Debt

3 Months Ended

Mar. 31, 2020

Debt, net of unamortized original issue discounts or premiums, and unamortized debt issuance costs, consists of the following:



	March 31, 2020			December 31, 2019
Accounts Receivable Securitization Facility expiring 2020 (1) (2)	$	795		$	929
$3.75 billion ABL Facility expiring 2024 (1) (3)	1,179			1,638
Term loan facility expiring 2025 (1)	977			979
5 ¹/₂ percent Senior Notes due 2025 (3)	795			795
4 ⁵/₈ percent Senior Notes due 2025	743			742
5 ⁷/₈ percent Senior Notes due 2026	999			999
6 ¹/₂ percent Senior Notes due 2026	1,089			1,089
5 ¹/₂ percent Senior Notes due 2027	993			992
3 ⁷/₈ percent Senior Secured Notes due 2027	741			741
4 ⁷/₈ percent Senior Notes due 2028 (4)	1,653			1,652
4 ⁷/₈ percent Senior Notes due 2028 (4)	4			4
5 ¹/₄ percent Senior Notes due 2030	742			741
4 percent Senior Notes due 2030 (5)	741			—
Finance leases	146			127
Total debt	11,597			11,428
Less short-term portion (6)	(854		)	(997		)
Total long-term debt	$	10,743		$	10,431

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(1)The table below presents financial information associated with our variable rate indebtedness as of and for the three months ended March 31, 2020. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.



	ABL facility			Accounts receivable securitization facility			Term loan facility
Borrowing capacity, net of letters of credit	$	2,508		$	62		$	—
Letters of credit	52
Interest rate at March 31, 2020	2.2		%	2.1		%	2.7		%
Average month-end debt outstanding	1,097			804			987
Weighted-average interest rate on average debt outstanding	2.7		%	2.4		%	3.2		%
Maximum month-end debt outstanding	1,494			811			988

(2)

Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of March 31, 2020, there were $857 of receivables, net of applicable reserves and other deductions, in the collateral pool. As explained further below, in April 2020, we amended the accounts receivable securitization facility to adjust financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The adjustments to these tests are intended to make compliance with such tests more likely, and are not expected to materially impact our financial statements. The accounts receivable securitization facility expires on June 26, 2020, and we expect to renew the facility in the second quarter of 2020.

(3)

The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects using proceeds from the issuance of 4 percent Senior Notes (the “4 percent Notes”) discussed below to reduce borrowings under the ABL facility. At the time of the offering of the 4 percent Notes, we indicated our expectation that we would re-borrow an amount equal to net proceeds from the offering (discussed below), along with additional borrowings under the ABL facility, to redeem our 5 ¹/₂ percent Senior Notes due 2025 on or after July 15, 2020. Prior to redeeming any 5 ¹/₂ percent Senior Notes due 2025, due primarily to the potential impact of COVID-19 on liquidity, we plan to assess our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. We currently expect to make a decision regarding the redemption of 5 ¹/₂ percent Senior Notes due 2025 during the second half of 2020.


(4)	URNA separately issued 4 ⁷/₈ percent Senior Notes in August 2017 and in September 2017. Following the issuances, URNA consummated an exchange offer pursuant to which most of the 4 ⁷/₈ percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 ⁷/₈ percent Senior Notes issued in August 2017.

(5)

In February 2020, URNA issued $750 aggregate principal amount of 4 percent Notes which are due July 15, 2030. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 4 percent Notes may be redeemed on or after July 15, 2025, at specified redemption prices that range from 102.000 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to July 15, 2023, up to 40 percent of the aggregate principal amount of the 4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 104.000 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 4 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 4 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.


(6)	As of March 31, 2020, our short-term debt primarily reflects $795 of borrowings under our accounts receivable securitization facility.

Loan Covenants and Compliance

As of March 31, 2020, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and the senior notes. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

The only financial covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of March 31, 2020, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding.

The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.

On April 27, 2020, URI, URNA and the special purpose vehicle that is party to the accounts receivable securitization facility entered into an amendment to the Third Amended and Restated Receivables Purchase Agreement (the “Purchase Agreement”), dated as of September 24, 2012, with the other parties to the Purchase Agreement, which include Liberty Street Funding LLC (“Liberty”) and Gotham Funding Corporation (“Gotham”), as Purchasers, The Bank of Nova Scotia (“Scotia”), as Purchaser Agent for Liberty, as Administrative Agent and as a Bank, PNC Bank, National Association, as Purchaser Agent for itself and as a Bank, Truist Bank, as Purchaser Agent for itself and as a Bank, MUFG Bank, Ltd. (formerly known as the Bank of Tokyo-Mitsubishi UFJ, Ltd.) (“BTMU”), as Purchaser Agent for Gotham and as a Bank, and The Toronto-Dominion Bank (“TD”), as Purchaser Agent for itself and as a Bank. The amendment made certain adjustments to the financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The adjustments to these tests are intended to make compliance with such tests more likely, and are not expected to materially impact our financial statements. The accounts receivable securitization facility expires on June 26, 2020, and we expect to renew the facility in the second quarter of 2020.