Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On June 16, 2021, McGrath RentCorp (the "Company") issued and sold to Prudential
Retirement Insurance and Annuity Company, The Prudential Insurance Company of
America and The Prudential Insurance Company of America (collectively, the
"Purchasers") $60 million aggregate principal amount of 2.35% Series E Notes
pursuant to the terms of the Amended and Restated Note Purchase and Private
Shelf Agreement, dated March 31, 2020 (the "Note Purchase Agreement"), among the
Company, PGIM, Inc. and the noteholders party thereto.
The Notes are an unsecured obligation of the Company. The Notes bear interest at
a rate of 2.35% per annum and mature on June 16, 2026. Interest on the Notes is
payable semi-annually beginning on December 16, 2021 and continuing thereafter
on June 16 and December 16 of each year until maturity. The Company may at any
time prepay all or any portion of the Notes; provided that such portion is at
least $5,000,000 (and increments of $100,000 in excess thereof). In the event of
a prepayment, the Company will pay an amount equal to 100% of the principal
amount so prepaid, plus a make-whole amount.
Pursuant to the terms of the Note Purchase Agreement, the Company has agreed to
customary affirmative and negative covenants for as long as the Notes are
outstanding, including, subject to certain exceptions and qualifications, among
other things, (i) a maximum leverage ratio and (ii) a minimum fixed charge
coverage ratio.
The Notes are also subject to customary events of default, including without
limitation, (i) failure to make payments on principal or premium, if any, upon
maturity; (ii) failure to pay interest within five business days after the same
becomes due and payable; (iii) the Company or any of the Guarantors (as defined
below) fails to comply with its various covenants and agreements in the Note
Purchase Agreement; (iv) the Company or any of the Guarantors makes false
representations and warranties in the documents relating to the Note Purchase
Agreement; (v) the Company or any of the Company's Material Subsidiaries (as
defined in the Note Purchase Agreement) fails to pay when due debt obligations
in excess of $10,000,000, or such debt obligations may be declared payable
earlier than their stated maturity due to breach by the Company or any of the
Company's Material Subsidiaries; (vi) certain insolvency events with respect to
the Company or any of its subsidiaries; (vii) the Company or any of its
subsidiaries becomes subject to final judgments or orders for payment of money
that exceed $10,000,000 in the aggregate and are not within 60 days after entry
thereof, bonded, discharged or stayed pending appeal; (viii) the Company incurs
liability with respect to certain benefit plans which result or could reasonably
be expected to result in payments in excess of $10,000,000; (ix) the
documentation related to the Note Purchase Agreement ceases to be in full force
and effect; or (x) any Change of Control (as defined in the Note Purchase
Agreement) of the Company occurs.
Certain of the Company's U.S. subsidiaries, Mobile Modular Management
Corporation, Enviroplex, Inc. and Adler Tank Rentals, LLC (the "Guarantors"),
guarantee the full payment of all the obligations of the Company in connection
with the Notes.
The foregoing descriptions do not purport to be complete and are qualified in
their entirety by reference to the full text of the Note Purchase Agreement,
which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K
filed with the U.S. Securities and Exchange Commission on April 3, 2020, and is
incorporated herein by reference.
* * *
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McGRATH RENTCORP
Dated: June 16, 2021 By: /s/ Keith E. Pratt
Keith E. Pratt
Senior Vice President and Chief Financial Officer
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