuers to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's
Exchange Debentures pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash (the "Change of Control Payment")
equal to 101% of the Accreted Value thereof on the date of repurchase (if such
date of repurchase is prior to August 1, 2003) or 101% of the aggregate
principal amount thereof (if such date of repurchase is on or after August 1,
2003) plus, in each case, accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase. Within ten days following any Change
of Control, the Issuers will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Exchange Debentures on the date specified in such notice, which
date shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice. The Issuers
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Exchange
Debentures as a result of a Change of Control.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (1) accept for payment all Exchange Debentures or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with
the Paying Agent an amount equal to the Change of Control Payment in respect
of all Exchange Debentures or portions thereof so tendered and (3) deliver or
cause to be delivered to the Trustee the Exchange Debentures so accepted
together with an Officers' Certificate stating the aggregate principal amount
at maturity of Exchange Debentures or portions thereof being purchased by the
Issuers. The Paying Agent will promptly mail to each Holder of Exchange
Debentures so tendered the Change of Control Payment for such Exchange
Debentures, and the Trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new Exchange Debenture equal in
principal amount at maturity to any unpurchased portion of the Exchange
Debentures surrendered, if any; provided that each such new Exchange Debenture
will be in a principal amount of $1,000 or an integral multiple thereof. The
Issuers will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
The Senior Credit Facilities and the Note Indenture restricts the Issuers'
ability to repurchase any Exchange Debentures prior to repaying any
obligations outstanding thereunder and also provides that certain change of
control events with respect to the Issuers would constitute a default
thereunder. Any future credit agreements or other agreements relating to
Indebtedness to which the Issuers or the Company become a party may contain
similar restrictions and provisions. In the event a Change of Control occurs
at a time when the Issuers are prohibited from purchasing Exchange Debentures,
the Issuers could seek the consent of their lenders to the purchase of
Exchange Debentures or could attempt to refinance the borrowings that contain
such prohibition. If the Issuers do not obtain such a consent or repay such
borrowings, the Issuers will remain prohibited from purchasing Exchange
Debentures. In such case, the Issuers' failure to purchase tendered Exchange
Debentures would constitute an Event of Default under the Indenture which
would, in turn, constitute a default under the Senior Credit Facilities and
the Note Indenture. In addition, the exercise by Holders of the Exchange
Debentures of their right to require the Issuers to repurchase the Exchange
Debentures could cause a default under the Senior Credit Facilities or the
Note Indenture, even if the Change of Control itself does not, due to the
financial effect of such repurchases on the Issuers. Finally, the Issuers'
ability to pay cash to the Holders of Exchange Debentures upon a repurchase
may be limited by the Company's then existing financial resources.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Exchange Debentures to
require that the Issuers repurchase or redeem the Exchange Debentures in the
event of a takeover, recapitalization or similar transaction.
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The Issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Issuers and purchases all Exchange Debentures validly tendered and not
withdrawn under such Change of Control Offer.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
Holdings and its Subsidiaries (determined on a consolidated basis) to any
Person or group of related Persons, as defined in Section 13(d) of the
Exchange Act (a "Group"), together with any Affiliates thereof (whether or not
otherwise in compliance with the provisions of the Indenture) other than a
Principal or a Related Party of a Principal; (ii) the approval by the holders
of Capital Stock of one or more of the Issuers or the General Partner of any
plan or proposal for the liquidation or dissolution of the Issuers or the
General Partner (whether or not otherwise in compliance with the provisions of
the Indenture); (iii) any Person or Group (other than one of the Principals or
their respective Related Parties) shall become the owner, directly or
indirectly, beneficially or of record, of more than 50% of either the
aggregate Voting Stock or Capital Stock of one of the Issuers, the General
Partner or any successor to all or substantially all of their respective
assets; (iv) the occurrence of any transaction, the result of which is that
the General Partner is no longer the sole general partner of Holdings; (v) the
first day on which Holdings fails to own 100% of the issued and outstanding
Equity Interests of Anthony Crane Holdings Capital Corporation; and (vi) (A)
for so long as Holdings is a partnership (or other pass-through entity for
federal income tax purposes) with a limited liability company serving as the
General Partner, the first day on which a majority of the members of the
Management Committee of the General Partner are not Continuing Members and (B)
at all such other times, the first day on which a majority of the members of
Holdings Management Committee are not Continuing Members. Notwithstanding the
foregoing, any reorganization of Holdings and Anthony Crane Holdings Capital
Corporation pursuant to the last sentence of the covenant described below
under the caption "Merger, Consolidation or Sale of Assets" shall not
constitute a Change of Control under the Indenture.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Holdings and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "all or
substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Exchange
Debentures to require the Issuers to repurchase such Exchange Debentures as a
result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of Holdings and its Subsidiaries taken as a whole to
another Person or group may be uncertain.
"Continuing Members" means, as of any date of determination, any member of
the Management Committee of Holdings who (i) was a member of such Management
Committee on the date of the Indenture or (ii) was nominated for election or
elected to such Management Committee by any of the Principals or with the
approval of a majority of the Continuing Members who were members of such
Board at the time of such nomination or election.
"Principals" means Bain Capital, Inc. and any Affiliate of Bain Capital,
Inc.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
ASSET SALES
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) Holdings
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or
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otherwise disposed of (as determined in good faith by the Management
Committee), (ii) at least 75% of the consideration received by Holdings or the
Restricted Subsidiary, as the case may be, from such Asset Sale shall be cash
or Cash Equivalents; provided that the amount of (a) any liabilities (as shown
on Holdings or such Restricted Subsidiary's most recent balance sheet) of
Holdings or any such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Exchange Debentures) that are assumed by the
transferee of any such assets, (b) any Exchange Debentures or other
obligations received by Holdings or any such Restricted Subsidiary from such
transferee that are immediately converted by Holdings or such Restricted
Subsidiary into cash (to the extent of the cash received), and (c) any
Designated Noncash Consideration received by Holdings or any of its Restricted
Subsidiaries in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Noncash Consideration received pursuant to
this clause (c) that is at that time outstanding, not to exceed 10% of Total
Assets at the time of the receipt of such Designated Noncash Consideration
(with the fair market value of each item of Designated Noncash Consideration
being measured at the time received and without giving effect to subsequent
changes in value), shall be deemed to be cash for the purposes of this
provision, and (iii) upon the consummation of an Asset Sale, Holdings shall
apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds
relating to such Asset Sale within 365 days of receipt thereof to reinvest in
Productive Assets or to repay Indebtedness under the Senior Credit Facilities.
Pending the final application of any such Net Cash Proceeds, Holdings or such
Restricted Subsidiary may invest such Net Cash Proceeds in Cash Equivalents.
On the 366th day after an Asset Sale or such earlier date, if any, as the
Management Committee or such Restricted Subsidiary determines not to apply the
Net Cash Proceeds relating to such Asset Sale as set forth in clause (iii) of
the preceding paragraph (each, a "Net Proceeds Offer Trigger Date"), the
aggregate amount of Net Cash Proceeds that have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clause (iii) of the
preceding paragraph (each a "Net Proceeds Offer Amount") shall be applied by
Holdings or such Restricted Subsidiary to make an offer to purchase (the "Net
Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less
than 30 nor more than 45 days following the applicable Net Proceeds Offer
Trigger Date, (x) from all holders of Senior Notes on a pro rata basis that
amount of Senior Notes equal to the Net Proceeds Offer Amount at a price equal
to 100% of the principal amount of the Senior Notes to be purchased, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase, or (y) from all Holders on a pro rata basis that amount of
Exchange Debentures equal to the Net Proceeds Offer Amount at a price equal to
100% of the Accreted Value thereof on the date of repurchase (if such date of
repurchase is prior to August 1, 2003) or 100% of the principal amount of the
Exchange Debentures to be purchased (if such date of repurchase is on or after
August 1, 2003), plus, in each case, accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase; provided,
however, that if at any time any non-cash consideration (including any
Designated Noncash Consideration) received by Holdings or any Restricted
Subsidiary of Holdings, as the case may be, in connection with any Asset Sale
is converted into or sold or otherwise disposed of for cash (other than
interest received with respect to any such non-cash consideration), then such
conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in accordance
with this covenant.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$10.0 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time
as such Net Proceeds Offer Amount plus the aggregate amount of all Net
Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger
Date relating to such initial Net Proceeds Offer Amount from all Asset Sales
by Holdings and its Restricted Subsidiaries aggregates at least $10.0 million,
at which time Holdings or such Restricted Subsidiary shall apply all Net Cash
Proceeds constituting all Net Proceeds Offer Amounts that have been so
deferred to make a Net Proceeds Offer (the first date the aggregate of all
such deferred Net Proceeds Offer Amounts is equal to $10.0 million or more
shall be deemed to be a "Net Proceeds Offer Trigger Date").
Notwithstanding the two immediately preceding paragraphs, Holdings and its
Restricted Subsidiaries will be permitted to consummate an Asset Sale without
complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Productive Assets, cash, Cash
Equivalents and/or Marketable
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Securities and (ii) such Asset Sale is for fair market value (as determined in
good faith by the Management Committee of the General Partner); provided that
any consideration not constituting Productive Assets received by Holdings or
any of its Restricted Subsidiaries in connection with any Asset Sale permitted
to be consummated under this paragraph shall be subject to the provisions of
the two preceding paragraphs.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the
register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Exchange Debentures in whole or in part in
integral multiples of $1,000 in exchange for cash. To the extent Holders
properly tender Exchange Debentures in an amount exceeding the Net Proceeds
Offer Amount, Exchange Debentures of tendering Holders will be purchased on a
pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain
open for a period of 20 business days or such longer period as may be required
by law. To the extent that the aggregate amount of Exchange Debentures
tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer
Amount, the Company may use any remaining Net Proceeds Offer Amount for
general corporate purposes. Upon completion of any such Net Proceeds Offer,
the Net Proceeds Offer Amount shall be reset at zero.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Exchange Debentures pursuant to a Net Proceeds Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the Asset Sale provisions of the Indenture, the Issuers shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the Asset Sale provisions of the Indenture by
virtue thereof.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of Holdings' or
any of its Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving Holdings or
any of its Subsidiaries) or to the direct or indirect holders of Holdings' or
any of its Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Qualified Capital Stock of Holdings
or the Company); (ii) purchase, redeem or otherwise acquire or retire for
value (including, without limitation, in connection with any merger or
consolidation involving Holdings) any Equity Interests of Holdings or any
direct or indirect parent of Holdings; (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Exchange Debentures (other
than intercompany Indebtedness), except a payment of interest or principal at
stated maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) Holdings would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable Four-Quarter Period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Holdings and its Restricted Subsidiaries
after the date of the Indenture (excluding Restricted Payments permitted by
clauses (3), (4)(but only to the extent such Restricted Payment is made
with the cash proceeds received by Holdings or one of its Restricted
Subsidiaries from any "key man" life insurance policies), (5), (7), (8) and
(9) of the next succeeding paragraph), is less than the sum, without
duplication,
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of (i) 50% of the Consolidated Net Income of Holdings for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of Holdings' most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net proceeds (including the fair market value of
property other than cash (determined in good faith by the Management
Committee as evidenced by a certificate filed with the Trustee, except that
in the event the value of any non-cash consideration shall be $15.0 million
or more, the value shall be determined based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing)) received by Holdings since the date of the Indenture as a
contribution to its common equity capital or from the issue or sale of
Equity Interests (other than Disqualified Stock) of Holdings (excluding any
net proceeds from an Equity Offering or capital contribution to the extent
used to redeem Exchange Debentures in accordance with the optional
redemption provisions of the Exchange Debentures) or from the issue or sale
of Disqualified Stock or debt securities of Holdings that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of
Holdings), plus (iii) to the extent that any Restricted Investment that was
made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any), plus
(iv) any dividends (the fair market value of property other than cash shall
be determined in good faith by the Management Committee as evidenced by a
certificate filed with the trustee, except that in the event the value of
any non-cash consideration shall be $15.0 million or more, the value shall
be determined based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing) received by
Holdings or a Restricted Subsidiary after the date of the Indenture from
any Unrestricted Subsidiary of Holdings, to the extent that such dividends
were not otherwise included in Consolidated Net Income of Holdings for such
period, plus (v) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of the Indenture, if
as a result of such redesignation, (x) the Fixed Charge Coverage Ratio of
Holdings on a pro forma basis is lower than such ratio immediately prior
thereto, then the lesser of (A) the fair market value of Holdings'
Investment in such Subsidiary as of the date of such redesignation or (B)
such fair market value as of the date on which such Subsidiary was
originally designated as an Unrestricted Subsidiary or (y) the Fixed Charge
Coverage Ratio of Holdings on a pro forma basis is equal to or higher than
such ratio immediately prior thereto, the fair market value of Holdings
Investment in such Subsidiary as of the date of such redesignation.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not prohibit (1) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice; (2) if no Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof, the
acquisition of any Capital Stock of Holdings (the "Retired Capital Stock"),
either (i) solely in exchange for Qualified Capital Stock of Holdings (the
"Refunding Capital Stock"), or (ii) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of Holdings) of Qualified Capital Stock of Holdings, and, in the
case of subclause (i) of this clause (2), if immediately prior to the
retirement of the Retired Capital Stock the declaration and payment of
dividends thereon was permitted under clause (3) of this paragraph, the
declaration and payment of dividends on the Refunding Capital Stock in an
aggregate amount per year no greater than the aggregate amount of dividends
per annum that was declarable and payable on such Retired Capital Stock
immediately prior to such retirement; provided that at the time of the
declaration of any such dividends on the Refunding Capital Stock, no Default
or Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; (3) if no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof, the declaration and
payment of dividends to holders of any class or series of Designated Preferred
Stock (other than Disqualified Stock) issued after the date of the Indenture
(including, without limitation, the declaration and payment of dividends on
Refunding Capital Stock in excess of the dividends declarable and payable
thereon pursuant to clause (2) of this paragraph); provided that, at the time
of such issuance, Holdings, after giving effect to such issuance on a pro
forma basis, would have had a
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Consolidated Fixed Charge Coverage Ratio of at least 1.75 to 1.0 for the most
recent Four-Quarter Period; (4) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of Holdings or any
Subsidiary of Holdings held by any former member of the Holdings' (or any of
its Subsidiaries') management committee or any former officer, employee or
director of Holdings or any of its Subsidiaries pursuant to any equity
subscription agreement, stock option agreement, employment agreement or other
similar agreements; provided that (A) the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
(x) $1.5 million in any calendar year (with unused amounts in any calendar
year being carried over to succeeding calendar years) plus (y) the aggregate
cash proceeds received by Holdings or the Company during such calendar year
from any reissuance of Equity Interests by Holdings or the Company to members
of management of the Company and its Restricted Subsidiaries and (B) no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; provided, further that the aggregate cash proceeds
referred to in (y) above shall be excluded from clause (c)(ii) of the
preceding paragraph; (5) if no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof, other Restricted
Payments in an aggregate amount not to exceed $12.0 million since the date of
the Indenture; (6) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock represents a portion of the
exercise price thereof; (7) distributions to the Current Owners to fund the
Transactions (as described under "The Transactions-Sources and Uses") and (8)
so long as Holdings is treated as a partnership or disregarded as an entity
separate from its owners for federal income tax purposes, distributions to the
partners of Holdings in an amount with respect to any period after June 30,
1998 not to exceed the Tax Amount of Holdings for such period.
The Management Committee may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by Holdings
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated will be deemed to be Restricted Payments at the time
of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Holdings or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness and that Holdings will not issue any Disqualified Stock and will
not permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Issuers may incur Indebtedness or issue
shares of Disqualified Stock and Holdings' Restricted Subsidiaries may incur
Indebtedness or issue shares of preferred stock if (i) no Default or Event of
Default shall have occurred and be continuing at the time or as a consequence
of the incurrence of any such Indebtedness or the issuance of any such
Disqualified Stock, and (ii) the Consolidated Fixed Charge Coverage Ratio for
Holdings' most recently ended Four-Quarter Period would have been at least
1.75 to 1.0, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, at the beginning
of such Four-Quarter Period.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the incurrence by Holdings of Indebtedness represented by the
Exchange Debentures issued in the Offering, the incurrence by the Company
of Indebtedness represented by the Senior Notes and the incurrence by the
Subsidiary Guarantors of the Subsidiary Guarantees of the Senior Notes;
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(ii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness incurred pursuant to one or more Credit Facilities in an
aggregate principal amount at any time outstanding (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of Holdings and its Subsidiaries thereunder) not to exceed the
sum of (a) $50.0 million (which amount shall initially be utilized for term
Indebtedness) plus (b) the greater of (I) the Borrowing Base or (II) $275.0
million, less, in the case of clauses (a) or (b)(II), (A) the aggregate
amount of Indebtedness of Securitization Entities at the time outstanding
less (B) the amount of all optional or mandatory principal payments
actually made by the Company or any of its Restricted Subsidiaries since
the date of the Indenture in respect of term loans under Credit Facilities
(excluding any such payments to the extent refinanced at the time of
payment under a Credit Facility) and (C) further reduced by (X) any
repayments of revolving credit borrowings under Credit Facilities that are
applied in accordance with the covenant described above under the caption
"--Asset Sales" and (Y) any Attributable Debt incurred in pursuant to the
covenant described below under the caption "--Sale Leaseback Transaction";
(iii) the incurrence by Holdings and its Restricted Subsidiaries of
Indebtedness under Currency Agreements;
(iv) the incurrence by Holdings and its Restricted Subsidiaries of
Existing Indebtedness;
(v) Interest Swap Obligations of Holdings and its Restricted Subsidiaries
covering Indebtedness of Holdings and its Restricted Subsidiaries; provided
that any Indebtedness to which any such Interest Swap Obligations
correspond is otherwise permitted to be incurred under the Indenture; and
provided, further, that such Interest Swap Obligations are entered into, in
the judgment of Holdings, to protect Holdings and its Restricted
Subsidiaries from fluctuation in interest rates on its outstanding
Indebtedness;
(vi) the incurrence by Holdings or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Holdings and any of its
Restricted Subsidiaries; provided, however, that (i) if Holdings is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Exchange Debentures and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than Holdings or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either
Holdings or a Restricted Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by Holdings or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vi);
(vii) the incurrence of Acquired Indebtedness of Restricted Subsidiaries
of Holdings to the extent Holdings could have incurred such Indebtedness in
accordance with the first paragraph of this covenant on the date such
Indebtedness became Acquired Indebtedness;
(viii) Guarantees by Holdings and its Restricted Subsidiaries of each
other's Indebtedness; provided that such Indebtedness is permitted to be
incurred under the Indenture;
(ix) Indebtedness (including Capitalized Lease Obligations) incurred by
Holdings or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) in an aggregate principal amount outstanding not to
exceed 5% of Total Assets at the time of any incurrence thereof (including
any Refinancing Indebtedness with respect thereto) (which amount may, but
need not, be incurred in whole or in part under the Senior Credit
Facilities);
(x) the incurrence of Indebtedness (including letters of credit) in
respect of workers' compensation claims, self-insurance obligations,
performance, surety, bid or similar bonds and completion guarantees
provided by Holdings or a Restricted Subsidiary in the ordinary course of
business and consistent with past practices;
(xi) Indebtedness arising from agreements of Holdings or a Restricted
Subsidiary of Holdings providing for indemnification, adjustment of
purchase price, earn out or other similar obligations, in each case,
incurred or assumed in connection with the disposition of any business,
assets or a Restricted Subsidiary of Holdings, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition;
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provided that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received
by Holdings and its Restricted Subsidiaries in connection with such
disposition;
(xii) obligations in respect of performance and surety bonds and
completion guarantees provided by Holdings or any Restricted Subsidiary of
Holdings in the ordinary course of business;
(xiii) any refinancing, modification, replacement, renewal, restatement,
refunding, defeasance, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness (other than
intercompany Indebtedness), including any additional Indebtedness incurred
to pay interest or premiums required by the instruments governing such
existing or future Indebtedness as in effect at the time of issuance
thereof ("Required Premiums") and fees in connection therewith
("Refinancing Indebtedness"); provided that (1) any such event shall not
directly or indirectly result in an increase in the aggregate principal
amount of Permitted Indebtedness (except to the extent such increase is a
result of a simultaneous incurrence of additional Indebtedness (A) to pay
Required Premiums and related fees or (B) otherwise permitted to be
incurred under the Indenture) of Holdings and its Restricted Subsidiaries,
(2) such Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, (3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Exchange Debentures, such Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in right of
payment to, the Exchange Debentures on terms at least as favorable to the
Holders as those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded;
(xiv) the incurrence by Holdings or any of its Restricted Subsidiaries of
additional Indebtedness and/or the issuance of Disqualified Stock in an
aggregate principal amount or aggregate liquidation value, as applicable
(or accreted value, as applicable), at any time outstanding, including all
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xiv), not to exceed $20
million; and
(xv) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is Non-Recourse Debt (except for
Standard Securitization Undertakings) with respect to Holdings and its
other Restricted Subsidiaries.
The Indenture also provides that the Issuers will not incur any Indebtedness
(including Permitted Indebtedness) that is contractually subordinated in right
of payment to any other Indebtedness of the Issuers unless such Indebtedness
is also contractually subordinated in right of payment to the Exchange
Debentures on substantially identical terms; provided, however, that no
Indebtedness of the Issuers shall be deemed to be contractually subordinated
in right of payment to any other Indebtedness of the Issuers solely by virtue
of being unsecured.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Indebtedness described in clauses (i) through (xv) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuers shall, in their sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant; provided, in each such case, that the amount thereof is
included in Consolidated Fixed Charges of the Company as accrued.
LIENS
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Liens of any kind against or upon any of its property or assets, or any
proceeds therefrom, except for Permitted Liens.
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SALE LEASEBACK TRANSACTION
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that Holdings or any of its Restricted Subsidiaries may enter into a
sale and leaseback transaction if (i) Holdings or such Restricted Subsidiary,
as applicable, could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
either (A) the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock" or (B) clause (ii) of the
covenant described above under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock" and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described above under the caption "--
Liens," (ii) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (as determined in good faith by
the Management Committee and set forth in an Officers' Certificate delivered
to the Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and Holdings applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"--Asset Sales."
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
consensual restriction on the ability of any Restricted Subsidiary to (a) pay
dividends or make any other distributions on or in respect of its Capital
Stock, (b) make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary of Holdings
or (c) transfer any of its property or assets to Holdings or any other
Restricted Subsidiary of Holdings, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) the
Indenture or the Note Indenture; (3) non-assignment provisions of any contract
or any lease entered into in the ordinary course of business; (4) any
instrument governing Acquired Indebtedness, which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so acquired;
(5) agreements existing on the date of the Indenture (including, without
limitation, the Senior Credit Facilities); (6) restrictions on the transfer of
assets subject to any Lien permitted under the Indenture imposed by the holder
of such Lien; (7) restrictions imposed by any agreement to sell assets or
Capital Stock permitted under the Indenture to any Person pending the closing
of such sale; (8) any agreement or instrument governing Capital Stock of any
Person that is in effect on the date such Person is acquired by Holdings or a
Restricted Subsidiary of Holdings; (9) any Purchase Money Note, or other
Indebtedness or other contractual requirements of a Securitization Entity in
connection with a Qualified Securitization Transaction; provided that such
restrictions apply only to such Securitization Entity; (10) other Indebtedness
permitted to be incurred subsequent to the date of the Indenture pursuant to
the provisions of the covenant described above under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock"; provided that any such
restrictions are ordinary and customary with respect to the type of
Indebtedness or preferred stock being incurred or issued (under the relevant
circumstances); (11) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business; and (12) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (11) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Management
Committee, no more restrictive with respect to such dividend and other payment
restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that Holdings may not consolidate or merge with or
into (whether or not Holdings is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless
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(i) Holdings is the surviving corporation or the entity or the Person formed
by or surviving any such consolidation or merger (if other than Holdings) or
to which such sale, assignment, transfer, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than Holdings) or the entity or Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all the
obligations of Holdings under the Registration Rights Agreement, the Exchange
Debentures and the Indenture pursuant to supplemental indentures in forms
reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of Holdings with or into a Wholly Owned Restricted Subsidiary of
Holdings and except in the case of a merger entered into solely for the
purpose of incorporating Holdings or reincorporating Holdings in another
jurisdiction, Holdings or the entity or Person formed by or surviving any such
consolidation or merger (if other than Holdings), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
Four-Quarter Period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock." The Indenture
will also provide that Holdings may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. The provisions of this covenant will not be
applicable to a merger, sale, assignment, transfer, conveyance or other
disposition of assets between or among Holdings and any of its Restricted
Subsidiaries. Notwithstanding the foregoing, Holdings is permitted to
reorganize as a corporation in accordance with the procedures established in
the Indenture (and Anthony Crane Holdings Capital Corporation may thereafter
liquidate); provided that Holdings shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that such reorganization (and, if applicable, liquidation of
Anthony Crane Holdings Capital Corporation) is not adverse to holders of the
Exchange Debentures from a U.S. federal tax standpoint (it being recognized
that such reorganization shall not be deemed adverse to the holders of the
Exchange Debentures solely because (i) of the accrual of deferred tax
liabilities resulting from such reorganization or (ii) the successor or
surviving corporation (a) is subject to income tax as a corporate entity or
(b) is considered to be an "includible corporation" of an affiliated group of
corporations within the meaning of the Code or any similar state or local law)
and certain other conditions are satisfied.
TRANSACTIONS WITH AFFILIATES
(a) Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to occur any
transaction or series or related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are not materially less
favorable than those that would have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate
of the Company or any of its Restricted Subsidiaries; provided, however, that
for a transaction or series of related transactions with an aggregate value of
$5.0 million or more, at Holdings option, either (i) a majority of the
disinterested members of the Management Committee shall determine in good
faith that such Affiliate Transaction is on terms that are not materially less
favorable than those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of Holdings or (ii) the Management Committee or any such Restricted
Subsidiary party to such Affiliate Transaction shall have received an opinion
from a nationally recognized investment banking firm that such Affiliate
Transaction is on terms not materially less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of Holdings; and
provided, further, that for an Affiliate Transaction with an aggregate value
of $10.0 million or more the Management Committee or any such Restricted
Subsidiary party to such Affiliate Transaction shall have received an opinion
from a nationally recognized investment banking firm that such Affiliate
Transaction is on terms not materially less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of Holdings.
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(b) The foregoing restrictions shall not apply to (i) reasonable fees and
compensation paid to and indemnity provided on behalf of, officers, directors,
employee or consultants of Holdings or any Subsidiary as determined in good
faith by the Management Committee or senior management; (ii) transactions
exclusively between or among Holdings and any of its Restricted Subsidiaries
or exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the Indenture; (iii) any
agreement as in effect as of the date of the Indenture or any amendment or
replacement thereto or any transaction contemplated thereby (including
pursuant to any amendment or replacement thereto) so long as any such
amendment or replacement agreement is not more disadvantageous to the Holders
in any material respect than the original agreement as in effect on the date
of the Indenture; (iv) Restricted Payments permitted by the Indenture; (v) the
payment of customary annual management, consulting and advisory fees and
related expenses to the Principals and their Affiliates made pursuant to any
financial advisory, financing, underwriting or placement agreement or in
respect of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which are approved by the
Management Committee or such Restricted Subsidiary in good faith; (vi)
payments or loans to employees or consultants that are approved by the
Management Committee in good faith; (vii) the existence of, or the performance
by Holdings or any of its Restricted Subsidiaries of its obligations under the
terms of, any securityholders agreement (including any registration rights
agreement or purchase agreement related thereto) to which it is a party as of
the date of the Indenture and any similar agreements which it may enter into
thereafter; provided, however, that the existence of, or the performance by
Holdings or any of its Restricted Subsidiaries of obligations under, any
future amendment to any such existing agreement or under any similar agreement
entered into after the date of the Indenture shall only be permitted by this
clause (vii) to the extent that the terms of any such amendment or new
agreement are not disadvantageous to the Holders of Exchange Debentures in any
material respect; (viii) transactions permitted by, and complying with, the
provisions of the covenant described under "--Merger, Consolidation, or Sale
of Assets"; (ix) transactions effected as part of a Qualified Securitization
Transaction; (x) transactions with customers, clients, suppliers, or
purchasers or sellers of goods or services, in each case in the ordinary
course of business and otherwise in compliance with the terms of the Indenture
which are fair to Holdings or its Restricted Subsidiaries, in the reasonable
determination of the Management Committee or the senior management thereof, or
are on terms at least as favorable as might reasonably have been obtained at
such time from an unaffiliated party; and (xi) any Affiliate Transaction with
(A) a Principal or Related Party not in excess of $1.0 million or (B) any
other Person not in excess of $100,000.
CONDUCT OF BUSINESS
The Indenture provides that Holdings will not, and will not permit any of
its Restricted Subsidiaries to, engage in any businesses a majority of whose
revenues are not derived from the same or reasonably similar, ancillary or
related to, or a reasonable extension, development or expansion of, the
businesses in which Holdings and its Restricted Subsidiaries are engaged on
the date of the Indenture.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Exchange Debentures are outstanding, the Issuers will furnish to
the Holders of Exchange Debentures (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if Holdings were required to file such
Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition
and results of operations of Holdings and its consolidated Subsidiaries and,
with respect to the annual information only, a report thereon by Holdings
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if Holdings were required
to file such reports, in each case within the time periods specified in the
Commission's rules and regulations. In addition, following the consummation of
the exchange offer contemplated by the Registration Rights Agreement, whether
or not required by the rules and regulations of the Commission, Holdings will
file a copy of all such information and reports with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept
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such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, Holdings has agreed that, for
so long as any Exchange Debentures remain outstanding, they will furnish to
the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Exchange Debentures when the same
becomes due and payable if the default continues for a period of 30 days; (ii)
the failure to pay the principal on any Exchange Debentures when such
principal becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Exchange Debentures
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer); (iii)
failure by Holdings or any of its Restricted Subsidiaries to comply with the
provisions of the covenants described above under the captions "--Change of
Control," or "--Asset Sales;" (iv) a default in the observance or performance
of any other covenant or agreement contained in the Indenture if the default
continues for a period of 30 days after the Issuers receive written notice
specifying the default (and demanding that such default be remedied) from the
Trustee or the Holders of at least 25% of the outstanding principal amount of
the Exchange Debentures; (v) the failure to pay at final stated maturity
(giving effect to any extensions thereof) the principal amount of any
Indebtedness of Holdings or any Restricted Subsidiary (other than a
Securitization Entity), which failure continues for at least 10 days, or the
acceleration of the maturity of any such Indebtedness, which acceleration
remains uncured and unrescinded for at least 10 days, if the aggregate
principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $10.0 million or more at
any time; (vi) one or more judgments in an aggregate amount in excess of $10.0
million shall have been rendered against the Issuers or any of their
Significant Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become final
and non-appealable; and (vii) certain events of bankruptcy affecting the
Issuers or any of their Significant Subsidiaries.
Upon the happening of any Event of Default specified in the Indenture, the
Trustee or the Holders of at least 25% in principal amount of outstanding
Exchange Debentures may declare the principal of and accrued interest on all
the Exchange Debentures to be due and payable by notice in writing to the
Issuers and the Trustee specifying the respective Event of Default and that
such notice is a "notice of acceleration" (the "Acceleration Notice"), and the
same shall become immediately due and payable. If an Event of Default with
respect to bankruptcy proceedings of the Issuers occurs and is continuing,
then such amount shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of Exchange
Debentures.
The Indenture provides that, at any time after a declaration of acceleration
with respect to the Debentures as described in the preceding paragraph, the
Holders of a majority in principal amount of Debentures may rescind and cancel
such declaration and its consequences (i) if the rescission would not conflict
with any judgment or decree, (ii) if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration, (iii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Issuers have paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an Officers' Certificate
and an Opinion of Counsel that such Event of Default has been cured or waived.
The holders of a majority in principal amount of Exchange Debentures may waive
any existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest
on any Exchange Debentures.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding payment of the premium that the Issuers
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would have had to pay if the Issuers then had elected to redeem the Exchange
Debentures pursuant to the optional redemption provisions of the Indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the Exchange Debentures. If
an Event of Default occurs prior to August 1, 2003 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding the prohibition on redemption of the Exchange
Debentures prior to August 1, 2003, then the premium specified in the
Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Exchange Debentures.
NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No partner, director, officer, employee, incorporator or stockholder of the
Issuers, as such, shall have any liability for any obligations of the Issuers
under the Exchange Debentures or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of Exchange Debentures by accepting a Exchange Debenture waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Exchange Debentures. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Exchange Debentures
("Legal Defeasance") except for (i) the rights of Holders of outstanding
Exchange Debentures to receive payments in respect of the principal of,
premium, if any, and interest and Liquidated Damages on such Exchange
Debentures when such payments are due from the trust referred to below, (ii)
the Issuers' obligations with respect to such Exchange Debentures concerning
issuing temporary Debentures, registration of Exchange Debentures, mutilated,
destroyed, lost or stolen Exchange Debentures and the maintenance of an office
or agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the applicable trustee, and
the Issuers' obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Issuers may, at their option and
at any time, elect to have the obligations of the Issuers released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Exchange
Debentures. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default and Remedies" will no longer
constitute an Event of Default with respect to the Exchange Debentures.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Issuers must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Exchange Debentures, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, interest and
Liquidated Damages, if any, on all outstanding Exchange Debentures on the
stated maturity or on the applicable redemption date, as the case may be, and
the Issuers must specify whether the Exchange Debentures are being defeased to
maturity or to a particular redemption date; (ii) in the case of Legal
Defeasance, the Issuers shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture,
there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Exchange Debentures will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Issuers shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Exchange Debentures will not recognize
income, gain or loss for federal income tax purposes as a result of such
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Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit); (v) such Legal Defeasance or Covenant
Defeasance will not result in a breach or violation of, or constitute a
default under any material agreement or instrument (including the Indenture
and the Senior Credit Facilities) to which Holdings or any of its Subsidiaries
is a party or by which Holdings or any of its Subsidiaries is bound; (vi) the
Issuers must have delivered to the Trustee an Opinion of Counsel to the effect
that after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; (vii) the Issuers must
deliver to the Trustee an Officers' Certificate stating that the deposit was
not made by the Issuers with the intent of preferring the Holders of
Debentures over the other creditors of the Issuers with the intent of
defeating, hindering, delaying or defrauding creditors of the Issuers or
others; and (viii) the Issuers must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Exchange Debentures in accordance with the
Indenture. The applicable Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Issuers may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Issuers are not required to transfer or
exchange any Exchange Debenture selected for redemption. Also, the Issuers are
not required to transfer or exchange any Exchange Debenture for a period of 15
days before a selection of Exchange Debentures to be redeemed.
The registered Holder of a Exchange Debenture will be treated as the owner
of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture and
the Exchange Debentures may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Exchange Debentures
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Exchange
Debentures), and any existing default or compliance with any provision of the
Indenture or the Exchange Debentures may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Exchange
Debentures (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Exchange
Debentures).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder): (i)
reduce the principal amount of Exchange Debentures whose Holders must consent
to an amendment, supplement or waiver, (ii) reduce the principal of or change
the fixed maturity of any Exchange Debenture or alter the provisions with
respect to the redemption of the Exchange Debentures (other than provisions
relating to the covenants described above under the caption "--Repurchase at
the Option of Holders"), (iii) reduce the rate of or change the time for
payment of interest on any Exchange Debenture, (iv) waive a Default or Event
of Default in the payment of principal of or premium, if any, or interest on
the Exchange Debentures (except a rescission of acceleration of the Exchange
Debentures by the Holders of at least a majority in aggregate principal amount
of the Exchange Debentures and a waiver of the payment default that resulted
from such acceleration), (v) make any Exchange Debenture payable in money
other than that stated in the Exchange Debentures, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Exchange Debentures to receive payments of principal of or
premium, if any, or interest on the Exchange Debentures, (vii) waive a
redemption payment with respect to any Debenture (other than a payment
required by one of the covenants described above under the caption "--
Repurchase at the Option of Holders") or (viii) make any change in the
foregoing amendment and waiver provisions.
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Notwithstanding the foregoing, without the consent of any Holder of Exchange
Debentures, the Issuers and the Trustee may amend or supplement the Indenture
or the Exchange Debentures to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Exchange Debentures in addition to or in place of
certificated Exchange Debentures, to provide for the assumption of the
Issuers' obligations to Holders of Exchange Debentures in the case of a merger
or consolidation or sale of all or substantially all of the Issuers' assets,
to make any change that would provide any additional rights or benefits to the
Holders of Exchange Debentures or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Issuers, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Exchange Debentures will have the right to direct the time, method and place
of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture will provide that in
case an Event of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any Holder of Exchange Debentures,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain copies of the Indenture and
Registration Rights Agreement, without charge, by writing to Anthony Crane
Holdings Rental L.P., 1165 Camp Hollow Road, Pittsburgh, Pennsylvania 15122,
Attention: Investor Services.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Debentures initially will be represented by one or more notes
in registered, global form without interest coupons (collectively, the "Global
Debenture"). The Global Debenture will be deposited upon issuance with the
Trustee, as custodian for The Depository Trust Company ("DTC"), in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant as described below.
Except as set forth below, the Global Debenture may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or
its nominee. Beneficial interests in the Global Debenture may not be exchanged
for Debentures in certificated form except in the limited circumstances
described below.
The Exchange Debentures may be presented for registration of transfer and
exchange at the offices of the Exchange Agent.
DTC has advised the Issuers that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to
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other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect Participants"). Persons
who are not Participants may beneficially own securities held by or on behalf
of DTC only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of DTC are recorded on the records of
the Participants and the Indirect Participants.
DTC has also advised the Issuers that pursuant to procedures established by
it, (i) upon deposit of the Global Debenture, DTC will credit the accounts of
Participants designated by the exchanging holders with portions of the
principal amount of the Global Debenture and (ii) ownership of such interests
in the Global Debenture will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants
(with respect to other owners of beneficial interests in the Global
Debenture).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Debenture to such persons may be
limited to that extent. Because DTC can act only on behalf of the
Participants, which in turn act on behalf of the Indirect Participants and
certain banks, the ability of a person having beneficial interests in the
Global Debenture to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL DEBENTURE WILL
NOT HAVE DEBENTURES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF DEBENTURES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE
REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of (and premium, if any) and interest
on the Global Debenture registered in the name of DTC or its nominee will be
payable to DTC or its nominee in its capacity as the registered holder under
the Indenture. Under the terms of the Indenture, the Issuers and the Trustee
will treat the persons in whose names the Exchange Debentures, including the
Global Debenture, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, none of the Issuers or the Trustee nor any agent of the Issuers
or the Trustee has or will have any responsibility or liability for (i) any
aspect or accuracy of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Debenture, or for maintaining, supervising
or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Debenture or (ii) any other matter relating to the actions and
practices of DTC or any of the Participants or the Indirect Participants.
DTC has advised the Issuers that its current practice, upon receipt of any
payment in respect of securities such as the Exchange Debentures (including
principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
relevant security as shown on the records of DTC. Payments by the Participants
and the Indirect Participants to the beneficial owners of Exchange Debentures
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or the Issuers. Neither the Issuers
nor the Trustee will be liable for any delay by DTC or any of the Participants
in identifying the beneficial owners of the Exchange Debentures, and the
Issuers and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
Global Debenture for all purposes.
Interests in the Global Debenture will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and the Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures and
will be settled in same-day funds.
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DTC has advised the Issuers that it will take any action permitted to be
taken by a holder of Exchange Debentures only at the direction of one or more
Participants to whose account with DTC interests in the Global Debenture are
credited and only in respect of such portion of the aggregate principal amount
of the Exchange Debentures as to which such Participant or Participants has or
have given such direction. However, if any of the events described under "--
Exchange of Book Entry Debentures for Certificated Debentures" occurs, DTC
reserves the right to exchange the Global Debenture for Debentures in
certificated form and to distributed such Debentures to its Participants.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Debenture among accountholders in DTC, it is under
no obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuers or the Trustee
nor any agent of the Issuers or the Trustee will have any responsibility for
the performance by DTC or its respective participants, indirect participants
or accountholders of their respective obligations under the rules and
procedures governing their operations.
Exchange of Book-Entry Debentures for Certificated Debentures
The Global Debenture is exchangeable for definitive Exchange Debentures in
registered certificated form if (i) DTC (x) notifies the Issuers that it is
unwilling or unable to continue as depository for the Global Debenture and the
Issuers thereupon fail to appoint a successor depository or (y) has ceased to
be a clearing agency registered under the Exchange Act, (ii) the Issuers, at
their option, notify the Trustee in writing that they elect to cause the
issuance of the Debentures in certificated form or (iii) there shall have
occurred and be continuing a Default or an Event of Default with respect to
the Exchange Debentures. In all cases, certificated Exchange Debentures
delivered in exchange for the Global Debenture or beneficial interests therein
will be registered in the names, and issued in any approved denominations,
requested by or on behalf of DTC (in accordance with its customary
procedures).
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Accreted Value" means for each $1,000 of Exchange Debentures, as of any
date of determination prior to August 1, 2003, the sum of (i) the initial
offering price of each Exchange Debenture and (ii) that portion of the excess
of the principal amount of each Exchange Debenture over such initial offering
price which shall have been accreted thereon through such date, such amount to
be so accreted on a daily basis and compounded semi-annually on each February
1 and August 1 at the rate of 13 3/8% per annum from the date of issuance of
the Exchange Debentures through the date of determination.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of Holdings or that is assumed by Holdings or any of its Restricted
Subsidiaries in connection with the acquisition of assets from such Person, in
each case excluding any Indebtedness incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of Holdings or such acquisition.
"Affiliate" means a Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
Holdings. The term "control" means the possession directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, no Person (other than Holdings or
any Subsidiary of Holdings) in whom a Securitization Entity makes an
Investment in connection with a Qualified Securitization Transaction shall be
deemed to be an Affiliate of Holdings or any of its Subsidiaries solely by
reason of such Investment.
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"all or substantially all" shall have the meaning given such phrase in the
Revised Model Business Corporation Act.
"Asset Acquisition" means (a) an Investment by Holdings or any Restricted
Subsidiary of Holdings in any other Person if, as a result of such Investment,
such Person shall become a Restricted Subsidiary of Holdings, or shall be
merged with or into Holdings or any Restricted Subsidiary of Holdings, or (b)
the acquisition by Holdings or any Restricted Subsidiary of Holdings of all or
substantially all of the assets of any other Person or any division or line of
business of any other Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease, assignment or other transfer for value (other than operating
leases entered into in the ordinary course of business (other than Sale and
Leaseback Transactions)) by Holdings or any of its Restricted Subsidiaries to
any Person other than Holdings or a Restricted Subsidiary of Holdings of (a)
any Capital Stock of any Restricted Subsidiary of Holdings or (b) any other
property or assets of Holdings or any Restricted Subsidiary of Holdings other
than in the ordinary course of business; provided, however, that Asset Sales
shall not include (i) a transaction or series of related transactions for
which Holdings or its Restricted Subsidiaries receive aggregate consideration
of less than $1.0 million, (ii) the sale, lease, conveyance, disposition or
other transfer of all substantially all of the assets of Holdings as permitted
under the provisions described above under the caption "--Certain Covenants--
Merger, Consolidation and Sale of Assets" or any disposition that constitutes
a Change of Control, (iii) the sale or discount, in each case without
recourse, of accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof, (iv) the
factoring of accounts receivable arising in the ordinary course of business
pursuant to arrangements customary in the industry, (v) the licensing of
intellectual property, (vi) disposals or replacements of used or obsolete
cranes and equipment in the ordinary course of business, (vii) the sale, lease
conveyance, disposition or other transfer by Holdings or any Restricted
Subsidiary of assets or property to one or more Restricted Subsidiaries in
connection with Investments permitted by the covenant described under the
caption "--Restricted Payments" and (viii) sales of accounts receivable,
equipment and related assets (including contract rights) of the type specified
in the definition of "Qualified Securitization Transaction" to a
Securitization Entity for the fair market value thereof, including cash in an
amount at least equal to 75% of the fair market value thereof. For the
purposes of clause (viii), Purchase Money Notes shall be deemed to be cash.
"Attributable Debt" means, in respect of a sale and leaseback transaction,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
100% of the orderly liquidation value of cranes and lifting equipment; (ii)
75% of the orderly liquidation value of trucks and trailers; (iii) 85% of the
face amount of all accounts receivable owned by Holdings and its Restricted
Subsidiaries as of such date that are not more than 90 days past due, as
calculated on a consolidated basis and in accordance with GAAP and (iv) 75% of
the book value of spare parts inventory. To the extent that information is not
available as to the amount of accounts receivable as of a specific date,
Holdings may utilize the most recent available information for purposes of
calculating the Borrowing Base.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
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"Cash Equivalents" means: (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; (iii) commercial paper maturity no more
than one year from the date of creation thereof and at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances (or, with
respect to foreign banks, similar instruments) maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia,
having at the date of acquisition thereof combined capital and surplus of not
less than $500.0 million; (v) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in
clause (iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Anthony Crane Rental, L.P., a Pennsylvania limited
partnership and its successors.
"Consolidated EBITDA" means, with respect to any Person for any period, the
sum (without duplication) of such Person's (i) Consolidated Net Income (less
any gains on Used Crane Sales) and (ii) to the extent Consolidated Net Income
has been reduced thereby, (A) all income taxes and foreign withholding taxes
of such Person and its Restricted Subsidiaries paid or accrued in accordance
with GAAP for such period and any provision for taxes paid or accrued based on
income or profits or the Tax Amount of such Person and its Subsidiaries for
such period, to the extent that such provision for taxes or Tax Amount was
included in computing such Consolidated Net Income, (B) Consolidated Interest
Expense, (C) Consolidated Noncash Charges, (D) all one-time cash compensation
payments made in connection with the Transactions, and (E) any payments
related to addressing the Company's or any of its Restricted Subsidiaries
"Year 2000" information systems issues or to re-engineering efforts that must
be expensed in accordance with EITF 97-13.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the most recent
four full fiscal quarters for which internal financial statements are
available (the "Four-Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such
Person for the Four-Quarter Period. In addition to and without limitation of
the foregoing, for purposes of this definition, Consolidated EBITDA and
Consolidated Fixed Charges shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence of any
Indebtedness or the issuance of any preferred stock of such Person or any of
its Restricted Subsidiaries (and the application of the proceeds thereof) and
any repayment of other Indebtedness or redemption of other preferred stock
occurring during the Four-Quarter Period or at any time subsequent to the last
day of the Four-Quarter Period and on or prior to the Transaction Date, as if
such incurrence, repayment, issuance or redemption, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the
Four-Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any Pro
Forma Cost Savings) associated with such Asset Acquisition) occurring during
the Four-Quarter Period or at any time subsequent to the last day of the Four-
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale
or Asset Acquisition (including the incurrence, assumption or liability for
any such Indebtedness or Acquired Indebtedness) occurred on the first day of
the Four-Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly Guarantees Indebtedness of a third Person, the
preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or any Restricted Subsidiary
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of such Person had directly incurred or otherwise assumed such guaranteed
Indebtedness. Furthermore, in calculating Consolidated Fixed Charges for
purposes of determining the denominator (but not the numerator) of this
Consolidated Fixed Charge Coverage Ratio, (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rates, then the interest rate
in effect on the Transaction Date will be deemed to have been in effect during
the Four-Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating rate, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed
to accrue at the rate per annum resulting after giving effect to the operation
of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write off of debt issuance costs incurred on or
prior to the date of the Indenture) plus (ii) the product of (a) all cash
dividend payments or other distributions (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred equity
of such Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person (or, in the case of a Person that is a
partnership or a limited liability company, the combined federal, state and
local income tax rate that was or would have been utilized to calculate the
Tax Amount of such Person), expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP, provided that with respect to
any series of preferred stock that was not paid cash dividends during such
period but that is eligible to be paid cash dividends during any period prior
to the maturity date of the Exchange Debentures, cash dividends shall be
deemed to have been paid with respect to such series of preferred stock during
such period for purposes of clause (ii) of this definition.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication, (i) the aggregate of all cash and
non-cash interest expense with respect to all outstanding Indebtedness
(including amortization or write-off of debt issuance costs) of such Person
and its Restricted Subsidiaries, including the net costs associated with
Interest Swap Obligations, for such period determined on a consolidated basis
in conformity with GAAP, (ii) the consolidated interest expense incurred by
such Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) the interest component of Capitalized Lease Obligations and
imputed interest with respect to Attributable Debt paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
(i) the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP, provided that there shall be excluded therefrom (a) gains (or
losses) from Asset Sales (without regard to the $1.0 million limitation set
forth in the definition thereof) or abandonments or reserves relating thereto
and the related tax effects according to GAAP, (b) gains (or losses) due
solely to fluctuations in currency values and the related tax effects
according to GAAP, (c) items classified as extraordinary, unusual or
nonrecurring gains (or losses) (including, without limitation, severance,
relocation, other restructuring costs and multiemployer pension plan insured
liability payments), and the related tax effects according to GAAP and any
related Tax Amounts with respect thereto, (d) the net income (or loss) of any
Person acquired in a pooling of interests transaction accrued prior to the
date it becomes a Restricted Subsidiary of Holdings or is merged or
consolidated with Holdings or any Restricted Subsidiary of Holdings, (e) the
net income of any Restricted Subsidiary of Holdings to the extent that the
declaration of dividends or similar distributions by that Restricted
Subsidiary of Holdings of that income is restricted by operation of its
charter (or the equivalent thereof), operation of law or any judgment, decree,
order, statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (f) the net income of any Person, other than a
Restricted Subsidiary of Holdings, except to the extent of cash dividends or
distributions paid to Holdings or a Restricted Subsidiary of
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Holdings by such Person, (g) only for purposes of clause (c)(i) of the first
paragraph of the covenant described under the caption "--Restricted Payments",
any amounts included pursuant to clause (c)(iii) of the first paragraph of
such covenant, (h) the net income (or loss) from the operations of any
business that has been divested by distribution, sale, spin-off or
abandonment, and (i) one time non-cash compensation charges, including any
arising from existing stock options resulting from any merger or
recapitalization transaction, less (ii) any cash distribution paid or accrued
related to payment of the Tax Amount for such period.
"Consolidated Noncash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and any other non-cash
expenses of such Person and its Restricted Subsidiaries reducing Consolidated
Net Income of such Person for such period, determined on a consolidate basis
in accordance with GAAP excluding any such non-cash charge constituting an
extraordinary item or loss or any such non-cash charge which requires an
accrual of or a reserve for cash charges for any future period.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Senior Credit Facilities) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables
to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) and/or letters of credit.
"Currency Agreements" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect
Holdings or any Restricted Subsidiary of Holdings against fluctuations in
currency values.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Noncash Consideration" means any non-cash consideration (other
than non-cash consideration that would constitute a Restricted Investment)
received by Holdings or one of its Restricted Subsidiaries in connection with
an Asset Sale that is so designated as Designated Noncash Consideration
pursuant to an Officers' Certificate executed by the principal executive
officer and the principal financial officer of Holdings or such Restricted
Subsidiary. Such Officers' Certificate shall state the basis of such
valuation, which shall be a report of a nationally recognized investment
banking firm with respect to the receipt in one or a series of related
transactions of Designated Noncash Consideration with a fair market value in
excess of $10.0 million.
"Designated Preferred Stock" means preferred stock that is so designated as
Designated Preferred Stock, pursuant to an Officers' Certificate executed by
the principal executive officer and the principal financial officer of
Holdings, on the issuance date thereof, the cash proceeds of which are
excluded from the calculation set forth in clause (iv) of the first paragraph
of the covenant described under the caption "--Restricted Payments."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Exchange Debentures mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require Holdings to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
Holdings may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants-Restricted Payments."
"dividends" means, for so long as Holdings or any applicable Subsidiary is a
partnership (or other pass-through entity for federal income tax purposes),
dividends or distributions.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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"Equity Offering" means any offering of Qualified Capital Stock of Holdings.
"Existing Indebtedness" means Indebtedness of Holdings and its Restricted
Subsidiaries (other than Indebtedness under the Senior Credit Facilities) in
existence on the date of the Indenture, until such amounts are permanently
repaid.
"Four-Quarter Period" has the meaning specified in the definition of
Consolidated Fixed Charge Coverage Ratio.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements (including Interest Swap
Obligations) and (ii) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, Exchange Debentures, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than letters
of credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person (whether
or not such Indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness. For purposes of calculating the amount of Indebtedness of
a Securitization Entity outstanding as of any date, the face or notional
amount of any interest in receivables or equipment that is outstanding as of
such date shall be deemed to be Indebtedness but any such interests held by
Affiliates of such Securitization Entity shall be excluded for purposes of
such calculation.
"Interest Swap Obligations" means the obligations of any Person, pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated
by applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Persons calculated
by applying a fixed or a floating rate of interest on the same notional
amount.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as
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investments on a balance sheet prepared in accordance with GAAP. If Holdings
or any Subsidiary of Holdings sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of Holdings such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of Holdings, Holdings shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "--Restricted Payments".
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Management Committee" means (i) for so long as Holdings is a partnership
(or other pass through entity for federal income tax purposes), the management
committee (or the equivalent thereof for any other pass through entity for
federal income tax purposes) of the General Partner and (ii) otherwise, the
Board of Directors of Holdings.
"Marketable Securities" means publicly traded debt or equity securities that
are listed for trading on a national securities exchange and that were issued
by a corporation whose debt securities are rated at least "AAA-" from S&P or
"Aaa3" from Moody's.
"Moody's" means Moody's Investors Service, Inc.
"Net Proceeds" means the aggregate cash proceeds received by Holdings or any
of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes or Tax Distributions
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements) and any reserve
for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Holdings nor
any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of
Holdings or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or
assets of Holdings or any of its Restricted Subsidiaries.
"Note Indenture" means the indenture governing the Senior Notes.
"Obligations" means any principal, interest (including interest that, but
for the filing of a petition in bankruptcy with respect to the Issuers, would
accrue on such obligations), penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Permitted Business" means any business that derives a majority of its
revenues from the sale, rental or lease of cranes or other lifting equipment
or activities that are reasonably similar, ancillary or related to, or a
reasonable extension, development or expansion of, the businesses in which
Holdings and its Restricted Subsidiaries are engaged on the date of the
Indenture.
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"Permitted Investments" means (i) Investments by Holdings or any Restricted
Subsidiary of Holdings in any Restricted Subsidiary of Holdings (whether
existing on the date of the Indenture or created thereafter) or in any other
Person (including by means of any transfer of cash or other property) if as a
result of such Investment such Person shall become a Restricted Subsidiary of
Holdings and Investments in Holdings by any Restricted Subsidiary of Holdings,
(ii) cash and Cash Equivalents, (iii) Investments existing on the date of the
Indenture, (iv) loans and advances to employees and officers of Holdings and
its Restricted Subsidiaries in the ordinary course of business, (v) accounts
receivable created or acquired in the ordinary course of business, (vi)
Interest Swap Obligations entered into in the ordinary course of Holdings
businesses and otherwise in compliance with the Indenture, (vii) Investments
in Unrestricted Subsidiaries an amount at any one time outstanding not to
exceed $10.0 million, (viii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers, (ix) guarantees by Holdings of Indebtedness otherwise permitted to
be incurred by Restricted Subsidiaries of Holdings under the Indenture, (x)
Investments the payment for which consists exclusively of Qualified Capital
Stock of Holdings, (xi) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(xi) that are at that time outstanding, not to exceed 5% of Total Assets at
the time of such Investment (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent
changes in value), (xii) Investments received by Holdings or its Restricted
Subsidiaries as consideration for asset sales, including Asset Sales; provided
that in the case of an Asset Sale, such Asset Sale is effected in compliance
with the covenant described under the caption "--Redemption or Repurchase at
Option of Holders-Asset Sales," and (xiii) any Investment by Holdings or a
Subsidiary of Holdings in a Securitization Entity or any Investment by a
Securitization Entity in any other Person in connection with a Qualified
Securitization Transaction; provided that any Investment in a Securitization
Entity is in the form of a Purchase Money Note or an equity interest.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which Holdings or its Restricted Subsidiaries shall
have set aside on its books such reserves as may be required pursuant to
GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of Holdings or
any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of Holdings or
any Restricted Subsidiary of Holdings acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of Holdings or any Restricted
Subsidiary of Holdings other than the property and assets so acquired and
(B) the Lien securing such Indebtedness shall be created with 90 days of
such acquisition;
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(viii) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment, or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of Holdings or
any of its Restricted Subsidiaries, including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Acquired Indebtedness incurred in reliance on the
second paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock";
(xiii) Liens incurred in the ordinary course of business of Holdings or
any Restricted Subsidiary with respect to obligations that do not in the
aggregate exceed $15.0 million at any one time outstanding;
(xiv) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of Holdings and its
Restricted Subsidiaries;
(xv) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(xvi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customer duties in connection with the
importation of goods;
(xvii) Liens on assets of Unrestricted Subsidiaries that secure Non-
Recourse Debt of Unrestricted Subsidiaries;
(xviii) Liens existing on the date of the Indenture, together with any
Liens securing Indebtedness incurred in reliance on clause (xiii) of the
definition of Permitted Indebtedness in order to refinance the Indebtedness
secured by Liens existing on the date of the Indenture; provided that the
Liens securing the refinancing Indebtedness shall not extend to property
other than that pledged under the Liens securing the Indebtedness being
refinanced;
(xix) Liens securing Indebtedness and other Obligations under Credit
Facilities that will be permitted by the terms of the Indenture to be
incurred;
(xx) Liens securing Attributable Debt incurred in connection with any
sale and leaseback transaction permitted to be consummated pursuant to the
covenant described above under the caption "Sale Leaseback Transaction";
(xxi) Liens securing Indebtedness permitted to be incurred pursuant to
(A) the Senior Credit Facilities (whether such Indebtedness is incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio set forth in the
first paragraph of the covenant described above under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock" or clause (ii)
of the covenant described above under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock"), (B) clause (ix) of the
covenant described above under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock" and (C) clause (xiv) of the covenant described
above under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock"; and
(xxii) Liens on assets transferred to a Securitization Entity or on
assets of a Securitization Entity, in either case incurred in connection
with a Qualified Securitization Transaction.
"Productive Assets" means assets (including Capital Stock) that are used or
usable by Holdings and its Restricted Subsidiaries in Permitted Businesses;
provided that for any Capital Stock to qualify as Productive Assets, it must,
after giving pro forma effect to the transaction in which it was acquired, be
Capital Stock of a Restricted Subsidiary.
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"Pro Forma Cost Savings" means, with respect to any period, the reduction in
costs that occurred during the Four-Quarter Period or after the end of the
Four-Quarter Period and on or prior to the Transaction Date that were (i)
directly attributable to an Asset Acquisition and calculated on a basis that
is consistent with Article 11 of Regulation S-X under the Securities Act as in
effect on the date of the Indenture or (ii) implemented by the business that
was the subject of any such Asset Acquisition within six months of the date of
the Asset Acquisition and that are supportable and quantifiable by the
underlying accounting records of such business, as if, in the case of each of
clause (i) and (ii), all such reductions in costs had been effected as of the
beginning of such period.
"Purchase Money Note" means a promissory Debenture of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from Holdings or
any Restricted Subsidiary of the Company in connection with a Qualified
Securitization Transaction, which Debenture shall be repaid from cash
available to the Securitization Entity, other than (i) amounts required to be
established as reserves pursuant to agreements, (ii) amounts paid to investors
in respect of interest, principal and other amounts owing to such investors
and (iii) amounts paid in connection with the purchase of newly generated
receivables or newly acquired equipment.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Stock.
"Qualified Securitization Transaction" means any transaction or series of
transactions pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by Holdings or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any accounts
receivable or equipment (whether now existing or arising or acquired in the
future) of Holdings or any of its Restricted Subsidiaries, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable and equipment, all contracts and contract rights and all
Guarantees or other obligations in respect to such accounts receivable and
equipment, proceeds of such accounts receivable and equipment and other assets
(including contract rights) which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable and equipment, all
of the foregoing for the purpose of providing working capital financing on
terms that are more favorable to Holdings and its Restricted Subsidiary than
would otherwise be available at that time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's.
"Securitization Entity" means a Wholly Owned Subsidiary of Holdings (or
another Person in which Holdings or any Subsidiary of Holdings makes an
Investment and to which Holdings or any Subsidiary of Holdings transfers
accounts receivable or equipment and related assets) that engages in no
activities other than in connection with the financing of accounts receivable
or equipment and that is designated by the Management Committee of Holdings
(as provided below) as a Securitization Entity (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which (i)
is guaranteed by Holdings or any Restricted Subsidiary of Holdings (excluding
guarantees of Obligations (other than the principal of, and interest on,
Indebtedness)) pursuant to Standard Securitization Undertakings, (ii) is
recourse to or obligates Holdings or any Restricted Subsidiary of Holdings in
any way other than pursuant to Standard Securitization Undertakings or (iii)
subjects any property or asset of Holdings or any Restricted Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to Standard Securitization
Undertakings, (b) with which neither Holdings nor any Restricted Subsidiary of
Holdings has any material contract, agreement, arrangement or understanding
other than on terms no less favorable to Holdings or such Restricted
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of Holdings, other than fees payable in the ordinary course of
business in connection with servicing receivables of such entity, and (c) to
which neither Holdings nor any Restricted Subsidiary of Holdings has any
obligation to
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maintain or preserve such entity's financial condition or cause such entity to
achieve certain levels of operating results. Any such designation by the
Management Committee of Holdings shall be evidenced to each of the Trustees by
filing with the Trustees a certified copy of the resolution of the Management
Committee of Holdings giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Sale and Leaseback Transaction" means any sale and leaseback transaction by
Holdings or any of its Restricted Subsidiaries with respect to assets with an
aggregate fair market value (as determined in good faith by the Management
Committee) in excess of $1.0 million.
"Senior Credit Facilities" means the Credit Agreement, dated as of the date
of the Indenture, by and among the Company, Goldman Sachs Credit Partners
L.P., and the Agent, Collateral Agent and the financial institutions party
thereto, providing for revolving credit borrowings and term loan borrowings,
including any related Exchange Debentures, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case
as amended (including any amendment and restatement thereof), modified,
renewed, refunded, replaced, refinanced or restructured from time to time and
whether with the same or any other agent, lender or group of lenders,
including to increase the amount of available borrowings thereunder.
"Senior Notes" means the 10 3/8% Senior Notes due 2008 of the Company.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by Holdings or any Subsidiary of
Holdings that are reasonably customary in an accounts receivable or equipment
transactions.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof), but shall not include any Non-Recourse Subsidiary.
"Tax Amount" means the amount of distributions, whether paid or accrued,
necessary to permit Holdings partners to pay federal and state income tax
liabilities arising from income of Holdings and its Restricted Subsidiaries
and taxable to such partners, including the tax distributions contemplated by
Holdings' and the Company's respective partnership agreements attributable to
such partners solely as a result of Holdings (and any intermediate entity
through which any such partner owns its interest in Holdings) being a
partnership or similar pass-through entity for federal income tax purposes.
"Tax Distributions" means a distribution in respect of taxes to the partners
of Holdings pursuant to clause (9) of the second paragraph of the covenant
described above under the caption "Certain Covenants-Restricted Payments."
"Total Assets" means the total consolidated assets of Holdings and its
Restricted Subsidiaries, as set forth on Holdings most recent consolidated
balance sheet.
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"Unrestricted Subsidiary" means (i) any Subsidiary (other than Anthony Crane
Holdings Capital Corporation) that is designated by the Management Committee
as an Unrestricted Subsidiary pursuant to a Resolution, but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt;
(b) is not party to any agreement, contract, arrangement or understanding with
Holdings or any Restricted Subsidiary of Holdings unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
Holdings or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of Holdings; (c) is a Person with
respect to which neither Holdings nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results; (d)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of Holdings or any of its Restricted Subsidiaries; and
(e) has at least one director on its board of directors that is not a director
or executive officer of Holdings or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
Holdings or any of its Restricted Subsidiaries. Any such designation by the
Management Committee shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the caption "Certain Covenants-Restricted Payments." If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Holdings as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock", Holdings shall be
in default of such covenant). The Management Committee may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an Incurrence of Indebtedness by a
Restricted Subsidiary of Holdings of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i)
such Indebtedness is permitted under the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock", calculated on
a pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period and (ii) no Default or Event of Default would be
in existence following such designation.
"Used Crane Sales" means sales of used cranes, used parts and other used
equipment by Holdings or any of its Restricted Subsidiaries pursuant to the
Company's fleet management program in the ordinary course of business
consistent with past practices on the date of the Indenture.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Management
Committee or Board of Directors, as applicable, of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Debentures were originally sold by the Issuers on July 22, 1998 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Debentures to qualified institutional buyers in
reliance on Rule 144A under the Securities Act and in offshore transactions
pursuant to Regulation S under the Securities Act. As a condition to the
Purchase Agreement, the Issuers entered into the Registration Rights Agreement
with the Initial Purchasers pursuant to which the Issuers have agreed to: (i)
to use their respective best efforts to file with the Commission on or prior
to 90 calendar days after the date of issuance of the Debentures (the "Issue
Date") a registration statement on an appropriate form under the Securities
Act (the "Exchange Offer Registration Statement") relating to a registered
exchange offer (the "Exchange Offer") for the Debentures under the Securities
Act and (ii) use their respective best efforts to cause the Exchange Offer
Registration Statement to become effective within 165 calendar days after the
Issue Date. Upon the effectiveness of the Exchange Offer Registration
Statement, unless it would not be permitted by applicable law or Commission
policy, the Issuers will promptly offer to exchange any and all of the
outstanding Debentures for the Exchange Debentures that are identical in all
material respects to the Debentures (except that the Exchange Debentures will
not contain terms with respect to transfer restrictions) and that would be
registered under the Securities Act. The Issuers will keep the Exchange Offer
open for not less than 20 business days (or longer, if required by applicable
law) after the date on which notice of the Exchange Offer is mailed to the
holders of the Debentures. For each Debenture surrendered to the Issuers
pursuant to the Exchange Offer, the holder of such Debenture will receive an
Exchange Debenture having a principal amount equal to that of the surrendered
Debenture. Interest on each Exchange Debenture will accrue from the date of
its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Issuers believe that the
Exchange Debentures would in general be freely tradeable after the Exchange
Offer without further registration under the Securities Act. However, any
purchaser of Debentures who is an "affiliate" of either Holdings or AC
Holdings Corp. or who intends to participate in the Exchange Offer for the
purpose of distributing the Exchange Debentures: (i) will not be able to rely
on the interpretation of the staff of the Commission; (ii) will not be able to
tender its Debentures in the Exchange Offer; and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Debentures, unless such sale or
transfer is made pursuant to an exemption from such requirements.
If (i) the Issuers are not required to file the Exchange Offer Registration
Statement or permitted to effect the Exchange Offer because the Exchange Offer
is not permitted by applicable law or Commission policy; or (ii) any Holder of
Transfer Restricted Securities notifies the Issuers prior to the 20th business
day following commencement of the Exchange Offer that (a) it is prohibited by
law or Commission policy from participating in the Exchange Offer or (b) that
it may not resell the Exchange Debentures acquired by it in the Exchange Offer
to the public without delivering a prospectus and the prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
such resales or (c) that it is a broker-dealer and owns Debentures acquired
directly from the Issuers or an affiliate of the Issuers, then the Issuers
will file with the Commission a shelf registration statement (the "Shelf
Registration Statement") to cover resales of Transfer Restricted Securities by
such Holders who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Issuers
will use their best efforts to cause the applicable registration statement to
be declared effective as promptly as possible by the Commission. For purposes
of the foregoing, "Transfer Restricted Securities" means each (A) Debenture,
until the earliest to occur of any of the following events: (i) the date on
which such Debenture may be exchanged for an Exchange Debenture in the
Exchange Offer, if following such exchange such Holder would be entitled to
resell such Exchange Debenture to the public without complying with the
prospectus delivery requirements of the Securities Act; (ii) the date on which
such Debenture has been registered pursuant to an effective Shelf Registration
Statement under the Securities Act and disposed of in accordance with the
Shelf Registration Statement (and purchasers thereof have been issued Exchange
Debentures); or (iii) the date on which such Debenture is sold to the public
pursuant to Rule 144 under the Securities Act and each (B) Exchange Debenture
held by a Broker-Dealer until the date on which such Exchange Debenture is
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disposed of by a Broker Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery
of the Prospectus contained therein).
The Issuers will use their respective best efforts to cause the Exchange
Offer Registration Statement or, if applicable, the Shelf Registration
Statement (each, a "Registration Statement") to become effective under the
Securities Act by the Commission as soon as practicable after the filing
thereof but in no event later than 165 calendar days after the Issue Date.
Upon the effectiveness of the Exchange Offer Registration Statement, unless
it would not be permitted by applicable law or Commission policy, the Issuers
will promptly commence the Exchange Offer to enable each Holder of the
Debentures (other than Holders who are affiliates (within the meaning of the
Securities Act) of either Holdings or AC Holdings Corp. or underwriters (as
defined in the Securities Act) with respect to the Exchange Debentures) to
exchange the Debentures for Exchange Debentures. If applicable, the Issuers
shall keep the Shelf Registration Statement continuously effective for, under
certain circumstances, a period of at least two years after the Issue Date.
In the event that, for any reason whatsoever: (a) the Issuers fail to file
any of the Registration Statements on or before the date specified for such
filing; (b) any of such Registration Statements is not declared effective by
the Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"); (c) the Issuers fail to consummate the Exchange
Offer within 30 business days of the Effectiveness Target Date with respect to
the Exchange Offer Registration Statement; or (d) the Shelf Registration
Statement or the Exchange Offer Registration Statement is declared effective
but thereafter ceases to be effective or usable in connection with resales of
Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Issuers will pay
liquidated damages ("Liquidated Damages") to each Holder of Debentures, with
respect to the first 90-day period immediately following the occurrence of the
first Registration Default, in an amount equal to $.05 per week per $1,000
principal amount of Debentures held by such Holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Debentures with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages for all Registration Defaults of $.50 per week per $1,000
principal amount of Debentures. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
The Issuers (i) shall make available for a period of 180 days from the
consummation of the Exchange Offer a prospectus meeting the requirements of
the Securities Act to any broker-dealer for use in connection with any resale
of any such Exchange Debentures and (ii) shall pay all expenses incident to
the Exchange Offer (including the expense of one counsel to the Holders
covered thereby) and will indemnify certain holders of the Debentures
(including any broker-dealer) against certain liabilities, including
liabilities under the Securities Act. A broker-dealer which delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the Registration Rights Agreement (including
certain indemnification rights and obligations).
Each holder of Debentures who wishes to exchange such Debentures for
Exchange Debentures in the Exchange Offer will be required to make
representations in the Letter of Transmittal that (a) it is not an "affiliate"
of either Holdings or AC Holdings Corp. (within the meaning of Rule 405 of the
Securities Act); (b) it is not engaged in and does not intend to engage in,
and has no arrangement or understanding with any person to participate in, a
distribution of the Exchange Debentures to be issued in the Exchange Offer;
(c) it is acquiring the Exchange Debentures in its ordinary course of
business; and (d) if it is a Participating Broker-Dealer holding Debentures
acquired for its own account as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
Exchange Debentures received in respect of such Exchange Debentures pursuant
to the Exchange Offer. The Commission has taken the position and the Issuers
believe that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the Exchange Debentures (other than a
resale of an unsold allotment from the original sale of the Debentures) with
the prospectus contained in the Exchange Offer
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Registration Statement. Under the Registration Rights Agreement, the Issuers
are required to allow Participating Broker-Dealers and other persons, if any,
subject to similar prospectus delivery requirements to use the prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of such Exchange Debentures.
If the holder is a Participating Broker-Dealer, it will be required to
include a representation in such Participating Broker-Dealer's letter of
transmittal with respect to the Exchange Offer that such Participating Broker-
Dealer has not entered into any arrangement or understanding with the Issuers
or any affiliate of the Issuers to distribute the Exchange Debentures.
Holders of the Debentures will be required to make certain representations
to the Issuers (as described above) in order to participate in the Exchange
Offer and will be required to deliver information to be used in connection
with the Shelf Registration Statement in order to have their Debentures
included in the Shelf Registration Statement and benefit from the provisions
regarding liquidated damages set forth in the preceding paragraphs. A holder
who sells Debentures pursuant to the Shelf Registration Statement generally
will be required to be named as a selling securityholder in the related
prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such a holder (including
certain indemnification obligations).
For so long as any Debentures are outstanding, the Issuers will continue to
provide to holders of the Debentures and to prospective purchasers of the
Debentures the information required by Rule 144A(d)(4) under the Securities
Act.
The foregoing description of the Registration Rights Agreement contains a
discussion of all material elements thereof, but does not purport to be
complete and is qualified in its entirety by reference to all provisions of
the Registration Rights Agreement. The Issuers will provide a copy of the
Registration Rights Agreement to holders of Debentures identified to the
Issuers by any Initial Purchasers upon request.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept any and all
Debentures validly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. The Issuers will issue $1,000 principal
amount of Exchange Debentures in exchange for each $1,000 principal amount of
outstanding Debentures accepted in the Exchange Offer. Holders may tender some
or all of their Debentures pursuant to the Exchange Offer. However, Debentures
may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Debentures are the same as the form and
terms of the Debentures except that: (i) the Exchange Debentures bear a Series
B designation and a different CUSIP Number from the Debentures; (ii) the
Exchange Debentures have been registered under the Securities Act and hence
will not bear legends restricting the transfer thereof; and (iii) the holders
of the Exchange Debentures will not be entitled to certain rights under the
Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Debentures in certain circumstances
relating to the timing of the Exchange Offer, all of which rights will
terminate when the Exchange Offer is terminated. The Exchange Debentures will
evidence the same debt as the Debentures and will be entitled to the benefits
of the Indenture.
As of the date of this Prospectus, $25,667,404 aggregate principal amount of
Debentures were outstanding. The Issuers have fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Debentures do not have any appraisal or dissenters' rights under
the Pennsylvania Revised Uniform Limited Partnership Act, the General
Corporation Law of Delaware or the Indenture in connection with
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the Exchange Offer. The Issuers intend to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Issuers shall be deemed to have accepted validly tendered Debentures
when, as and if the Issuers have given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Debentures from the Issuers.
If any tendered Debentures are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Debentures will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Debentures in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of
Debentures pursuant to the Exchange Offer. The Issuers will pay all charges
and expenses, other than transfer taxes in certain circumstances, in
connection with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Issuers, in their sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended. Notwithstanding the foregoing,
the Company will not extend the Expiration Date beyond , 1998.
In order to extend the Exchange Offer, the Issuers will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
The Issuers reserve the right, in their sole discretion, (i) to delay
accepting any Debentures, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
or written notice thereof to the registered holders.
ACCRETION OF THE EXCHANGE DEBENTURES; INTEREST
The Debentures will continue to accrete at the rate of 13 3/8% per annum to,
compounded semi-annually to an aggregate principal amount of $48.0 million on
August 1, 2003. Any Debentures not tendered or accepted for exchange will
continue to accrete at the rate of 13 3/8% per annum in accordance with their
terms and will cease to accrete upon cancellation of the Debentures and
issuance of the Exchange Debentures. From and after the date of issuance of
the Exchange Debentures, the Exchange Debentures shall accrete at the rate of
13 3/8% per annum, but no cash interest will accrue or be payable in respect
of the Exchange Debentures prior to August 1, 2003. Thereafter, interest on
the Exchange Debentures will accrue on the principal amount at maturity at the
rate of 13 3/8% per annum and will be payable semi-annually on each February 1
and August 1, commencing February 1, 2004. Interest on the Exchange Debentures
will accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from August 1, 2003. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
PROCEDURES FOR TENDERING
Only a holder of Debentures may tender such Debentures in the Exchange
Offer. To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of
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Transmittal or such facsimile, together with the Debentures and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Debentures,
Letter of Transmittal and other required documents must be completed and
received by the Exchange Agent at the address set forth below under "Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.
Delivery of the Debentures may be made by book-entry transfer in accordance
with the procedures described below. Confirmation of such book-entry transfer
must be received by the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the Issuers
the representations set forth in the eighth paragraph under the heading "--
Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Issuers will
constitute agreement between such holder and the Issuers in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF DEBENTURES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR DEBENTURES SHOULD BE SENT TO THE
ISSUERS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner whose Debentures are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See
"Instruction to Registered Holder and/or Book-Entry Transfer Facility
Participant from Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Debentures tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
maybe, are required to be guaranteed, such guarantee must be by a member firm
of the Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Debentures listed therein, such Debentures must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Debentures with the
signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Debentures or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Issuers of their authority to so act must be submitted with the Letter of
Transmittal.
The Issuers understand that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Debentures at the book-entry transfer facility, The Depository Trust Company
(the "Book-Entry Transfer Facility"), for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Debentures by causing such Book-Entry Transfer
Facility to transfer such Debentures into the Exchange Agent's account with
respect to the Debentures in accordance with
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the Book-Entry Transfers Facility's procedures for such transfer. Although
delivery of the Debentures may be effected through book-entry transfer into
the Exchange Agent's account at the Book-Entry Transfer Facility, an
appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The Depositary and DTC have confirmed that the Exchange Offer is eligible
for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange
Offer by causing DTC to transfer Debentures to the Depositary in accordance
with DTC's ATOP procedures for transfer. DTC will then send an Agent's Message
to the Depositary.
The term "Agent's Message" means a message transmitted by DTC, received by
the Depositary and forming part of the confirmation of a book-entry transfer,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Debentures which are the subject of such book-
entry confirmation, that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Issuers may enforce
such agreement against such participant. In the case of an Agent's Message
relating to guaranteed delivery, the term means a message transmitted by DTC
and received by the Depositary, which states that DTC has received an express
acknowledgment from the participant in DTC tendering Debentures that such
participant has received and agrees to be bound by the Notice of Guaranteed
Delivery.
Notwithstanding the foregoing, in order to validly tender in the Exchange
Offer with respect to Securities transferred pursuant to ATOP, a DTC
participant using ATOP must also properly complete and duly execute and
applicable Letter of Transmittal and deliver it to the Depositary. Pursuant to
authority granted by DTC, any DTC participant which has Debentures credited to
its DTC account at any time (and thereby held of record by DTC's nominee) may
directly provide a tender as though it were the registered holder by so
completing, executing and delivering the applicable Letter of Transmittal to
the Depositary. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Debentures and withdrawal of tendered
Debentures will be determined by the Issuers in their sole discretion, which
determination will be final and binding. The Issuers reserve the absolute
right to reject any and all Debentures not properly tendered or any Debentures
the Issuers' acceptance of which would, in the opinion of counsel for the
Issuers, be unlawful. The Issuers also reserves the right in their sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Debentures. The Issuers' interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Debentures must be
cured within such time as the Issuers shall determine. Although the Issuers
intend, to notify holders of defects or irregularities with respect to tenders
of Debentures, neither the Issuers, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Debentures will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Debentures received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Debentures and (i) whose Debentures are not
immediately available, (ii) who cannot deliver their Debentures, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
96
<PAGE>
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Debentures and the principal amount of Debentures tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Debentures (or a confirmation of book-entry transfer of
such Debentures into the Exchange Agent's account at the Book-Entry
Transfer Facility), and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Debentures in proper form for transfer (or a confirmation of book-entry
transfer of such Debentures into the Exchange Agent's account at the Book-
Entry Transfer Facility), and all other documents required by the Letter of
Transmittal are received by the Exchange Agent upon five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Debentures according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Debentures may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
withdraw a tender of Debentures in the Exchange offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Debentures to be withdrawn
(the "Depositor"), (ii) identify the Debentures to be withdrawn (including the
certificate number(s) and principal amount of such Debentures, or, in the case
of Debentures transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited), (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Debentures were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Debentures register the transfer of such
Debentures into the name of the person withdrawing the tender and (iv) specify
the name in which any such Debentures are to be registered, if different form
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Issuers,
whose determination shall be final and binding on all parties. Any Debentures
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Debentures will be issued with respect
thereto unless the Debentures so withdrawn are validly retendered. Any
Debentures which have been tendered but which are not accepted for exchange
will be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Debentures may be retendered by following
one of the procedures described above under "--Procedures for Tendering" at
any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuers shall not
be required to accept for exchange, or exchange Exchange Debentures for, any
Debentures, and may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Debentures, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Issuers, might materially impair the
ability of the Issuers to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Issuers or any of their respective subsidiaries; or
97
<PAGE>
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the sole judgment
of the Issuers, might materially impair the ability of the Issuers to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Issuers; or
(c) any governmental approval has not been obtained, which approval the
Issuers shall, in their sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Issuers determine in their reasonable sole discretion that any of the
conditions are not satisfied, the Issuers may (i) refuse to accept any
Debentures and return all tendered Debentures to the tendering holders,
(ii) extend the Exchange Offer and retain all Debentures tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders
to withdraw such Debentures (see "--Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Debentures which have not been withdrawn.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<S> <C>
By Overnight Courier or Hand: By Registered or Certified Mail:
----------------------------- --------------------------------
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
Two International Place P.O. Box 778
Boston, Massachusetts 02102-0078 Boston, Massachusetts 02102-0078
Fourth Floor Attn: Kellie Mullen
Attn: Kellie Mullen Telephone: (617) 664-5587
Telephone: (617) 664-5587 Facsimile: (617) 664-5290
Facsimile: (617) 664-5290
</TABLE>
Delivery to an address other than as set forth above will not constitute a
valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Issuers and their respective affiliates.
The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Issuers however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Exchange Debentures will be recorded at the same carrying value as the
Debentures, which is face value less accrued original discount, as reflected
in the Issuers' accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized by the Issuers. The
expenses of the Exchange Offer will be capitalized and amortized to expense
over the term of the Exchange Debentures.
98
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE
The Debentures that are not exchanged for Exchange Debentures pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such
Debentures may be resold only; (i) to the Issuers (upon redemption thereof or
otherwise); (ii) so long as the Debentures are eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller reasonably
believes is a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act in a transaction meeting the requirements of Rule
144A, in accordance with Rule 144 under the Securities Act, or pursuant to
another exemption from the registration requirements of the Securities Act
(and based upon an opinion of counsel reasonably acceptable to the Issuers);
(iii) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act; or (iv) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States.
RESALES OF THE EXCHANGE DEBENTURERS
With respect to resales of Exchange Debentures, based on interpretations by
the staff of the Commission set forth in no-action letters issued to third
parties, the Issuers believe that a holder or other person who receives
Exchange Debentures, whether or not such person is the holder (other than a
person that is an "affiliate" of either Holdings or AC Holdings Corp. within
the meaning of Rule 405 under the Securities Act) who receives Exchange
Debentures in exchange for Debentures in the ordinary course of business and
who is not participating, does not intend to participate, and has no
arrangement or understanding with person to participate, in the distribution
of the Exchange Debentures, will be allowed to resell the Exchange Debentures
to the public without further registration under the Securities Act and
without delivering to the purchasers of the Exchange Debentures a prospectus
that satisfies the requirements of Section 10 of the Securities Act. However,
if any holder acquires Exchange Debentures in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Exchange
Debentures, such holder cannot rely on the position of the staff of the
Commission enunciated in such no-action letters or any similar interpretive
letters, and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction,
unless an exemption from registration is otherwise available. Further, each
Participating Broker-Dealer that receives Exchange Debentures for its own
account in exchange for Debentures, where such Debentures were acquired by
such Participating Broker-Dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Debentures.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent
to the Issuers in the Letter of Transmittal that (a) it is not an "affiliate"
of either Holdings or AC Holdings Corp. (within the meaning of Rule 405 of the
Securities Act); (b) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in, a
distribution of the Exchange Debentures to be issued in the Exchange Offer;
(c) it is acquiring the Exchange Debentures in its ordinary course of
business; and (d) if it is a Participating Broker-Dealer holding Debentures
acquired for its own account as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
Exchange Debentures received in respect of such Exchange Debentures pursuant
to the Exchange Offer. As indicated above, each Participating Broker-Dealer
that receives and Exchange Debenture for its own account in exchange for
Debentures must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Debentures. For a description of the
procedures for such resales by Participating Broker-Dealers, see "Plan of
Distribution."
99
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion (including the opinion of special counsel described
below) is based upon current provisions of the Internal Revenue Code of 1986,
as amended, applicable Treasury regulations, judicial authority and
administrative rulings and practice. There can be no assurance that the
Internal Revenue Service (the "Service") will not take a contrary view, and no
ruling from the Service has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies, tax-
exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. The Issuers
recommend that each holder consult such holder's own tax advisor as to the
particular tax consequences of exchanging such holder's Debentures for
Exchange Debentures, including the applicability and effect of any state,
local or foreign tax laws.
Kirkland & Ellis, special counsel to the Issuers, has advised the Issuers
that in its opinion, the exchange of the Debentures for Exchange Debentures
pursuant to the Exchange Offer will not be treated as an "exchange" for
federal income tax purposes because the Exchange Debentures will not be
considered to differ materially in kind or extent from the Debentures. Rather,
the Exchange Debentures received by a holder will be treated as a continuation
of the Debentures in the hands of such holder. As a result, there will be no
federal income tax consequences to holders exchanging Debentures for Exchange
Debentures pursuant to the Exchange Offer.
100
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Debentures for its
own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Debentures received in respect of such
Debentures pursuant to the Exchange Offer. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of Exchange Debentures received in
exchange for Debentures where such Debentures were acquired as a result of
market-making activities or other trading activities. The Issuers have agreed
that for a period of 180 days from the consummation of the Exchange Offer, it
will make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale. In
addition, until , 1998, all dealers effecting transactions in the Exchange
Debentures may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sales of the Exchange
Debentures by Participating Broker-Dealers. Exchange Debentures received by
Participating Broker-Dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the Exchange Debentures or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchaser or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
Participating Broker-Dealer and/or the purchasers of any such Exchange
Debentures. Any Participating Broker-Dealer that resells the Exchange
Debentures that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Debentures may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of Exchange
Debentures and any commissions or concessions received by any such persons may
be deemed to be underwriting compensation a under the Securities Act. The
Letter of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
With respect to resales of Exchange Debentures, based on interpretations by
the staff of the Commission set forth in no-action letters issued to third
parties, the Issuers believe that a holder or other person who receives
Exchange Debentures, whether or not such person is the holder (other than a
person that is an "affiliate" of either Holdings or AC Holdings Corp. within
the meaning of Rule 405 under the Securities Act) who receives Exchange
Debentures in exchange for Debentures in the ordinary course of business and
who is not participating, does not intend to participate, and has no
arrangement or understanding with person to participate, in the distribution
of the Exchange Debentures, will be allowed to resell the Exchange Debentures
to the public without further registration under the Securities Act and
without delivering to the purchasers of the Exchange Debentures a prospectus
that satisfies the requirements of Section 10 of the Securities Act. However,
if any holder acquires Exchange Debentures in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Exchange
Debentures, such holder cannot rely on the position of the staff of the
Commission enunciated in such no-action letters or any similar interpretive
letters, and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction
and such a secondary resale transaction should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K under the
Securities Act, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives Exchange Debentures
for its own account in exchange for Debentures, where such Debentures were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Debentures. The
Issuers have agreed that, for a period of up to one year from the consummation
of the Exchange Offer, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale.
101
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Exchange Debentures offered
hereby will be passed upon for the Issuers by Kirkland & Ellis, New York, New
York. Certain partners of Kirkland & Ellis indirectly own a portion of the
equity of Holdings.
EXPERTS
The consolidated financial statements of Anthony Crane Rental Holdings, L.P.
and subsidiaries for each of the three years in the period ended December 31,
1997, included in this Prospectus have been included herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
102
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ANTHONY CRANE RENTAL HOLDINGS, L.P. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997 and September
30, 1998 (unaudited)..................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and for the nine month periods ended September 30,
1997 and 1998 (unaudited)................................................ F-4
Consolidated Statements of Partners' Capital (Deficit) for the years ended
December 31, 1995, 1996 and 1997 and for the nine month period ended
September 30, 1998 (unaudited)........................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997 and for the nine month periods ended September 30,
1997 and 1998 (unaudited)................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Anthony Crane Rental Holdings, L.P.:
We have audited the accompanying consolidated balance sheets of Anthony
Crane Rental Holdings, L.P. and subsidiaries (collectively, the Partnership)
as of December 31, 1997 and 1996, and the related consolidated statements of
operations, partners' capital (deficit), and cash flows for each of the three
years in the period ended December 31, 1997. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Anthony Crane Rental Holdings, L.P. and subsidiaries as of December 31,
1997 and 1996, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
As more fully discussed in Note 3 to the consolidated financial statements,
effective January 1, 1997, the Partnership revised its estimate of the salvage
values used for depreciating certain rental equipment. The effect of this
change was to decrease depreciation expense and increase net income for 1997
by approximately $5,650,000.
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 25, 1998, except as to Note 13,
which is as of July 22, 1998
F-2
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
SEPTEMBER 30,
1998 1997 1996
------------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................... $ 7,860 $ 4,375 $ 8,588
Trade accounts receivable, net of allowance
for doubtful accounts of $2,673, $1,840 and
$1,850 in 1998, 1997 and 1996,
respectively............................... 25,349 24,152 19,871
Receivable from sale of property (Note 3)... -- 6,055 --
Other receivables (Note 6).................. 2,140 2,596 2,010
Prepaid expenses and deposits............... 1,496 1,560 1,262
-------- -------- --------
Total current assets...................... 36,845 38,738 31,731
Rental equipment, net of accumulated
depreciation of $89,960, $82,322 and $77,181
in 1998, 1997 and 1996, respectively (Notes 3
and 5)....................................... 274,752 212,975 171,226
Property and equipment, net (Notes 4 and 5)... 50,654 51,859 35,068
Intangible assets, net of accumulated
amortization of $3,095, $2,661 and $2,273 in
1998, 1997 and 1996, respectively............ 3,511 1,865 1,868
Debt issuance costs, net of accumulated
amortization of $548, $926 and $566 in 1998,
1997 and 1996, respectively.................. 18,749 1,003 711
Other assets (Note 6)......................... 486 488 635
-------- -------- --------
Total assets.............................. $384,997 $306,928 $241,239
======== ======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable--trade (Note 6)............ 9,479 8,603 3,559
Accrued interest............................ 3,988 2,530 1,953
Accrued wages and employee benefits......... 1,793 1,730 1,548
Accrued taxes, other than income taxes...... 4,613 3,669 1,027
Other accrued liabilities................... 657 1,450 1,001
Current portion of long-term debt (Note 5).. -- 7,500 4,000
Current portion of obligation under capital
lease (Note 7)............................. 94 94 --
-------- -------- --------
Total current liabilities................. 20,624 25,576 13,088
Long-term debt, less current portion (Note
5)........................................... 374,695 177,500 136,000
Long-term obligation under capital lease (Note
7)........................................... 799 867 --
Other non-current liabilities................. 1,695 1,569 1,290
-------- -------- --------
Total liabilities......................... 397,813 205,512 150,378
Commitments and contingencies (Notes 7 and 10)
Partners' capital (deficit):
Senior Preferred Units...................... 22,500 -- --
Equity Investors Common Units............... 20,079 -- --
Predecessor Partners Common Units........... (51,493) 105,316 94,654
Accumulated other comprehensive income...... 48 50 157
Related party receivables (Note 6).......... (3,950) (3,950) (3,950)
-------- -------- --------
Total partners' capital (deficit)......... (12,816) 101,416 90,861
-------- -------- --------
Total liabilities and partners' capital
(deficit).............................. $384,997 $306,928 $241,239
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
F-3
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals (Note
6)....................... $136,876 $116,044 $156,408 $128,161 $106,593
Equipment sales........... 16,655 23,127 27,400 19,444 9,419
-------- -------- -------- -------- --------
Total revenues.......... 153,531 139,171 183,808 147,605 116,012
-------- -------- -------- -------- --------
Cost of revenues:
Cost of equipment rentals
(Note 6)................. 81,883 71,659 97,036 78,049 62,533
Cost of equipment sales... 12,878 13,153 15,541 13,643 7,039
-------- -------- -------- -------- --------
Total cost of revenues.. 94,761 84,812 112,577 91,692 69,572
-------- -------- -------- -------- --------
Gross profit................ 58,770 54,359 71,231 55,913 46,440
Selling, general and admin-
istrative expenses......... 30,196 25,363 35,111 29,211 23,351
-------- -------- -------- -------- --------
Income from operations...... 28,574 28,996 36,120 26,702 23,089
Interest expense............ 16,377 9,931 13,962 10,873 8,482
Other income................ (633) (480) (1,739) (69) (104)
-------- -------- -------- -------- --------
Income before extraordinary
item and taxes............. 12,830 19,545 23,897 15,898 14,711
Provision (benefit) for
state taxes................ 220 78 96 (102) 583
-------- -------- -------- -------- --------
Income before extraordinary
item....................... 12,610 19,467 23,801 16,000 14,128
Extraordinary item (see Note
13)........................ 15,811 -- -- -- --
-------- -------- -------- -------- --------
Net income (loss)........... $ (3,201) $ 19,467 $ 23,801 $ 16,000 $ 14,128
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
PARTNERS
------------------
EQUITY ACCUMULATED
INVESTORS SENIOR OTHER
COMPREHENSIVE COMMON PREFERRED COMMON COMPREHENSIVE RELATED PARTY
INCOME UNITS UNITS UNITS INCOME (EXPENSE) RECEIVABLES
------------- --------- --------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994... $ -- $ -- $ 74,645 $ -- $(10,512)
Capital contributions.......... -- -- 25 -- 6,562
Partner withdrawals............ -- -- (4,851) -- --
Comprehensive income:
Net income.................... $14,128 -- -- 14,128 -- --
Unrealized investment gain on
securities................... 148 -- -- -- 148 --
------- ------- ------- -------- ----- --------
Comprehensive income........... $14,276
=======
Balance at December 31, 1995... -- -- 83,947 148 (3,950)
Partner withdrawals............ -- -- (5,293) -- --
Comprehensive income:
Net income.................... 16,000 -- -- 16,000 -- --
Unrealized investment gain on
securities................... 9 -- -- -- 9 --
------- ------- ------- -------- ----- --------
Comprehensive income........... $16,009
=======
Balance at December 31, 1996... -- -- 94,654 157 (3,950)
Partner withdrawals............ -- -- (13,139) -- --
Comprehensive income:
Net income.................... 23,801 -- -- 23,801 -- --
Unrealized investment (loss)
on securities................ (107) -- -- -- (107) --
------- ------- ------- -------- ----- --------
Comprehensive income........... $23,694
=======
Balance at December 31, 1997... -- -- 105,316 50 (3,950)
Partner withdrawals
(unaudited)................... -- -- (13,891) -- --
Recapitalization expenses
(unaudited)................... (1,523) -- (6,886) -- --
Capital contributions
(unaudited)................... 33,620 -- -- -- --
Partner distributions from
Recapitalization (unaudited).. -- 22,500 (144,849) -- --
Comprehensive income
(unaudited):
Net income (loss)............. (3,201) (12,018) -- 8,817 -- --
Unrealized investment (loss)
on securities................ (2) -- -- -- (2) --
------- ------- ------- -------- ----- --------
Comprehensive income
(unaudited)................... $(3,203)
=======
Balance at September 30, 1998
(unaudited)................... $20,079 $22,500 $(51,493) $ 48 $ (3,950)
- --------------------------------------------------
======= ======= ======== ===== ========
<CAPTION>
TOTAL PARTNERS'
CAPITAL
---------------
<S> <C>
Balance at December 31, 1994... $ 64,133
Capital contributions.......... 6,587
Partner withdrawals............ (4,851)
Comprehensive income:
Net income.................... 14,128
Unrealized investment gain on
securities................... 148
---------------
Comprehensive income...........
Balance at December 31, 1995... 80,145
Partner withdrawals............ (5,293)
Comprehensive income:
Net income.................... 16,000
Unrealized investment gain on
securities................... 9
---------------
Comprehensive income...........
Balance at December 31, 1996... 90,861
Partner withdrawals............ (13,139)
Comprehensive income:
Net income.................... 23,801
Unrealized investment (loss)
on securities................ (107)
---------------
Comprehensive income...........
Balance at December 31, 1997... 101,416
Partner withdrawals
(unaudited)................... (13,891)
Recapitalization expenses
(unaudited)................... (8,409)
Capital contributions
(unaudited)................... 33,620
Partner distributions from
Recapitalization (unaudited).. (122,349)
Comprehensive income
(unaudited):
Net income (loss)............. (3,201)
Unrealized investment (loss)
on securities................ (2)
---------------
Comprehensive income
(unaudited)...................
Balance at September 30, 1998
(unaudited)................... $(12,816)
- --------------------------------------------------
===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income.................. $ (3,201) $ 19,468 $ 23,801 $ 16,000 $ 14,128
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization............. 20,872 15,767 22,264 22,302 17,909
Net (gains) on used rental
equipment sales.......... (2,733) (9,140) (10,659) (3,926) (1,820)
Net (gains) losses on
other asset
dispositions............. (390) (418) (1,657) 29 --
Provision (benefit) for
bad debts................ 1,255 236 428 1,071 1,293
Deferred income tax
provision (benefit)...... 220 78 96 (102) 582
Write-off of deferred
financing costs.......... 735 -- -- -- --
Extraordinary item-loss on
early extinguishment of
debt..................... 15,076 -- -- -- --
Increase (decrease) in cash
from changes in:
Trade accounts
receivable............... (2,238) (4,743) (4,709) (4,304) (4,759)
Other receivables......... 456 (460) (2,011) (571) 139
Prepaid expenses and
deposits................. 65 431 (298) 670 (871)
Other non-current assets.. -- -- 39 -- 17
Accounts payable--trade... (6,149) (639) (447) 803 (228)
Accrued interest.......... 806 1,066 577 278 125
Accrued wages and employee
benefits................. 48 734 182 664 302
Accrued taxes, other than
income taxes............. 944 (91) 2,642 (627) 1,262
Other accrued
liabilities.............. (793) (291) 449 124 (384)
-------- -------- -------- -------- --------
Net cash provided by
operating activities.. 24,973 21,998 30,697 32,411 27,695
-------- -------- -------- -------- --------
Cash flows from investing
activities:
Cash paid for business
acquisitions............... (2,936) (4,050) (4,050) (7,825) --
Proceeds from sale/leaseback
transaction................ -- -- -- 24,162 --
Proceeds from sale of fixed
assets, including rental
equipment.................. 9,241 19,655 22,532 8,338 7,738
Proceeds from sale of
property................... 6,055 -- -- -- --
Capital expenditures........ (80,927) (59,819) (85,641) (81,195) (44,847)
Repayment of related party
loans, net................. -- -- -- 319 350
Other....................... (94) 194 183 (148) (148)
-------- -------- -------- -------- --------
Net cash used in
investing activities.. (68,661) (44,020) (66,976) (56,349) (36,907)
-------- -------- -------- -------- --------
Cash flows from financing
activities:
Proceeds from issuance of
debt....................... 404,044 88,480 108,000 56,500 21,000
Payments on debt............ (215,000) (63,000) (63,000) (24,500) (7,427)
Payments under capital
leases..................... (58) (87) (74) -- --
Expenditures for debt
issuance cost and other
intangibles................ (19,297) (864) (1,147) (337) --
Proceeds from
Recapitalization, net of
recapitalization expenses
of $1,523.................. 32,097 -- -- -- --
Prepayment penalties as a
result of early
extinguishment of debt..... (15,076) -- -- -- --
Partner withdrawals
including recapitalization
expenses of $6,886 in
1998....................... (139,537) (7,961) (11,713) (5,293) (4,851)
-------- -------- -------- -------- --------
Net cash provided by
financing activities.. 47,173 16,568 32,066 26,370 8,722
-------- -------- -------- -------- --------
Net increase (decrease)
in cash and cash
equivalents........... 3,485 (5,454) (4,213) 2,432 (490)
Cash and cash equivalents,
beginning of period......... 4,375 8,588 8,588 6,156 6,646
-------- -------- -------- -------- --------
Cash and cash equivalents,
end of period............... $ 7,860 $ 3,134 $ 4,375 $ 8,588 $ 6,156
======== ======== ======== ======== ========
Supplemental disclosure of
cash flow information:
Cash paid during the period
for interest............... $ 14,260 $ 8,594 $ 13,026 $ 10,353 $ 8,101
======== ======== ======== ======== ========
Noncash investing and
financing activities:
Assets acquired under
capital lease obligations.. -- $ 1,035 $ 1,035 -- --
======== ======== ======== ======== ========
Expenditures for rental
equipment purchases
included in accounts
payable/trade.............. $ 6,879 $ 8,033 $ 5,491 $ 1,478 $ 394
======== ======== ======== ======== ========
Receivable from sale of
property................... -- -- $ 6,055 -- --
======== ======== ======== ======== ========
Noncash partner
withdrawals................ $ 3,589 $ 806 $ 1,426 -- --
======== ======== ======== ======== ========
Property and equipment
contributed by partners.... -- -- -- -- $ 6,562
======== ======== ======== ======== ========
Contributed capital through
advances................... -- -- -- -- $ 25
======== ======== ======== ======== ========
Distribution of Senior
Preferred Units............ $ 22,500 -- -- -- --
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
Anthony Crane Rental, L.P. (the "Company"), its subsidiaries and, effective
July 22, 1998, its parent, Anthony Crane Rental Holdings, L.P. ("Holdings")
(collectively, the Partnership) are engaged in the rental of cranes and other
heavy equipment primarily for industrial maintenance and construction to a
variety of companies in the petrochemical, paper, steel, utility, mining and
multiple other industries. The Partnership provides twenty-four hour service,
seven days a week to customers principally in the United States. The
Partnership also sells new and used equipment to commercial construction,
industrial and residential users. Effective July 22, 1998 as part of the
Company's Recapitalization (see Note 13), the Company became 99% directly-
owned by Holdings (a former subsidiary of the Company which has no current
operations other than through the Company).
2. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Partnership and all of its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Prior to the Recapitalization of the Partnership on July 22, 1998 (see Note
13), the partners of the Partnership consisted of Anthony Crane Rental, Inc.,
as general partner; and ACR Acquisitions, Inc., Anthony Crane Rental of
Georgia, Inc., Anthony Crane Rental of Texas, Inc. and Anthony Iron and Metal
Company, as limited partners (collectively referred to hereafter as the
"Predecessor Partners"). All of these entities are under common control of Ray
G. Anthony (Mr. Anthony). Effective with the Recapitalization, the partners of
the Partnership now include the Predecessor Partners who have retained an 18%
interest in the Partnership and the Equity Investors (as defined in Note 13),
who collectively hold an 82% interest in the Partnership.
In addition, Mr. Anthony has a majority ownership interest in organizations
that engage in steel erection and installation (Century Steel Erectors, Inc.);
inspect, repair and manufacture overhead cranes (Century Crane and Hoist,
Inc.); rent cranes to mining operations (Republic Crane Rental, Inc.); and
sell motorcycles and service (Dallas Corporation). Mr. Anthony also owns a
fifty percent interest in Steel City Environmental Services, Inc., which
provides environmental remediation and transportation services to the steel
and petrochemical industries; Crane and Rigging Consultants, Inc., a lift
consulting company; and A & D Tower, Inc., a communications company, which is
a passive investment with no personal management control by Mr. Anthony. These
companies are not included in these consolidated financial statements.
PARTNERSHIP AGREEMENT
The term of the Partnership, which was amended and restated July 22, 1998,
expires December 31, 2080; however, dissolution will occur earlier in the
event of the sale of substantially all of the Partnership's assets or a
disabling event as described in the Partnership Agreement. Partners may not
sell, assign, transfer or convey all or any portion of their interest in the
Partnership without the consent of the general partner, or as specifically
defined in the Partnership Agreement.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Partnership
considers all highly liquid investments purchased with original maturities of
90 days or less to be cash equivalents.
INVESTMENT SECURITIES
Investment securities, included in other assets, are classified as available
for sale and are recorded at the aggregate fair market value determined at the
consolidated balance sheets date. Gross unrealized investment gains/losses are
included as a separate component of partners' capital.
F-7
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
RENTAL EQUIPMENT AND PROPERTY AND EQUIPMENT
Rental equipment and property and equipment are stated at cost less
accumulated depreciation.
Major renewals and improvements are charged to the property and equipment
accounts, while replacements, maintenance and repairs which do not improve or
extend the useful lives of the respective assets are expensed. Upon
disposition or retirement of property and equipment, the cost and the related
accumulated depreciation are removed from the accounts and any gain or loss is
recorded in results of operations. Depreciation of rental equipment and
property and equipment is computed using the straight-line method based on the
estimated useful lives of the assets.
Effective January 1, 1997, the Partnership revised its estimate of the
salvage values used for depreciating certain rental equipment, principally
cranes, to amounts ranging from 15% to 35%. Prior to 1997, the Partnership
depreciated this rental equipment over their estimated useful lives with no
salvage value. The Partnership believes this change in estimated salvage
values more appropriately allocates the costs of this rental equipment over
their estimated useful lives. The effect of this change was to decrease
depreciation expense and increase net income for 1997 by approximately $5,650.
All other rental equipment and property and equipment will continue to be
depreciated with no salvage value.
The useful lives of rental equipment and property and equipment are as
follows:
<TABLE>
<CAPTION>
LIFE
IN YEARS
--------
<S> <C>
Rental equipment:
Cranes, lifts and other heavy equipment........................ 8-12.5
Property and equipment:
Buildings and improvements..................................... 5-30
Motor vehicles and trailers.................................... 3-8
Aircraft....................................................... 15
Machinery and tools............................................ 3-8
Furniture, fixtures and office equipment ...................... 5-10
</TABLE>
INTANGIBLE ASSETS
Intangible assets consist of noncompetition agreements, customer lists,
trade names and goodwill related to various business acquisitions. These
assets are being amortized using the straight-line method over periods ranging
from 2 to 20 years. The Partnership periodically reviews the carrying value of
intangible assets and will recognize impairments when the expected future
operating cash flow derived from such intangible assets is less than their
carrying value.
REVENUE RECOGNITION
The Partnership rents equipment to commercial, industrial and government
customers by the day, month and longer terms. Revenue from equipment rentals
is earned over the corresponding rental period. In addition, the Partnership
generates revenue from equipment sales. Revenue from the sale of equipment is
recognized upon the execution of a sales agreement and delivery of the
equipment.
OTHER INCOME
Included in other income is approximately $1.4 million related to a net gain
on property sold by the Partnership during 1997.
INCOME TAXES
The partners included in the accompanying consolidated financial statements
have elected to be treated as either an S-corporation or a partnership for
federal income tax purposes.
F-8
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
Similar elections are made, where possible, for state income tax purposes.
Accordingly, all federal and certain state (except for Texas) income tax
liabilities are borne by the partners and, accordingly, are not reflected in
the accompanying consolidated financial statements.
Deferred income tax assets and liabilities are provided for state income tax
purposes for the temporary differences between the tax basis of assets and
liabilities and the financial reporting basis using enacted tax rates in
effect in the years in which these differences are expected to reverse. These
differences principally relate to depreciation and the reporting for certain
revenues and expenses.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Partnership to
significant concentrations of credit risk consist primarily of cash and
accounts receivable. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the large number of entities comprising
the Partnership's customer base and their geographic dispersion. The
Partnership generally does not require collateral on accounts receivable. As
of December 31, 1997 and 1996, the Partnership had no significant
concentrations of credit risk.
The Partnership maintains cash and cash equivalents with a limited number of
financial institutions located throughout the country in order to limit
exposure. No collateral or other security is provided on these deposits, other
than $100 of deposits insured by the Federal Deposit Insurance Corporation.
The Partnership's periodic evaluations of the relative credit standing of
these financial institutions are considered in the Partnership's business
strategy.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION
The unaudited consolidated balance sheet as of September 30, 1998, and the
unaudited consolidated statements of operations, partners' capital (deficit)
and cash flows for the nine months ended September 30, 1998 and the unaudited
consolidated statements of operations and cash flows for the nine months ended
September 30, 1997, in the opinion of management, have been prepared on the
same basis as the audited consolidated financial statements and include all
significant adjustments (consisting primarily of normal recurring adjustments)
considered necessary for a fair presentation of the results of these interim
periods. Operating results for the nine month period ended September 30, 1998
are not necessarily indicative of the results for the entire year.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components. This Statement requires
that all items that are required to be recognized under accounting standards
as components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements. The
provisions of SFAS No. 130 have been adopted in the nine month period ended
September 30, 1998 and all years presented have been adjusted to reflect the
adoption. In the Partnership's case, comprehensive income includes net income
and unrealized investment gains and losses on securities.
The FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which establishes standards for the way that public
business enterprises report information about operating
F-9
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
segments in annual financial statements and related disclosures about products
and services, geographic areas and major customers. SFAS No. 131 is effective
for fiscal years beginning after December 15, 1997. Accordingly, the
Partnership is not required to adopt this standard until the fiscal year
ending December 31, 1998. Management is currently evaluating the impact of
this standard on the consolidated financial statements.
The FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and
other Postretirement Benefits," which revises employers' disclosures about
pension and other postretirement benefit plans by standardizing the disclosure
requirements for pensions and other postretirement benefits to the extent
practicable, requiring additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminating certain disclosures that are no longer as useful.
SFAS No. 132 is effective for fiscal years beginning after December 15, 1997.
Accordingly, the Partnership is not required to adopt this standard until the
fiscal year ending December 31, 1998. Management is currently evaluating the
impact of this standard on the consolidated financial statements.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of December 31:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land................................................... $ 8,438 $ 5,351
Buildings and improvements............................. 14,898 12,362
Motor vehicles and trailers............................ 29,986 15,560
Aircraft............................................... 1,889 3,549
Machinery and tools.................................... 3,562 3,414
Furniture, fixtures and office equipment............... 2,685 2,722
Spare equipment parts.................................. 5,016 4,041
-------- --------
66,474 46,999
Less accumulated depreciation and amortization......... (14,615) (11,931)
-------- --------
$ 51,859 $ 35,068
======== ========
</TABLE>
Depreciation expense for rental equipment and property and equipment was
approximately $21,405, $21,662 and $17,228 in 1997, 1996 and 1995,
respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following (see Note 13):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
10 3/8% Company Senior Notes, due
2008 (A).......................... $155,000 $ -- $ --
13 3/8% Holdings Senior Discount
Debentures, due 2009 (A).......... 25,695 -- --
Senior Credit Facility of the
Company (A)
Revolving Credit Facility........ 144,000 -- --
Term Loan........................ 50,000 -- --
8.5% Series A Senior Notes $20
million, due 2001 (B)............. -- 16,000 20,000
8.9% Series B Senior Notes $40
million, due 2006 (B)............. -- 40,000 40,000
8.9% Series C Senior Notes $22.5
million, due 2004 (C)............. -- 22,500 --
9.5% Series D Senior Notes $36.5
million, due 2009 (C)............. -- 36,500 --
Credit Agreement--Banks' Prime Rate
(D)............................... -- 10,000 --
Credit Agreement--LIBO (D)......... -- 60,000 80,000
-------- -------- --------
374,695 185,000 140,000
Less current portion of long-term
debt.............................. -- 7,500 4,000
-------- -------- --------
$374,695 $177,500 $136,000
======== ======== ========
</TABLE>
F-10
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
(A) Refer to Note 13 for a description of the Company's Senior Notes and
Senior Credit Facility and Holdings' Senior Discount Debentures.
(B) The $20 million and $40 million Senior Notes issued to various insurance
companies are due September 30, 2001 and 2006, respectively. On April 16,
1997, in connection with the issuance of the Senior Notes discussed in
item (C) below, the Series A and B Senior Notes were amended to change the
interest rates from 8.25% and 8.65% to 8.5% and 8.9%, respectively.
Interest payments are due semi-annually on March 31 and September 30. In
accordance with the note agreements, the Partnership is required to make
sinking funds payments of principal amounting to $4.0 million annually
beginning September 30, 1997 for Series A Senior Notes and $5.0 million
annually beginning September 30, 1999 for Series B Senior Notes.
(C) On April 16, 1997, the Partnership issued Series C and D Senior Notes to
various insurance companies. The $22.5 million Series C Senior Notes and the
$36.5 million Series D Senior Notes bear interest at 8.9% and 9.5%,
respectively. Interest payments are due semi-annually on April 15 and
October 15. The Series C and D Senior Notes mature on April 15, 2004 and
April 15, 2009, respectively.
(D) On September 23, 1994, the Partnership entered into a credit agreement
(Credit Agreement) by which two banks committed maximum borrowings of $40
million. The facilities bear interest at the banks' prime rate (8.5% at
December 31, 1997) or the London Interbank Offered Rate (LIBO) plus 1.25%
for specified periods if elected by the Partnership. The interest rate in
effect for borrowings at LIBO was 7.1875% at December 31, 1997.
During 1996 and 1995, the banks committed an additional $55 million and $15
million, respectively, increasing the commitment under the facilities to
$110 million with the same terms. The credit agreement matures in September
1998 at which time, at the Partnership's election, the credit agreement can
be converted into a term loan payable over five years. Management
anticipates that they will convert the credit agreement into a term loan,
therefore, the principal debt maturities in the table below are reflected
over a five-year period beginning in 1998.
The Partnership's debt agreements contain various covenants related to the
maintenance of certain financial ratios, tangible net worth, additional
indebtedness, fixed charges, and maintenance of cash balances. Additionally,
all of the outstanding debt under the Company's Series A, B, C and D Senior
Notes and Credit Agreement and its new Senior Notes and Senior Credit
Facility are guaranteed on a full, unconditional and joint and several basis
by all of the Company's subsidiaries (Guarantor Subsidiaries).
The aggregate principal debt maturities of long-term debt for the next five
years are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
1998....................... $ -- $ 7,500
1999....................... -- 23,000
2000....................... -- 27,500
2001....................... -- 27,500
2002....................... -- 28,062
Thereafter................. 374,695 71,438
-------- --------
$374,695 $185,000
======== ========
</TABLE>
F-11
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
6. RELATED PARTY TRANSACTIONS
The Partnership periodically rents and sells equipment to affiliated
companies. Rental revenues from such transactions totaled $682, $423 and $639
and gross proceeds from equipment sales totaled $119, $45 and $22 in 1997,
1996 and 1995, respectively. In addition, the Partnership rents equipment,
utilizes personnel and purchases equipment from affiliated companies. Expenses
from such transactions totaled $652, $198 and $366 in 1997, 1996 and 1995,
respectively, and purchases of equipment totaled $218 and $50 in 1997 and
1996, respectively. There were no equipment purchases in 1995.
The following is a summary of amounts due from/to related parties as of
December 31, 1997 and 1996, exclusive of amounts classified as a reduction of
partners' capital:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Due from:
Ray G. Anthony................................................ $-- $806
Century Steel Erectors, Inc. (CSE)............................ 115 44
Steel City Environmental Services, Inc. (SCE)................. 26 21
Republic Crane Rental, Inc. (Republic)........................ -- 14
Lindsay Crane................................................. 28 --
Insurance Salvors Corp. ...................................... 19 --
---- ----
$188 $885
==== ====
Long-term notes receivable from:
SCE........................................................... 300 300
Century Crane and Hoist, Inc. ................................ 81 81
---- ----
$381 $381
==== ====
Due to:
Republic...................................................... -- 33
Lindsay Crane................................................. 13 --
---- ----
$ 13 $ 33
==== ====
</TABLE>
The Partnership periodically has made advances to Mr. Anthony. Such
advances, which totaled $3,950 at December 31, 1997 and 1996, have no specific
repayment terms and have been classified as a reduction of partners' capital
in the accompanying consolidated balance sheets. For federal income tax
purposes, the advances are treated as distributions to Anthony Iron and Metal
Company. In addition, during 1997, advances and other receivables due from Mr.
Anthony totaling $806 were charged to the partners' capital account.
7. LEASE COMMITMENTS:
The Partnership leases various pieces of equipment under long-term operating
lease agreements with third parties.
In addition, during December 1996, the Partnership entered into an agreement
for the sale and leaseback of certain cranes, lifts and other heavy equipment.
The Partnership has purchase and lease renewal options at future fair market
values under the agreement. The lease is classified as an operating lease in
accordance with SFAS No. 13, "Accounting for Leases." The net book value of
the equipment totaling approximately $24 million has been removed from the
accompanying consolidated balance sheets. There was no gain or loss on the
transaction. Rentals under this agreement approximate $3,141 annually through
January 2004.
F-12
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
The approximate future minimum lease payments under these agreements are as
follows:
<TABLE>
<S> <C>
Year ending December 31:
1998......................................... $ 4,765
1999......................................... 4,744
2000......................................... 4,744
2001......................................... 4,744
2002......................................... 4,744
Thereafter................................... 3,942
</TABLE>
Total rental expense for all leases, including the related party rentals
discussed in Note 6, approximated $5,060, $2,091 and $1,739 in 1997, 1996 and
1995, respectively.
In April 1997, the Partnership entered into a capital lease agreement for
the lease of twenty trucks. The lease has a term of three years with a bargain
purchase option at the end of the lease agreement. Interest rates under the
capital lease agreement range from approximately 19% to 22%.
The following is a schedule of future minimum lease payments under the
capital lease agreement together with the present value of the net minimum
lease payments as of December 31, 1997:
<TABLE>
<S> <C>
Year ending December 31:
1998.......................................... $ 287
1999.......................................... 287
2000.......................................... 806
------
Total minimum lease payments.................... 1,380
Less amount representing interest............... 419
------
Present value of minimum lease payments......... 961
Less current portion............................ 94
------
$ 867
======
</TABLE>
Included in rental equipment is cost and accumulated depreciation for these
leased trucks of approximately $1,035 and $86, respectively, at December 31,
1997.
8. BUSINESS ACQUISITIONS
In 1997 and 1996, the Partnership entered into various purchase agreements
to acquire certain tangible and intangible assets from unrelated parties. The
total purchase price for the acquisitions was $4,050 and $7,825 for 1997 and
1996, respectively. These acquisitions were accounted for under the purchase
method of accounting and, accordingly, the purchase price has been allocated
to the assets acquired, principally consisting of equipment, based on their
estimated fair values at the date of acquisition.
The operating results of these acquisitions were included in the
Partnership's consolidated results of operations from the date of acquisition.
Certain required pro forma financial information related to the above
acquisitions has not been presented since the acquisitions were not material
to the Partnership's consolidated financial position or its consolidated
results of operations.
F-13
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
9. EMPLOYEE BENEFIT PLANS
The Partnership has a profit-sharing defined contribution pension plan for
all affiliated companies. The plan covers all non-union employees of the
Partnership. The contribution to the plan is an amount determined by the
Partnership. The contribution for 1997, 1996 and 1995 was one percent of the
eligible participant's compensation.
The plan also includes a 401(k) savings plan feature that enables employees
to make voluntary salary reduction contributions up to 15% of eligible
compensation to the plan. The Partnership will match fifty percent of the
contributions, up to six percent of the participant's compensation.
The Partnership's total expense for the profit-sharing and 401(k) savings
plans was approximately $583, $380 and $220 in 1997, 1996 and 1995,
respectively.
Union employees of the Partnership are covered by various union-sponsored,
collectively bargained, benefit plans. The Partnership's contributions to
these multi-employer plans are based on specified amounts per hours worked by
the covered union employees. One such plan is underfunded and the unfunded
amount is being funded through ongoing contributions by all sponsoring
companies. Under certain circumstances, the Partnership may have to accelerate
such funding. In 1997, the Partnership paid approximately $600 towards its
share of the underfunded plan. Union employees receive union-sponsored
benefits such as pension benefits, health and welfare benefits, annuity
benefits, industry advancement and apprentice training. The total cost of
these union benefits approximated $6,162, $4,339 and $3,632 in 1997, 1996 and
1995, respectively.
The Partnership also has a deferred compensation plan for certain eligible
employees and members of the board of advisors. The participants are credited
with one percent of after-tax income annually and vest in annual contributions
if employed at year-end. The Partnership has purchased insurance contracts to
satisfy all future liabilities relating to the Plan. The Partnership's expense
for the deferred compensation plan for 1997, 1996 and 1995 was approximately
$250, $340 and $261, respectively.
10. CONTINGENCIES
The Partnership is involved in various claims and legal actions arising in
the ordinary course of business. The ultimate liability from these
contingencies cannot be determined because of the uncertainties that exist.
Therefore, it is possible that, upon settlement, consolidated results of
operations in a particular period could be materially affected by these
contingencies. Certain of these matters may be covered under the Partnership's
insurance coverage. However, in the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
consolidated financial position or consolidated results of operation of the
Partnership.
11. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has the following types of financial instruments:
. Cash and cash equivalents
. Accounts receivable
. Accounts payable
. Debt
Due to the short maturity of cash and cash equivalents, accounts receivable
and accounts payable, their carrying values approximate their fair value.
Based on the interest rates available at December 31, 1997, management
believes that the carrying amount of its long-term debt approximates fair
value.
F-14
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
12. SUBSIDIARY GUARANTORS
All of the Company's Guarantor Subsidiaries are wholly owned and all of the
outstanding debt under the Company's new Senior Notes and Senior Credit
Facility are guaranteed on a full, unconditional and joint and several basis
by all of the Guarantor Subsidiaries. The following consolidated condensed
financial information presents the financial position, results of operations
and cash flows for Holdings, the Company and Guarantor Subsidiaries as of and
for the nine month period ended September 30, 1998 and as of and for the year
ended December 31, 1997. The Guarantor Subsidiaries began operations in August
1996, and therefore, constitute only five months of activity in 1996.
Management does not believe that the financial information for 1996 is
meaningful for an understanding of the financial contribution of the Guarantor
Subsidiaries. In connection with the Recapitalization (see Note 13), Holdings
created a wholly-owned subsidiary, Anthony Crane Holdings Capital Corporation
(AC Holdings Corp.), for the sole purpose of serving as co-issuer of the
Senior Discount Debentures. AC Holdings Corp. does not have any substantial
operations or assets of any kind and will not have any revenues. As a result,
no separate disclosure of AC Holdings Corp.'s financial information has been
provided as such disclosure would not be meaningful given AC Holdings Corp.'s
lack of operations and assets.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 (UNAUDITED) DECEMBER 31, 1997
---------------------------------------------------------- ------------------------------------------------
GUARANTOR INTERCOMPANY GUARANTOR INTERCOMPANY
HOLDINGS COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED
BALANCE SHEETS -------- -------- ------------ ------------ ------------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total current
assets......... -- $ 37,381 $ 2,377 $ (2,913) $ 36,845 $ 42,260 $ 1,747 $(5,269) $ 38,738
Rental
equipment, net
of accumulated
depreciation... -- 267,466 7,286 -- 274,752 205,412 7,563 -- 212,975
Property and
equipment,
net............ -- 48,943 1,711 -- 50,654 50,320 1,539 -- 51,859
Other Assets.... $82,396 21,076 127 (80,853) 22,746 3,194 162 -- 3,356
------- -------- ------- -------- -------- -------- ------- ------- --------
Total assets... $82,396 $374,866 $11,501 $(83,766) $383,997 $301,186 $11,011 $(5,269) $306,928
======= ======== ======= ======== ======== ======== ======= ======= ========
LIABILITIES AND PARTNERS' CAPITAL
Total current
liabilities.... -- 20,392 3,145 (2,913) 20,624 25,436 5,409 (5,269) 25,576
Long-term debt,
less current
portion........ 25,695 349,000 -- -- 374,695 177,500 -- -- 177,500
Other non-
current........ -- 2,494 -- -- 2,494 2,436 -- -- 2,436
------- -------- ------- -------- -------- -------- ------- ------- --------
Total
liabilities... 25,695 371,886 3,145 (2,913) 397,813 205,372 5,409 (5,269) 205,512
Partners'
capital
(deficit)...... 56,701 2,980 8,356 (80,853) (12,816) 95,814 5,602 -- 101,416
------- -------- ------- -------- -------- -------- ------- ------- --------
Total
liabilities
and partners'
capital
(deficit)..... $82,396 $374,866 $11,501 $(83,766) $384,997 $301,186 $11,011 $(5,269) $306,928
======= ======== ======= ======== ======== ======== ======= ======= ========
<CAPTION>
SEPTEMBER 30, 1998 (UNAUDITED) DECEMBER 31, 1997
---------------------------------------------------------- ------------------------------------------------
GUARANTOR INTERCOMPANY GUARANTOR INTERCOMPANY
STATEMENTS OF HOLDINGS COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED
OPERATIONS -------- -------- ------------ ------------ ------------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment
rentals....... -- $128,995 $ 7,881 -- $136,876 $145,985 $10,423 -- $156,408
Equipment
sales......... -- 16,496 159 -- 16,655 27,400 -- -- 27,400
------- -------- ------- -------- -------- -------- ------- ------- --------
Total
revenues.... -- 145,491 8,040 -- 153,531 173,385 10,423 -- 183,808
Cost of
revenues.......
Cost of
equipment
rentals....... -- 78,699 3,184 -- 81,883 92,148 4,888 -- 97,036
Cost of
equipment
sales......... -- 12,753 125 -- 12,878 15,541 -- -- 15,541
------- -------- ------- -------- -------- -------- ------- ------- --------
Total cost of
revenues.... -- 91,452 3,309 -- 94,761 107,689 4,888 -- 112,577
Gross profit.... -- 54,039 4,731 -- 58,770 65,696 5,535 -- 71,231
Selling,
general, and
administrative.. -- 28,781 1,415 -- 30,196 33,067 2,044 -- 35,111
------- -------- ------- -------- -------- -------- ------- ------- --------
Income from
operations..... -- 25,258 3,316 -- 28,574 32,629 3,491 -- 36,120
Interest
expense........ 675 15,140 562 -- 16,377 13,422 540 -- 13,962
Other income.... -- (633) -- -- (633) (1,739) -- -- (1,739)
------- -------- ------- -------- -------- -------- ------- ------- --------
Income (loss)
before
extraordinary
item and
taxes.......... (675) 10,751 2,754 -- 12,830 20,946 2,951 -- 23,897
Provision
(benefit) for
state taxes.... -- 220 -- -- 220 96 -- -- 96
------- -------- ------- -------- -------- -------- ------- ------- --------
Income (loss)
before
extraordinary
item........... (675) 10,531 2,754 -- 12,610 20,850 2,951 -- 23,801
Extraordinary
item........... -- 15,811 -- -- 15,811 -- -- -- --
------- -------- ------- -------- -------- -------- ------- ------- --------
Net income
(loss)......... $ (675) $ (5,280) $ 2,754 -- $ (3,201) $ 20,850 $ 2,951 -- $ 23,801
======= ======== ======= ======== ======== ======== ======= ======= ========
</TABLE>
F-15
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 (UNAUDITED) DECEMBER 31, 1997
---------------------------------------------------------- ------------------------------------------------
GUARANTOR INTERCOMPANY GUARANTOR INTERCOMPANY
STATEMENTS OF HOLDINGS COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED
CASH FLOWS -------- -------- ------------ ------------ ------------ -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net cash provided
by operating
activities...... $ -- $ 23,714 $ -- $ -- $ 24,973 $ 29,399 $1,298 -- $ 30,697
-------- -------- ------ -------- -------- -------- ------ --- --------
Cash flows from
investing
activities......
Capital
expenditures... -- (80,219) (708) -- (80,927) (85,297) (344) -- (85,641)
Other investing
activities..... (80,853) 12,266 -- 80,853 12,266 18,665 -- -- 18,665
-------- -------- ------ -------- -------- -------- ------ --- --------
Net cash provided
by investing
activities...... $(80,853) $(67,953) $ (708) $ 80,853 $(68,661) $(66,632) $ (344) -- $(66,976)
-------- -------- ------ -------- -------- -------- ------ --- --------
Net cash provided
by financing
activities...... $ 80,853 $ 47,173 -- $(80,853) $ 47,173 $ 32,066 -- -- $ 32,066
-------- -------- ------ -------- -------- -------- ------ --- --------
Net increase
(decrease) in
cash and cash
equivalents..... -- 2,934 551 -- 3,485 (5,167) 954 -- (4,213)
Cash and cash
equivalents,
beginning of
period.......... -- 3,132 1,243 -- 4,375 8,300 288 -- 8,588
-------- -------- ------ -------- -------- -------- ------ --- --------
Cash and cash
equivalents, end
of period....... -- $ 6,066 $1,794 $ -- $ 7,860 $ 3,133 $1,242 -- $ 4,375
======== ======== ====== ======== ======== ======== ====== === ========
Supplemental
disclosure of
cash flow
information:
Cash paid during
the period for
interest........ -- $ 14,260 $ -- $ -- $ 14,260 $ 13,026 -- -- $ 13,026
======== ======== ====== ======== ======== ======== ====== === ========
</TABLE>
13. SUBSEQUENT EVENTS
RECAPITALIZATION
On June 1, 1998, the Partnership entered into a recapitalization agreement
with Bain/ACR, L.L.C. (Bain), pursuant to which Bain and certain members of
senior management of the Partnership (collectively the "Equity Investors")
indirectly acquired through Holdings an 82% ownership interest in the
Partnership (the "Recapitalization"). Effective July 22, 1998, the
Recapitalization was consummated and the Partnership incurred new debt
obligations, repaid its outstanding Senior Notes and Credit Agreement
obligations (see Note 5), restructured certain of its outstanding Partnership
interests and distributed approximately $122.4 million in cash and property
with a net book value of approximately $3.6 million to the Predecessor
Partners. In connection with the repayment of its outstanding debt
obligations, the Partnership incurred approximately $15.1 million in
prepayment penalties and wrote-off deferred financing costs of $0.8 million
which have been reflected as an extraordinary item in the consolidated
statement of operations for the nine months ended September 30, 1998.
The Recapitalization was funded by: (i) a notes offering by the Company with
gross proceeds of $155 million, (ii) a discount debentures offering by
Holdings with proceeds of $25 million (iii) a $33.6 million contribution by
the Equity Investors, (iv) $125 million of borrowings by the Company under a
revolving credit facility of a new senior credit facility, (v) $50 million of
borrowings by the Company under the term loan facility of a new senior credit
facility, and (vi) the distribution by Holdings of $22.5 million of Senior
Preferred Units to the Predecessor Partners.
The Recapitalization Agreement provided for an adjustment of the
distribution made to the Predecessor Partners based on consolidated net worth
(as defined in the Recapitalization Agreement), as of the closing date. The
amount of the adjustment has not yet been determined.
F-16
<PAGE>
ANTHONY CRANE RENTAL HOLDINGS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
The $155 million note offering consisted of 10 3/8% Senior Notes due 2008,
the discount debentures offering consisted of 13 3/8% Senior Discount
Debentures due 2009 and the new senior credit facilities provides up to $325.0
million in borrowings under a non-amortizing revolving credit facility and
non-amortizing term loan facility, which mature in 2004 and 2006,
respectively. At the Partnership's option, loans under the new senior credit
facilities bear interest at either the Base Rate (as defined in the agreement)
or the reserve-adjusted LIBO plus a margin of 2.25%.
ENVIRONMENTAL CONTINGENCY
The Partnership is currently investigating soil and groundwater
contamination at its Savannah, Georgia location from underground storage tanks
removed in 1994. Clean up activities associated with the contamination are
covered under the Georgia Underground Storage Tank Trust Fund (GUST). While
the ultimate costs of any remediation or continued monitoring are not yet
known, the Partnership expects that it will receive reimbursement for such
costs from the GUST. The reimbursement limit under the Trust Fund is $1
million. The Partnership believes that it is unlikely that its costs will
exceed the reimbursement limit.
F-17
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE ISSUERS OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDIC-
TION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE COMPANY OR THE ISSUERS SINCE THE DATE HEREOF OR THAT THE INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 15
The Transactions......................................................... 22
Use of Proceeds.......................................................... 24
Unaudited Pro Forma Consolidated Financial Data.......................... 25
Selected Historical Consolidated Financial Data.......................... 30
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 31
Business................................................................. 40
Management............................................................... 49
Security Ownership....................................................... 53
Certain Relationships and Related Transactions........................... 55
Description of Certain Indebtedness...................................... 58
Description of Exchange Debentures....................................... 61
The Exchange Offer....................................................... 91
Certain United States Federal Income Tax Considerations.................. 100
Plan of Distribution..................................................... 101
Legal Matters............................................................ 102
Experts.................................................................. 102
Index to Consolidated Financial Statements............................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$48,000,000
ANTHONY CRANE RENTAL HOLDINGS, L.P.
ANTHONY CRANE HOLDINGS CAPITAL CORPORATION
13 3/8% SENIOR DISCOUNT DEBENTURES DUE 2009
------------
PROSPECTUS
----------------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Anthony Crane Rental Holdings, L.P. (the "Company") is a limited partnership
organized under the laws of the State of Pennsylvania. Section 8510 of the
Pennsylvania Revised Uniform Limited Partnership Act (the "Pennsylvania
RULPA") provides that, subject to such standards and restrictions, if any, as
are set forth in its partnership agreement, a limited partnership may, and
shall have the power to, indemnify and hold harmless any partner or other
persons from and against any and all claims and demands whatsoever; provided,
however, that such indemnification shall not be made in any case where the act
or failure to act giving rise to the claim for indemnification is determined
by a court to have constituted willful misconduct or recklessness.
Section 5.10 of the Company's Amended and Restated Limited Partnership
Agreement (the "Limited Partnership Agreement") provides, among other things,
that:
(a) The Partnership shall indemnify and hold harmless the General partner
and each Affiliate, officer, director, controlling person, partner, employee
or shareholder of the General Partner ("Indemnified Person") from and against
any and all losses, claims, damages, liabilities, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements and other
amounts relating to any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, which
relate in any way to the General Partner's status or activities of the General
Partner or to the Partnership's property, business or affairs ("Claims"). An
Indemnified Person's expenses paid or incurred in defending itself against any
Claim shall be reimbursed as paid or incurred. A Person shall be considered an
Indemnified Person whether or not such Person has the status required to be an
Indemnified Person at the time any such Claim is made or maintained as long as
such person had the status of an Indemnified Person at the time the events
which gave rise to the Claim occurred. This Section 5.10 shall not apply with
respect to any Indemnified Person for that portion of any Claim determined by
the final decision (from which an appeal cannot be taken or is not taken on a
timely basis) of a court of competent jurisdiction to have been caused by his
or its gross negligence, willful misconduct or knowing violation of law. Any
payments made to or on behalf of a Person who is later determined not to be
entitled to such payments shall be refunded to the Partnership promptly
following such determination. Nothing contained in this Section 5.10 shall
obligate any Limited Partner to pay any amount to the Partnership or to any
Indemnified Person in excess of his Capital Contribution.
(b) The right to indemnification and the advancement of expenses conferred
in this Section 5.10 shall not be exclusive of any other right which any
Person may have or hereafter acquire under any statute, agreement, vote of
Partners or otherwise.
(c) The Partnership may maintain insurance, at its expense, to protect any
Person against any expense, liability or loss, to the extent that the
Partnership would have the power to indemnify such Person against such
expense, liability or loss under the Pennsylvania RULPA.
The Pennsylvania RULPA defines "Person" as an individual or a corporation,
partnership, limited liability company, trust, unincorporated organization,
association or other entity.
Section 5.11 of the Company's Limited Partnership Agreement further provides
that except as provided in Section 5.10, an Indemnified Person shall not be
liable to the Partnership or any Partner for any act or omission performed or
omitted by such Person pursuant to authority granted to such Person by this
Agreement; provided that such limitation of liability shall not apply to the
extent the act or omission was attributable to such Person's negligence,
willful misconduct or knowing violation of law. The General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents, and the General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner (so
long as such agent was selected in good faith and with due care) to the extent
that such agent's misconduct or negligence is not caused by and does not arise
out of the General Partner's misconduct or negligence in supervising the
activities of such agent.
II-1
<PAGE>
Anthony Crane Holdings Capital Corporation (the "Corporation") is a Delaware
corporation. Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides that a Delaware corporation may indemnify any
person who were, are or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative of investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's
best interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify any persons who are, were or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reasons of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent
of another corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, provided that no indemnification
is permitted without judicial approval if the officer, director, employee or
agent is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
The Certificate of Incorporation of the Corporation provides that to the
fullest extent permitted by the provisions of (S)145 of the General
Corporation Law of the State of Delaware, as the same exists or may thereafter
be amended, the Corporation shall indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure
to the benefit of the heirs, executors, and administrators of such a person.
Article VI of the Bylaws of the Corporation provides that every director and
officer of the Corporation shall be entitled as of right to be indemnified by
the Corporation against all expenses, liability and loss (including without
limitation, attorney's fees, judgments, fines, taxes, penalties and amounts
paid in settlement) paid or incurred by such person in connection with any
actual or threatened claim, action, suit or proceeding, civil, criminal,
administrative, investigative or other, whether brought by or in the right of
the Corporation or otherwise, in which he may be involved, as a party or
otherwise, by reason of such person being or having been a director or officer
of the Corporation or by reason of the fact such person is or was serving at
the request of the Corporation as a director, officer, employee, fiduciary or
other representative of another domestic or foreign corporation for profit or
not-for-profit, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise (such claim, action, suit or proceeding hereinafter
being referred to as an "Action" to the fullest extent authorized by the DGCL
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than such law permitted prior to such
amendment); provided, that no such right of indemnification shall exist with
respect to an Action brought by an Indemnitee (as hereinafter defined) against
the Corporation except as provided in the last sentence of this Section.
Persons who are not directors or officers of the Corporation may be similarly
indemnified in respect of service to the Corporation or to another such entity
at the request of the Corporation to the extent the Board of Directors at any
time denominates any of such persons as entitled to the benefits of this
Article VI. As used in this Article VI, "Indemnitee" shall include each
director and officer of the Corporation and each other person denominated by
the Board of Directors as entitled to the benefits of
II-2
<PAGE>
this Article VI. An Indemnitee shall be entitled to be indemnified pursuant to
this Section for expenses incurred in connection with any Action brought by
such Indemnitee against the Corporation only if the Action is a claim for
indemnity or expenses under Section 3 of this Article VI or otherwise and
either (i) the Indemnitee is successful in whole or in part in the Action for
which expenses are claimed or (ii) the indemnification for expenses is
included in a settlement of the Action or is awarded by a court.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Corporation's Bylaws provide for the maintenance of insurance under the
circumstances described in Section 145.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrants pursuant to the foregoing provisions, the registrants have been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<C> <S>
2.1 Recapitalization Agreement, dated as of June 1, 1998, by and among
Anthony Crane Rental, L.P., Bain/ACR, L.L.C., ACR Management, L.L.C.
and the current owners named therein.**
3.1 Certificate of limited partnership of Anthony Crane Rental Holdings,
L.P.**
3.2 Amended and Restated Agreement of Limited Partnership of Anthony Crane
Rental Holdings, L.P.**
3.3 Certificate of Incorporation of Anthony Crane Holdings Capital
Corporation.**
3.4 Bylaws of Anthony Crane Holdings Capital Corporation.**
4.1 Indenture, dated as of July 22, 1998, by and among Anthony Crane Rental
Holdings, L.P., Anthony Crane Holdings Capital Corporation and State
Street Bank and Trust Company.**
5.1 Opinion and Consent of Kirkland & Ellis.*
8.1 Opinion of Kirkland & Ellis as to federal income tax consequences.**
10.1 Purchase Agreement, dated as of July 16, 1998, by and among Anthony
Crane Rental Holdings, L.P., Anthony Crane Holdings Capital Corporation
and the Initial Purchasers.**
10.2 Registration Rights Agreement, dated as of July 22, 1998, by and among
Anthony Crane Rental Holdings, L.P., Anthony Crane Holdings Capital
Corporation and the Initial Purchasers.**
10.3 Revolving Credit Agreement, dated as of July 22, 1998, among Anthony
Crane Rental, L.P., Anthony Crane Rental Holdings, L.P., the several
banks or other financial institutions or entities from time to time
parties to this Agreement, Goldman Sachs Credit Partners L.P., Fleet
National Bank and DLJ Capital Funding, Inc.**
10.4 Term Loan Credit Agreement, dated as of July 22, 1998, among Anthony
Crane Rental, L.P., Anthony Crane Rental Holdings, L.P., the several
banks or other financial institutions or entities from time to time
parties to this Agreement, Goldman Sachs Credit Partners, L.P., Fleet
National Bank and DLJ Capital Funding, Inc.**
10.5 Securityholders Agreement, dated as of July 22, 1998, by and among ACR
Management, L.L.C., Anthony Crane Rental Holdings, L.P. and the
Securityholders.**
10.6 Registration Rights Agreement, made as of July 22, 1998, by and among
Anthony Crane Rental Holdings, L.P., ACR Management, L.L.C., Bain/ACR,
L.L.C. and the Current Owners.**
10.7 Advisory Agreement, dated as of July 22, 1998, by and among Bain
Capital, Inc., Anthony Crane Rental Holdings, L.P. and Anthony Crane
Rental, L.P.**
10.8 Escrow Agreement, dated as of July 22, 1998, by and among Anthony Crane
Rental, L.P., Anthony Iron & Metal Company, David W. Mahokey and Brown
Brothers Harriman & Co.**
10.9 Amended and Restated Agreement of Limited Partnership of Anthony Crane
Rental, L.P.**
10.10 Indenture, dated as of July 22, 1998, among Anthony Crane Rental, L.P.,
Anthony Crane Capital Corporation, the Guarantors and State Street Bank
and Trust Company.**
10.11 Purchase Agreement, dated as of July 16, 1998, by and among Anthony
Crane Rental, L.P., Anthony Crane Capital Corporation, the Guarantors
and the Initial Purchasers.**
10.12 Registration Rights Agreement, dated as of July 22, 1998, by and among
Anthony Crane Rental, L.P., Anthony Crane Capital Corporation, the
Guarantors, and the Initial Purchasers.**
10.13 Employment Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental, L.P. and Ray G. Anthony.**
10.14 Consulting and Noncompetition Agreement, dated as of July 22, 1998, by
and between Anthony Crane Rental, L.P. and Samuel R. Anthony.**
10.15 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and David
W. Mahokey.**
10.16 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and Arthur
J. Innamorato.**
10.17 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and Albert
C. Bove.**
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.18 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and William
B. Kania.**
10.19 Liability Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental, L.P. and Anthony Crane Capital Corporation.**
10.20 Liability Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental Holdings, L.P. and Anthony Crane Holdings Capital
Corporation.**
10.21 Agreement, dated as of August 1, 1996, between Hess Oil Virgin Islands
Corp. and Anthony Crane International, L.P.**
10.22 Sale and Lease Agreement, dated as of July 25, 1996, by and between
Anthony Crane Sales & Leasing, L.P. and Hess Oil Virgin Islands Corp.**
10.23 Master Rental Agreement for Bare Rental Equipment, dated as of August 1,
1996, by and between Anthony Crane Sales & Leasing, L.P. and Hess Oil
Virgin Islands Corp.**
12.1 Computation of Ratio of Earnings to Fixed Charges.**
21.1 Subsidiaries of Anthony Crane Rental, L.P.**
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Kirkland & Ellis (included in exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included in signature page).**
25.1 Statement of Eligibility of Trustee on Form T-1.**
27.1 Financial Data Schedule.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
</TABLE>
- ---------------------
* Filed herewith
** Previously filed
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE II--VALUATION & QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING CHARGED BALANCE AT
CLASSIFICATION OF PERIOD TO EXPENSE DEDUCTIONS END OF PERIOD
-------------- ---------- ---------- ---------- -------------
(IN THOUSANDS) --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1997
Allowance for Doubtful
Accounts................ $1,850 $ 428 $ (438) $1,840
YEAR ENDED DECEMBER 31,
1996
Allowance for Doubtful
Accounts................ $1,500 $1,071 $ (721) $1,850
YEAR ENDED DECEMBER 31,
1995
Allowance for Doubtful
Accounts................ $1,250 $1,293 $(1,043) $1,500
</TABLE>
All other schedules have been omitted because they are not applicable or not
required or the required information is included in the consolidated financial
statements or notes thereto.
(C) REPORT OF INDEPENDENT ACCOUNTANTS
In connection with our audits of the consolidated financial statements of
Anthony Crane Rental Holdings, L.P. and subsidiaries as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31,
1997, which financial statements are included in the Prospectus, we have also
audited the financial statement schedule listed in Item 21(b) herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
February 25, 1998, except as to Note 13,
which is as of July 22, 1998
II-5
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering; and
(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of the chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information
otherwise required by Section 10(a) (3) of the Act need not be furnished,
provided, that the registrant includes in the prospectus, by means of a post-
effective amendment, financial statements required pursuant to this paragraph
(a)(4) and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be filed to
include financial statements and information required by Section 10(a)(3) of
the Act or Rule 3-19 of this chapter is such financial statements and
information are contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form
F-3.
(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is part of this registration statement, by any person
or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 20 or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
II-6
<PAGE>
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
WEST MIFFLIN, STATE OF PENNSYLVANIA, ON DECEMBER 21, 1998.
Anthony Crane Rental Holdings, L.P.
*
By: __________________________________
Name: Ray G. Anthony
Title: Chairman and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES INDICATED ON DECEMBER 21, 1998:
SIGNATURE CAPACITY
* Chairman and Chief Executive
- ------------------------------------ Officer (principal executive
RAY G. ANTHONY officer)
/s/ Dale A. Buckwalter Chief Financial Officer (principal
- ------------------------------------ financial and accounting officer)
DALE A. BUCKWALTER
* Member of the Board and Chief
- ------------------------------------ Operating Officer
DAVID W. MAHOKEY
* Member of the Board
- ------------------------------------
PAUL EDGERLEY
* Member of the Board
- ------------------------------------
ROBERT C. GAY
* Member of the Board
- ------------------------------------
ANDREW B. BALSON
* Member of the Board
- ------------------------------------
JAMES E. HAAS
* Member of the Board
- ------------------------------------
WILLIAM B. KANIA
- --------------------
* means signed by attorney-in-fact
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF WEST MIFFLIN, STATE OF PENNSYLVANIA, ON DECEMBER 21, 1998.
Anthony Crane Holdings Capital
Corporation
*
By: _________________________________
Name: Ray G. Anthony
Title: Chairman and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON DECEMBER 21, 1998:
SIGNATURE CAPACITY
* Chairman and Chief Executive Officer
- ------------------------------------- (principal executive officer)
RAY G. ANTHONY
/s/ Dale A. Buckwalter Chief Financial Officer (principal
- ------------------------------------- financial and accounting officer)
DALE A. BUCKWALTER
* Member of the Board and Chief
- ------------------------------------- Operating Officer
DAVID W. MAHOKEY
* Member of the Board
- -------------------------------------
PAUL EDGERLEY
* Member of the Board
- -------------------------------------
ROBERT C. GAY
* Member of the Board
- -------------------------------------
ANDREW B. BALSON
* Member of the Board
- -------------------------------------
JAMES E. HAAS
*
- ------------------------------------- Member of the Board
WILLIAM B. KANIA
- ---------------------
* means signed by attorney-in-fact
II-9
<PAGE>
EXHIBITS INDEX
(A) EXHIBITS.
<TABLE>
<C> <S>
2.1 Recapitalization Agreement, dated as of June 1, 1998, by and among
Anthony Crane Rental, L.P., Bain/ACR, L.L.C., ACR Management, L.L.C.
and the current owners named therein.**
3.1 Certificate of limited partnership of Anthony Crane Rental Holdings,
L.P.**
3.2 Amended and Restated Agreement of Limited Partnership of Anthony Crane
Rental Holdings, L.P.**
3.3 Certificate of Incorporation of Anthony Crane Holdings Capital
Corporation.**
3.4 Bylaws of Anthony Crane Holdings Capital Corporation.**
4.1 Indenture, dated as of July 22, 1998, by and among Anthony Crane Rental
Holdings, L.P., Anthony Crane Holdings Capital Corporation and State
Street Bank and Trust Company.**
5.1 Opinion and Consent of Kirkland & Ellis.*
8.1 Opinion of Kirkland & Ellis as to federal income tax consequences.**
10.1 Purchase Agreement, dated as of July 16, 1998, by and among Anthony
Crane Rental Holdings, L.P., Anthony Crane Holdings Capital Corporation
and the Initial Purchasers.**
10.2 Registration Rights Agreement, dated as of July 22, 1998, by and among
Anthony Crane Rental Holdings, L.P., Anthony Crane Holdings Capital
Corporation and the Initial Purchasers.**
10.3 Revolving Credit Agreement, dated as of July 22, 1998, among Anthony
Crane Rental, L.P., Anthony Crane Rental Holdings, L.P., the several
banks or other financial institutions or entities from time to time
parties to this Agreement, Goldman Sachs Credit Partners L.P., Fleet
National Bank and DLJ Capital Funding, Inc.**
10.4 Term Loan Credit Agreement, dated as of July 22, 1998, among Anthony
Crane Rental, L.P., Anthony Crane Rental Holdings, L.P., the several
banks or other financial institutions or entities from time to time
parties to this Agreement, Goldman Sachs Credit Partners, L.P., Fleet
National Bank and DLJ Capital Funding, Inc.**
10.5 Securityholders Agreement, dated as of July 22, 1998, by and among ACR
Management, L.L.C., Anthony Crane Rental Holdings, L.P. and the
Securityholders.**
10.6 Registration Rights Agreement, made as of July 22, 1998, by and among
Anthony Crane Rental Holdings, L.P., ACR Management, L.L.C., Bain/ACR,
L.L.C. and the Current Owners.**
10.7 Advisory Agreement, dated as of July 22, 1998, by and among Bain
Capital, Inc., Anthony Crane Rental Holdings, L.P. and Anthony Crane
Rental, L.P.**
10.8 Escrow Agreement, dated as of July 22, 1998, by and among Anthony Crane
Rental, L.P., Anthony Iron & Metal Company, David W. Mahokey and Brown
Brothers Harriman & Co.**
10.9 Amended and Restated Agreement of Limited Partnership of Anthony Crane
Rental, L.P.**
10.10 Indenture, dated as of July 22, 1998, among Anthony Crane Rental, L.P.,
Anthony Crane Capital Corporation, the Guarantors and State Street Bank
and Trust Company.**
10.11 Purchase Agreement, dated as of July 16, 1998, by and among Anthony
Crane Rental, L.P., Anthony Crane Capital Corporation, the Guarantors
and the Initial Purchasers.**
10.12 Registration Rights Agreement, dated as of July 22, 1998, by and among
Anthony Crane Rental, L.P., Anthony Crane Capital Corporation, the
Guarantors, and the Initial Purchasers.**
10.13 Employment Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental, L.P. and Ray G. Anthony.**
10.14 Consulting and Noncompetition Agreement, dated as of July 22, 1998, by
and between Anthony Crane Rental, L.P. and Samuel R. Anthony.**
10.15 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and David
W. Mahokey.**
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.16 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and Arthur
J. Innamorato.**
10.17 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and Albert
C. Bove.**
10.18 Executive Purchase Agreement, dated as of July 22, 1998, by and among
ACR Management, L.L.C., Anthony Crane Rental Holdings, L.P. and William
B. Kania.**
10.19 Liability Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental, L.P. and Anthony Crane Capital Corporation.**
10.20 Liability Agreement, dated as of July 22, 1998, by and between Anthony
Crane Rental Holdings, L.P. and Anthony Crane Holdings Capital
Corporation.**
10.21 Agreement, dated as of August 1, 1996, between Hess Oil Virgin Islands
Corp. and Anthony Crane International, L.P.**
10.22 Sale and Lease Agreement, dated as of July 25, 1996, by and between
Anthony Crane Sales & Leasing, L.P. and Hess Oil Virgin Islands Corp.**
10.23 Master Rental Agreement for Bane Rental Equipment, dated as of August 1,
1996, by and between Anthony Crane Sales & Leasing, L.P. and Hess Oil
Virgin Islands Corp.**
12.1 Computation of Ratio of Earnings to Fixed Charges.**
21.1 Subsidiaries of Anthony Crane Rental, L.P.**
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Kirkland & Ellis (included in exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included in signature page).**
25.1 Statement of Eligibility of Trustee on Form T-1.**
27.1 Financial Data Schedule.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
</TABLE>
- ---------------------
* Filed herewith
** Previously filed.
<PAGE>
EXHIBIT 5.1
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
212 446-4800
Facsimile:
212 446-4900
November 25, 1998
Anthony Crane Rental Holdings, L.P.
1165 Camp Hollow Road
West Mifflin, Pennsylvania 15122
Re: Offer by Anthony Crane Rental Holdings, L.P. and Anthony Crane Holdings
Capital Corporation to Exchange their Series B 13 3/8% Senior Discount
Debentures due 2009 for any and all Debentures due 2009 of their
outstanding Series A 13 3/8% Senior Discount Debentures due 2009
Ladies and Gentlemen:
We are acting as special counsel to Anthony Crane Rental Holdings, L.P., a
Pennsylvania limited partnership (the "Company") and Anthony Crane Holdings
Capital Corporation ("AC Holdings Corp." and, together with the Company, the
"Issuers"), in connection with the proposed registration by the Issuers of up to
$25,667,404 in aggregate principal amount of the Issuer's Series B 13 3/8%
Senior Discount Debentures due 2009 (the "Exchange Debentures"), pursuant to a
Registration Statement on Form S-4 originally filed with the Securities and
Exchange Commission (the "Commission") on September 30, 1998 under the
Securities Act of 1933, as amended (the "Securities Act") (such Registration
Statement, as amended or supplemented, is hereinafter referred to as the
"Registration Statement"), for the purpose of effecting an exchange offer (the
"Exchange Offer") for the Company's outstanding Series A 13 3/8% Senior Discount
Debentures due 2009 (the "Debentures").
<PAGE>
Anthony Crane Rental Holdings, L.P.
November 25, 1998
Page 2
The Exchange Debentures are to be issued pursuant to the Senior Discount
Debenture Indenture (the "Senior Discount Debenture Indenture"), dated as of
July 22, 1998, among the Issuers and State Street Bank and Trust Company, as
trustee (the "Trustee"), in exchange for and in replacement of the Company's
outstanding Senior Discount Debenture, of which $25,667,404 in aggregate
principal amount is outstanding.
In connection with the Exchange Offer, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary for the
purposes of this opinion, including (i) the corporate and organizational
documents of the Company and AC Holdings Corp., (ii) minutes and records of the
corporate proceedings of the Company and AC Holdings Corp., with respect to the
issuance of the Exchange Debentures, (iii) the Registration Statement and
exhibits thereto and (iv) the Registration Rights Agreement, dated as of July
22, 1998, by and among the Issuers and Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of all
documents submitted to us as copies. We have also assumed the genuineness of the
signatures of persons signing all documents in connection with which this
opinion is rendered, the authority of such persons signing on behalf of the
parties thereto other than the Issuers, and the due authorization, execution and
delivery of all documents by the parties thereto other than the Issuers. As to
any facts material to the opinions expressed herein which we have not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Issuers, and
others.
<PAGE>
Anthony Crane Rental Holdings, L.P.
November 25, 1998
Page 3
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we are of the opinion
that:
(1) The Company is a limited partnership existing and in good standing
under the Pennsylavania Revised Uniform Limited Partnership Act.
(2) AC Holdings Corp. is a corporation existing and in good standing under
the Delaware General Corporation Law.
(3) The issuance of the Exchange Debentures has been duly authorized by each
of the Issuers.
(4) When, as and if (i) the Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the Indenture
shall have been qualified pursuant to the provisions of the Trust Indenture Act
of 1939, as amended, (iii) the Debentures shall have been validly tendered to
the Issuers, (iv) the Exchange Debentures shall have been issued in the form and
containing the terms described in the Registration Statement, the Indenture, the
resolutions of the Company's general partner (or authorized committee thereof)
and AC Holdings Corp.'s Board of Directors (or authorized committee thereof)
authorizing the foregoing and any legally required consents, approvals,
authorizations and other order of the Commission and any other regulatory
authorities to be obtained, the Exchange Debentures when issued pursuant to the
Exchange Offer will be legally issued, fully paid and nonassessable and will
constitute valid and binding obligations of the Company and AC Holdings Corp.
under the terms and conditions described in the Registration Statement, the
Indenture, and any legally required consents, approvals, authorizations and
other order of the Commission and any other regulatory authorities to be
obtained.
Our opinions expressed above are subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of (i)
any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (iii)
public policy considerations which may limit the rights of parties to obtain
certain remedies and (iv) any laws except the laws of the State of New York,
the laws of the State of Delaware and the laws of the Commonwealth of
Pennsylvania. For
<PAGE>
Anthony Crane Rental, L.P.
November 25, 1998
Page 4
purposes of our opinions expressed above, we have relied upon
certain certificates and opinions as we have deemed appropriate.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of the rules and regulations of
the Commission.
We do not find it necessary for the purposes of this opinion, and accordingly
we do not purport to cover herein, the application of the securities or "Blue
Sky" laws of the various states to the issuance of the Exchange Notes.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the States of Delaware or New York be changed by legislative action,
judicial decision or otherwise.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Yours very truly,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Amendment No.
2 to Form S-4 of our report dated February 25, 1998, except as to Note 13,
which is as of July 22, 1998, on our audits of the consolidated financial
statements and financial statement schedule of Anthony Crane Rental Holdings,
L.P. and subsidiaries as of December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997. We also consent to the
reference to our firm under the captions "Experts" and "Selected Historical
Consolidated Financial Data."
/s/ PricewaterhouseCoopers LLP
Pittsburgh, PA
December 21, 1998
