19th Jul 2006 07:00
FOR IMMEDIATE RELEASE 19 JULY 2006NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY ORINDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, FRANCE, JAPAN ORNEW ZEALANDPART 1 OF 2 Ashtead Group plc PROPOSED ACQUISITION OF NATIONSRENT FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE APPROXIMATELY ‚£150 MILLION Creating a US market leader IntroductionAshtead Group plc ("Ashtead"), one of the world's leading providers ofequipment rental services, principally to the US and UK non-residentialconstruction markets, and fourth largest operator in the United States throughits subsidiary Sunbelt Rentals ("Sunbelt"), today announces the proposedacquisition (the "Acquisition") of NationsRent Companies, Inc. ("NationsRent"),the sixth largest provider of equipment rental services in the United States,for an initial consideration of approximately US$1,000 million. On the basis of2005 rental revenues, the Enlarged Group would be the third largest provider inthe US and number two on a global basis.Acquisition highlights* Initial consideration of approximately US$1,000 million comprising US$600 million in cash and the assumption of approximately US$400 million of debt, plus - costs of approximately US$50 million in relation to the early redemption of the NationsRent Loan Notes offset by available tax losses - a potential future additional payment of up to US$89 million, contingent upon future Ashtead share price performance * Acquisition to be funded by a rights issue to raise approximately ‚£150 million, drawings under a new US$1,600 million senior secured credit facility and US$550 million of new senior loan notes * Combination of the two companies will form the third largest provider in the large and growing US rental market, principally serving the private non-residential construction market - NationsRent LTM March 2006 revenues and EBITDA of US$716 million and US$200 million respectively - market growth is expected to continue through to at least 2008, with an anticipated 2005-2008 compound annual growth rate in the value of non-residential building contracts of over 6 per cent - future growth in the US rental market is underpinned further by the continuing structural shift from ownership to rental of equipment * NationsRent represents an excellent fit with Sunbelt by both business type and geography - c.US$1 billion rental fleet - US$665m purchased new since June 2003 - NationsRent's store portfolio will substantially extend Sunbelt's "clustering" strategy - number of clusters to increase from 22 to 36 * Acquisition expected to be significantly earnings enhancing in financial year ending April 2008, the first full year of operation of the Enlarged Group, including - expected annual cost savings of at least ‚£20 million - additional benefits from operational realignment of NationsRent's business model to bring its utilisation and rental rates in line with those of Sunbelt * Transaction expected to close at the end of August 2006, pending, amongst other things, approval by Ashtead's shareholders at the Extraordinary General Meeting to be held on 4 August 2006 and receipt of the appropriate regulatory clearances Details of financing and the Rights IssueThe Board intends to fund the Acquisition through:i) the 3 for 8 fully underwritten Rights Issue to raise approximately ‚£150 million; ii) the New Senior Secured Credit Facility of up to US$1,600 million; iii) the issue of the New Senior Loan Notes to raise approximately US$550 million; and iv) the use of NationsRent's and the Company's existing cash resources. The New Ordinary Shares are being offered by way of rights to all QualifyingShareholders on the following basis:3 New Ordinary Shares at 100 pence per New Ordinary Share for every 8 Existing Ordinary Shares held and registered in their name at the close of business on the Record Date.The Rights Issue Price of 100 pence per New Ordinary Share represents a 31.6per cent. discount to the Closing Price for an Existing Ordinary Share of146.25 pence on 18 July 2006 (being the Closing Price of 147.25 pence on thelatest practicable date prior to this announcement excluding the proposed finaldividend of 1.0 pence per Existing Ordinary Share).The Rights Issue is fully underwritten by the Underwriters.As is customary in the high yield market, the New Senior Loan Notes are notunderwritten. Accordingly, the Company has also obtained a commitment fromCitigroup for a US$175 million bridge facility. This bridge facility will onlybe drawn if the Debt Issue is not completed.Commenting on the announcement, George Burnett, Chief Executive of Ashtead,said:"NationsRent is a high quality company which, like Sunbelt, has an attractiveand significant exposure to the growing non-residential construction market inthe US. The merger of NationsRent with Sunbelt creates a chain of 477outlets with minimal overlap and accelerates our 'clustering' strategy that hasdelivered consistent profitable growth over the past few years. NationsRent andSunbelt have similar rental fleets both in age and in mix and through thecombination of these businesses we believe we will enjoy benefits of scale inboth customer service and buying power. The Acquisition represents the lateststep in Ashtead's development and provides the Company with an excellentopportunity to create additional shareholder value."Additional informationUBS and JPMorgan Cazenove are acting as financial advisers to Ashtead inrelation to the Acquisition. JPMorgan Cazenove and Evolution are acting asjoint corporate brokers to Ashtead.The Circular and the Prospectus giving details of the Acquisition and theRights Issue and containing, amongst other things, a notice of theExtraordinary General Meeting of Ashtead to be held on 4 August 2006 to approvethe Acquisition and the Rights Issue will be sent to Shareholders shortly.EnquiriesAshteadCob Stenham, Non-executive Chairman +44 (0) 20 7299 5562George Burnett, Chief Executive +44 (0) 1372 362 300Ian Robson, Finance Director +44 (0) 1372 362 300UBS Investment BankLiam Beere +44 (0) 20 7567 8000JPMorgan CazenoveDermot McKechnie +44 (0) 20 7588 2828Evolution SecuritiesStuart Andrews +44 (0) 20 7071 4300MaitlandBrian Hudspith +44 (0) 20 7379 5151A presentation for analysts and institutions will be held at 10:00 today(London time) at JPMorgan Cazenove, 20 Moorgate, London, EC2R 6DA. A livewebcast of this presentation will be available on the Investor Centre of theGroup's website, at www.ashtead-group.com, and a recording will be availablethereafter.GeneralThis announcement has been issued by and is the sole responsibility of Ashtead.UBS Limited ("UBS" or "UBS Investment Bank") is acting exclusively as financialadviser to the Company and no one else in connection with the Acquisition andthe Rights Issue and will not be responsible to anyone other than the Companyfor providing the protections afforded to its clients or for providing advicein relation to the Acquisition, the Rights Issue, or in relation to thecontents of this announcement, or for any other transaction, arrangement ormatters referred to in this announcement.JPMorgan Cazenove Limited ("JPMorgan Cazenove"), which is authorised andregulated in the United Kingdom by the Financial Services Authority, is actingexclusively as financial adviser and corporate broker for the Company and noone else in connection with the Acquisition and the Rights Issue and will notbe responsible to anyone other than the Company for providing the protectionsafforded to its clients or for providing advice in relation to the Acquisition,the Rights Issue, or in relation to the contents of this announcement, or forany other transaction, arrangement or matters referred to in this announcement.Evolution Securities Limited ("Evolution"), which is authorised and regulatedin the United Kingdom by the Financial Services Authority, is actingexclusively as corporate broker for the Company and no one else in connectionwith the Rights Issue and will not be responsible to anyone other than theCompany for providing the protections afforded to its clients or for providingadvice in relation to the Rights Issue, or in relation to the contents of thisannouncement, or for any other transaction, arrangement or matters referred toin this announcement.This announcement does not constitute an offer to sell or the solicitation ofan offer to acquire or subscribe for New Ordinary Shares, Provisional AllotmentLetters, Nil Paid Rights and/or Fully Paid Rights and/or to take up anyentitlements. The offer to acquire New Ordinary Shares pursuant to the proposedRights Issue will be made solely on the basis of the information contained inthe Prospectus to be published in connection with the proposed Rights Issue.The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Australia, Canada, France,Japan or New Zealand.This announcement is not an offer of securities for sale in, into or from theUnited States, Australia, Canada, France, Japan or New Zealand. The NewOrdinary Shares, Provisional Allotment Letters, Nil Paid Rights and Fully PaidRights have not been and will not be registered under the US Securities Act of1933 (as amended) or under any relevant securities laws of any state or otherjurisdiction of the United States, and will not qualify for distribution underany of the relevant securities laws of Australia, Canada, France, Japan or NewZealand. Accordingly, the New Ordinary Shares, Provisional Allotment Letters,Nil Paid Rights and/or Fully Paid Rights may not be offered, sold, taken up,exercised, resold, renounced, transferred or delivered, directly or indirectly,within the United States (absent registration or an applicable exemption fromregistration) or within Australia, Canada, France, Japan or New Zealand.The availability of the Rights Issue to persons who are not resident in theUnited Kingdom may be affected by the laws of the relevant jurisdictions inwhich they are located. Persons who are not resident in the United Kingdomshould inform themselves of, and observe, any applicable requirements.Certain statements in this announcement are forward-looking statements. Suchstatements speak only as at the date of this announcement, are based on currentexpectations and beliefs and, by their nature, are subject to a number of knownand unknown risks and uncertainties that could cause actual results andperformance to differ materially from any expected future results orperformance expressed or implied by the forward-looking statement. Theinformation contained in this announcement is subject to change without noticeand none of the Company, UBS, JPMorgan Cazenove or Evolution assumes anyresponsibility or obligation to update publicly or review any of theforward-looking statements contained herein.No statement in this announcement is intended to be a profit forecast or toimply that the earnings of Ashtead for the current year or future years willnecessarily match or exceed the historical or published earnings of Ashtead orNationsRent.The Glossary contains the definitions of certain terms used in this Part 1.This Part 1 should be read in conjunction with the full text of the followingannouncement.FOR IMMEDIATE RELEASE 19 JULY 2006NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY ORINDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, FRANCE, JAPAN ORNEW ZEALANDPART 2 OF 2 Ashtead Group plc PROPOSED ACQUISITION OF NATIONSRENT FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE APPROXIMATELY ‚£150 MILLION Creating a US market leader IntroductionAshtead, one of the world's leading providers of equipment rental services andfourth largest player in the United States through its subsidiary Sunbelt,announces that it has signed a conditional agreement for the Acquisition ofNationsRent, the sixth largest provider of equipment rental services in theUnited States, for an initial consideration of approximately US$1,000 million.As one of the world's leading rental equipment providers with approximatelythree-quarters of its revenue derived from Sunbelt, Ashtead is committed toestablishing itself as a leading supplier in this large and growing market. TheAcquisition is a further step in this strategic development which, on the basisof 2005 rental revenues for Ashtead and NationsRent, will see the EnlargedGroup become the third largest rental equipment provider in the United States,only just behind the second placed firm, Rental Services Corporation, currentlyowned by Atlas Copco.Background to the AcquisitionRecent developments in the US rental equipment marketThe primary underlying market driver for the rental equipment market is theprivate non-residential construction market, a sector which grew strongly in2005. This growth is expected to continue through to at least 2008, withMcGraw-Hill Construction in its ``Construction Market Forecasting Survey'' ofMay 2006 forecasting a 2005-2008 compound annual growth rate in the value ofnon-residential building contracts of over 6 per cent. It is expected that themarket will grow 9 per cent. in 2006 alone (from US$175 billion in 2005 toUS$192 billion in 2006).Following a strong period of growth in the late 1990s, which also sawsignificant levels of consolidation in the rental equipment industry, the startof the decade saw a decline in equipment rental market conditions as theindustry experienced over-capacity coupled with a slowdown in themacro-economic environment. The market began to emerge from this cyclicaldownturn in mid-2004, largely due to a strong pick-up in the constructionmarkets, and has continued its recovery with the US equipment rental marketgrowing strongly to US$29 billion in 2005 (according to the American RentalAssociation's ``State of the Equipment Rental Industry 2005'' report and FrankManfredi's RER article of February 2005 entitled ``Back To Double-Digit RentalGrowth''). The Directors believe that this strong growth has continued in 2006,in line with the broader growth in the non-residential construction market.The Directors consider that the future growth of the US equipment rentalindustry is further underpinned by the currently under-penetrated nature of theUS market compared with the more mature UK market. With US penetration of only38 per cent., according to the Association of Equipment Manufacturers (``AEM'')Advisor Rental report of February 2006, there is substantial capacity forgrowth as the secular shift towards renting versus owning in the US marketcontinues. Indeed, according to AEM Advisor Rental, penetration rates in theUnited States are expected to increase to 50 per cent. by 2010.Other factors which the Directors believe will drive growth in the key USmarket are:* The US$286 billion August 2005 Federal Highway Bill has committed to increase federal funding to a level in excess of that from the predecessor bill (TEA21). Consequently, state and local spending may be expected to increase over time. * The rebuilding of the Gulf Coast region following the 2005 hurricanes which will benefit the Gulf Coast market for the next three to five years. The acquisition of NationsRent will add six stores in the Gulf Coast area to Sunbelt's three stores in that market. Information on AshteadAshtead was originally founded in 1947 as a plant hire company, but its moderndevelopment dates from 1984, when it was acquired by its current chiefexecutive, George Burnett, and a colleague who has since retired. The group hasbeen quoted on the London Stock Exchange since 1986.Since 1984, the Group has grown from a five-depot operation with ‚£1.5 millionturnover, to one of the largest rental equipment groups in the world with over6,000 employees and more than 428 rental stores in the UK, the US, Canada andSingapore. Annual turnover in the fiscal year ending 30 April 2006 was ‚£638million and the Group fulfils the rental equipment needs of over 150,000customers throughout industry, commerce and local government. The Group's fleetof equipment available to hire extends from heavyweight equipment such asbackhoes, excavators and forklift trucks, to smaller equipment such as powersaws, ladders and small pumps.Ashtead comprises A-Plant in the UK, Sunbelt Rentals in the US and AshteadTechnology Rentals, which has offices in the UK, Singapore, the US and Canada.A-Plant is the third largest equipment rental company in the UK, whilst SunbeltRentals is the fourth largest company of its kind in the USA. AshteadTechnology is a world leader in the rental of electronic survey and inspectionequipment to the offshore oil and gas industries in the North Sea, the Far Eastand the Gulf of Mexico.Information on NationsRentNationsRent, which was reorganised in June 2003 during its emergence fromproceedings under Chapter 11 of the United States Bankruptcy Code, is now thesixth largest equipment rental business in the United States by revenue, with268 locations in 26 states. It specialises in rentals and also sells new andused equipment with related merchandise, parts and supplies, and providesmaintenance and repair services.NationsRent offers a comprehensive line of equipment and related services to abroad range of construction, industrial and home owner customers, includinggeneral contractors, sub-contractors, highway contractors, manufacturingplants, distribution centres and other commercial businesses.The revenue (before the revenue from sales of used equipment, which NationsRentreports as revenue but which is treated as the proceeds on sale of fixed assetsunder Ashtead's accounting policies), sales of used equipment and EBITDA forthe two years ended 31 December 2005 and the last twelve months ended 31 March2006 (as presented under US GAAP) are summarised below. Year ended 31 December LTM to 31 March 2004 2005 2006 US$m US$m US$m NationsRent's revenue 515.2 573.6 593.5(excluding used equipment sales) Sale of used 74.5 121.7 122.5equipment EBITDA * 153.5 191.0 200.5 * EBITDA is defined as net income plus provision for income taxes, net interest expense, depreciation and amortisation For the year ended 31 December 2005, NationsRent had profits before tax ofUS$22.3 million on revenues of US$573.6 million. As at 31 March 2006,NationsRent had gross assets of approximately US$817.6 million, of which rentalequipment made up US$535.2 million, and net assets of approximately US$217.1million.Strategic rationale for the AcquisitionThe Board believes that: (i) the combination of NationsRent with Sunbelt toform the third largest equipment rental operator in the United States byrevenue will create a stronger organisation with a broader presence and thescale to meet the growing demands of the industry; (ii) customers will benefitfrom the Enlarged Group's improved customer-facing strength in sales, supportand professional services; and (iii) the Acquisition will increase Ashtead'slong-term growth prospects and will mean that Ashtead will significantly extendits scale in the core US market.With Ashtead's strong track record in integrating acquired businesses, theBoard believes that the Acquisition will strengthen Ashtead's existing businessand is in the best interests of Shareholders for the following reasons:* NationsRent has 268 stores, a generally young fleet and a well respected workforce which, in combination with Sunbelt, will strengthen the Enlarged Group and provide an expanded base of operations on which to build future revenue growth; * NationsRent's footprint of locations is largely complementary to Sunbelt's existing locations and will accelerate Sunbelt's "clustering" strategy by bringing together NationsRent's 168 general store locations, the 100 "NationsRent at Lowe's" tool hire outlets and Sunbelt's 209 store locations with only an approximate 7 per cent. geographical overlap, thereby extending the number of major markets in which Sunbelt has a clustered presence from 22 to 36. Additionally, the Board estimates that, because the footprint of the two businesses is largely complementary, it will be necessary to close only around 25 of the combined total of 477 stores currently operated by Sunbelt and NationsRent; * both Sunbelt and NationsRent use common IT systems and it is anticipated that the integration of the two businesses in this respect can be achieved with minimal disruption; * historically, NationsRent's dollar utilisation rate has been below that of its principal competitors (including Sunbelt). The Board believes that by realigning NationsRent's business, significant improvements in this utilisation rate can be achieved with a consequential increase in revenues and profit; * with the top 10 rental companies in the United States accounting for approximately 27 per cent. of the overall market in 2005 (according to RER's `The RER 100 Rockets' report of May 2006 and the American Rental Association's `State of the Equipment Rental Industry 2005' report), the rental industry remains highly fragmented and is poised for consolidation. The Acquisition would position Ashtead as a leader in this trend; and * the increased scale of the Enlarged Group also presents the opportunity to drive profitability and cash flow through significant operating synergies, such as: - elimination of duplicative and unnecessary general, administrative, marketing and property expenses. Costs savings of at least ‚£20 million are anticipated; - application of mutual best practices to both companies' current operations; - purchasing efficiencies both for equipment and other elements of the cost base; and - better ability to service large regional and national customers. Details of the Acquisition considerationUnder the terms of the Acquisition, Ashtead will - pay an initial cash consideration of US$600 million - assume NationsRent's net long-term borrowings of approximately US$400 million (i.e. will tender to acquire for cancellation the NationsRent Loan Notes) Ashtead will also incur costs of approximately US$50 million in relation to theearly redemption of the outstanding NationsRent Loan Notes, which will beoffset by available tax losses.In addition, up to a further US$89 million of deferred cash consideration (the"Performance Related Consideration") may be payable to the NationsRentShareholders, contingent upon Ashtead's share price performance during the nextthree years.The Performance Related ConsiderationThe Performance Related Consideration of up to US$89 million will becomepayable in the event that the Company's share price rises by more than 22.2 percent. above an agreed reference price which has been set at 223.5 pence perOrdinary Share measured during the three years following the closing of theAcquisition and will then be payable at the rate of US$5 million for everyadditional 1 per cent. rise in the share price (up to a maximum of 40 per cent.above the reference price). On this basis, the Performance RelatedConsideration will start to become payable to the extent that the Company'sshare price rises above 273.1 pence per Ordinary Share and it will becomepayable in full to the extent that the share price rises above 312.9 pence perOrdinary Share on or prior to the third anniversary of the closing of the acquisition. The reference price will be adjusted under certain circumstances in accordance with, amongst other things, customary non-dilution provisions, including in respect of the Rights Issue. If the Performance Related Consideration becomes payable, this will be met out of existing facilities.Principal additional terms of the Acquisition AgreementThe Acquisition Agreement contains various customary warranties. The warrantiesfrom NationsRent to Ashtead cover, amongst other things, the organisation andcapital of NationsRent and its subsidiaries, the authority and capacity toenter into the Acquisition Agreement, the absence of material changes to orevents affecting NationsRent and its business, the absence of environmentalliabilities and the absence of material litigation. The Acquisition Agreementalso provides Ashtead with indemnities in respect of breaches of certainrepresentations and warranties, environmental costs, and breaches of certaincovenants. Such indemnification is limited to US$28 million (to be deposited inan escrow fund). The representations and warranties expire at various timesfrom six months after the closing of the Acquisition to twelve months after theclosing of the Acquisition.Either the Company or NationsRent may terminate the Acquisition Agreement if,amongst other things, the merger has not been consummated on or before 30September 2006. In the event that the Acquisition Agreement is terminated byeither Ashtead or NationsRent following the failure to secure Ashtead'sShareholder approval of the Acquisition and Admission or the failure toconsummate the financing required in respect of the Acquisition, and there doesnot exist a breach by NationsRent of any representation, warranty or covenantwhich would give rise to a failure of a condition, then Ashtead will berequired to pay NationsRent a sum equal to US$11 million (which fee will beNationsRent's sole remedy in respect of termination of the AcquisitionAgreement, save in circumstances of wilful breach).Synergies and financial impact of the AcquisitionThe Board is confident that Ashtead can drive profitability and cash flowthrough material cost savings of at least ‚£20 million (US$37 million) per annumthrough elimination of duplicative and unnecessary general, administrative,marketing and property expenses. Furthermore, by realigning NationsRent'sbusiness model to be consistent with Sunbelt's, Ashtead should be able togenerate significant additional benefits.The Board expects the Acquisition to be significantly earnings enhancing in theyear ending 30 April 2008 (including cost savings and operational realignmentbenefits, before exceptional items and amortisation of intangible assets), thefirst full year of operation for the Enlarged Group.The acquisition will be dilutive in the current year as a result of theseasonality of the business and the time taken to realise the cost savings andoperational realignment benefits. It is expected that the cost of integratingNationsRent with Sunbelt will be approximately US$20 million, most of whichwill be incurred in the current financial year. These costs compriseprincipally staff redundancies and property costs.Immediately following completion of the Acquisition, the pro forma leverage isexpected to be approximately 3.0 times net debt to pro-forma LTM EBITDA. TheCompany expects to delever quickly following the acquisition and the Boardanticipates continuing to maintain leverage between two to three times net debtto EBITDA on average through the economic cycle.Integration planningThe integration plan will be led by Cliff Miller, Sunbelt President and CEO,whose immediate priorities are: - establishment of the new district and regional structure for the combined 477 stores; - selection and appointment of the new regional VPs and district managers for the new regions; - migration and unification of both IT systems (both companies currently use Wynne) onto a single core database; - implementation of Ashtead's profit share and sales commission programmes for NationsRent staff; and - unification of corporate/back-office functions. FinancingThe Board intends to fund the Acquisition through:i) the 3 for 8 fully underwritten Rights Issue to raise approximately ‚£150 million; ii) the New Senior Secured Credit Facility of up to US$1,600 million (which includes a re-financing of the current US$800 million Senior Secured Credit Facility); iii) the issue of the New Senior Loan Notes to raise approximately US$550 million. These Notes are expected to carry an interest rate of around 9%; and iv) the use of NationsRent's and the Company's existing cash resources. As is customary in the high yield market, the New Senior Loan Notes are notunderwritten. Accordingly, the Company has also obtained a commitment fromCitigroup for a US$175 million bridge facility. This bridge facility will onlybe drawn if the Debt Issue is not completed. In such circumstances, the Companyintends to refinance the bridge facility with high yield bonds when marketconditions permit.Assuming favourable market conditions in the public markets for the New SeniorLoan Notes, it is the Board's intention to redeem early the ‚£78 million of 12%Loan Notes currently outstanding so as to further reduce the weighted averagecost of capital.The Company has chosen to finance the Acquisition in this way in order tomaintain strategic flexibility and to give significant balance sheet strengthbased on an assessment of the Enlarged Group's future requirements forinvestment and working capital.Further details of the Rights Issue, including information on entitlements,acceptance and payment, are set out in the Prospectus (which will be sent toall Qualifying Shareholders on the register of members of the Company at theclose of business on 14 July 2006 other than, subject to certain exceptions,Qualifying Shareholders with a registered address in any Excluded Territory).Summary of the principal terms of the Rights IssueThe Board intends to offer the New Ordinary Shares by way of rights to allQualifying Shareholders (other than, subject to certain exceptions, QualifyingShareholders with a registered address in the United States, Australia, Canada,France, Japan or New Zealand) on the following basis:3 New Ordinary Shares at 100 pence per New Ordinary Share for every 8 Existing Ordinary Shares held and registered in their name at the close of business on the Record Date.Fractions of New Ordinary Shares will not be allotted to any QualifyingShareholders, but will be aggregated and sold in the market ultimately for thebenefit of the Company. Shareholders with fewer than 8 Existing Ordinary Shareswill not be entitled to any New Ordinary Shares. The New Ordinary Shares willrank pari passu with the Existing Ordinary Shares in all respects (save thatthey will not carry the right to receive the proposed final dividend of 1.0pence per Existing Ordinary Share and, subject to the approval of Shareholders,payable to those Shareholders on the register of members of the Company as at28 July 2006).The Nil Paid Rights or Fully Paid Rights represented by a Provisional AllotmentLetter may be converted into uncertificated form, that is, deposited into CREST(whether such conversion arises as a result of a renunciation of those rightsor otherwise). Similarly, Nil Paid Rights or Fully Paid Rights held in CRESTmay be converted into certificated form, that is, withdrawn from CREST.The Rights Issue Price of 100 pence per New Ordinary Share represents a 31.6per cent. discount to the Closing Price for an Existing Ordinary Share of146.25 pence on 18 July 2006 (being the Closing Price of 147.25 pence on thelatest practicable date prior to this announcement excluding the proposed finaldividend of 1.0 pence per Existing Ordinary Share).The Company has arranged for the Rights Issue to be fully underwritten by theUnderwriters in order to provide certainty as to the amount of capital to beraised.The Rights Issue is conditional, amongst other things, upon: (i) the passing ofthe Resolutions (without amendment) at the Extraordinary General Meeting; and(ii) the Acquisition Agreement not having been terminated (and no terminationrights existing under it having arisen) before Admission. After Admission, theRights Issue will proceed even if the Acquisition does not. In thesecircumstances, the Directors will consider whether to keep some or all of thenet proceeds of the Rights Issue to fund the growth of the business or reduceborrowings or whether to return some or all of such proceeds to Shareholders.In considering how any such proceeds might be returned to Shareholders, theDirectors will take into account, amongst other things, the tax implicationsfor Shareholders. It is presently anticipated that the Rights Issue and theAcquisition will close concurrently but, if this does not happen, the proceedsof the Rights Issue will be held by the Company and placed in aninterest-bearing deposit account.Prior to Admission, JPMorgan Cazenove and the Underwriters may terminate theUnderwriting Agreement in certain circumstances which the Board considers to beremote, and the obligations of JPMorgan Cazenove and the Underwriters under theUnderwriting Agreement are conditional, amongst other things, on the Company'srelevant financing agreements remaining in full force and effect between thepublication of the Prospectus and Admission (and the Company having madecertain confirmations). If the Underwriting Agreement is terminated, the RightsIssue will not proceed and the Acquisition cannot be completed. AfterAdmission, however, the underwriting arrangements will not be subject to anyright of termination (including in respect of any statutory withdrawal rights).Application has been made to the UK Listing Authority for the New OrdinaryShares (nil and fully paid) to be admitted to the Official List and to theLondon Stock Exchange for the New Ordinary Shares (nil and fully paid) to beadmitted to trading on the London Stock Exchange's main market for listedsecurities. It is expected that Admission will become effective and thatdealings in the New Ordinary Shares will commence on the London Stock Exchange,nil paid, at 8.00 a.m. on 7 August 2006.The Rights Issue will result in the issue of up to 152,141,151 New OrdinaryShares (representing approximately 37.5 per cent. of the Enlarged ShareCapital).Management and organisation of the Enlarged GroupImmediately following the Acquisition the Enlarged Group will continue to bemanaged by the current executive Directors. George Burnett will remain as ChiefExecutive Officer until December 2006, at which time, as announced on 28 June2006, he will retire. George will be succeeded by Geoff Drabble, who iscurrently an executive director of The Laird Group PLC (where he is responsiblefor its Building Products division) and a non-executive director of Ashteadsince April 2005. Geoff will join Ashtead as Chief Executive designate on 2October 2006 and will take over from George at the end of the year after ahandover period. Ian Robson (Finance Director), Cliff Miller (President andChief Executive Officer of Sunbelt Rentals) and Sat Dhaiwal (Chief ExecutiveOfficer of A-Plant) will all remain in place to oversee management of theEnlarged Group with Geoff. Cliff Miller will manage the combined business inthe United States and will lead the integration of NationsRent into Sunbelt. Noother changes to the Board of Ashtead are currently anticipated, save that theCompany intends to restore the balance of independent non-executive Directors.Current trading and prospects of the Group and the Enlarged GroupCurrent trading of AshteadAll three of the Group's businesses performed well in the past financial year.Each continues to benefit from good market conditions and has made an excellentstart to the new financial year.In the United States, where the shift from ownership to rental continues, weare encouraged by the strength of the non-residential construction market whichrose 10 per cent. in the 12 months to April 2006 and is forecast to growstrongly for at least the next two years and by Sunbelt's continuing gains inmarket share. Revenues from house builders, where the short-term outlook isless certain, accounted for just 6 per cent. of Sunbelt's revenues last year.The restructuring of A-Plant's sales force at the start of last year deliveredbenefits on a rising scale as the year progressed, a trend which has continuedinto our new financial year.With this strong, broadly-based momentum, the Board looks forward to reportingfurther significant progress in the coming year.Prospects for the Enlarged GroupThe Board believes that, following completion of the Acquisition, the EnlargedGroup will be well placed to consolidate its position in the US equipmentrental market. The Board has confidence in the financial and trading prospectsof the Enlarged Group for the current financial year, much of which will bespent in integrating and assimilating NationsRent with Sunbelt and on thedelivery of the cost savings and operational realignment benefits.Additional informationDocumentation and timetable expectationsA proposed timetable of events leading up to completion of the Acquisition isset out below. Please note that these dates are approximate and are subject tochange:* Posting of Circular and Prospectus Today (19 July 2006) * Record Date for entitlement to the Rights Issue 2 August 2006 * EGM 4 August 2006 * First day of dealing the Rights Issue shares, nil paid 7 August 2006 * Obtain HSR approval mid-August 2006 * Latest time and date for acceptance and payment in full 29 August 2006 * Completion of the Acquisition 31 August 2006 Additional informationUBS and JPMorgan Cazenove are acting as financial advisers to Ashtead inrelation to the Acquisition. JPMorgan Cazenove and Evolution are acting asjoint corporate brokers to Ashtead.The Circular and the Prospectus giving details of the Acquisition and theRights Issue and containing, amongst other things, a notice of theExtraordinary General Meeting of Ashtead to be held on 4 August 2006 to approvethe Acquisition and the Rights Issue will be sent to Shareholders shortly.EnquiriesAshteadCob Stenham, Non-executive Chairman +44 (0) 20 7299 5562George Burnett, Chief Executive +44 (0) 1372 362 300Ian Robson, Finance Director +44 (0) 1372 362 300UBS Investment BankLiam Beere +44 (0) 20 7567 8000JPMorgan CazenoveDermot McKechnie +44 (0) 20 7588 2828Evolution SecuritiesStuart Andrews +44 (0) 20 7071 4300MaitlandBrian Hudspith +44 (0) 20 7379 5151A presentation for analysts and institutions will be held at 10:00 today(London time) at JPMorgan Cazenove, 20 Moorgate, London, EC2R 6DA. A livewebcast of this presentation will be available on the Investor Centre of theGroup's website, at www.ashtead-group.com, and a recording will be availablethereafter.GeneralThis announcement has been issued by and is the sole responsibility of Ashtead.UBS Limited ("UBS" or "UBS Investment Bank") is acting exclusively as financialadviser to the Company and no one else in connection with the Acquisition andthe Rights Issue and will not be responsible to anyone other than the Companyfor providing the protections afforded to its clients or for providing advicein relation to the Acquisition, the Rights Issue, or in relation to thecontents of this announcement, or for any other transaction, arrangement ormatters referred to in this announcement.JPMorgan Cazenove Limited ("JPMorgan Cazenove"), which is authorised andregulated in the United Kingdom by the Financial Services Authority, is actingexclusively as financial adviser and corporate broker for the Company and noone else in connection with the Acquisition and the Rights Issue and will notbe responsible to anyone other than the Company for providing the protectionsafforded to its clients or for providing advice in relation to the Acquisition,the Rights Issue, or in relation to the contents of this announcement, or forany other transaction, arrangement or matters referred to in this announcement.Evolution Securities Limited ("Evolution"), which is authorised and regulatedin the United Kingdom by the Financial Services Authority, is actingexclusively as corporate broker for the Company and no one else in connectionwith the Rights Issue and will not be responsible to anyone other than theCompany for providing the protections afforded to its clients or for providingadvice in relation to the Rights Issue, or in relation to the contents of thisannouncement, or for any other transaction, arrangement or matters referred toin this announcement.This announcement does not constitute an offer to sell or the solicitation ofan offer to acquire or subscribe for New Ordinary Shares, Provisional AllotmentLetters, Nil Paid Rights and/or Fully Paid Rights and/or to take up anyentitlements. The offer to acquire New Ordinary Shares pursuant to the proposedRights Issue will be made solely on the basis of the information contained inthe Prospectus to be published in connection with the proposed Rights Issue.The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Australia, Canada, France,Japan or New Zealand.This announcement is not an offer of securities for sale in, into or from theUnited States, Australia, Canada, France, Japan or New Zealand. The NewOrdinary Shares, Provisional Allotment Letters, Nil Paid Rights and Fully PaidRights have not been and will not be registered under the US Securities Act of1933 (as amended) or under any relevant securities laws of any state or otherjurisdiction of the United States, and will not qualify for distribution underany of the relevant securities laws of Australia, Canada, France, Japan or NewZealand. Accordingly, the New Ordinary Shares, Provisional Allotment Letters,Nil Paid Rights and/or Fully Paid Rights may not be offered, sold, taken up,exercised, resold, renounced, transferred or delivered, directly or indirectly,within the United States (absent registration or an applicable exemption fromregistration) or within Australia, Canada, France, Japan or New Zealand.The availability of the Rights Issue to persons who are not resident in theUnited Kingdom may be affected by the laws of the relevant jurisdictions inwhich they are located. Persons who are not resident in the United Kingdomshould inform themselves of, and observe, any applicable requirements.Certain statements in this announcement are forward-looking statements. Suchstatements speak only as at the date of this announcement, are based on currentexpectations and beliefs and, by their nature, are subject to a number of knownand unknown risks and uncertainties that could cause actual results andperformance to differ materially from any expected future results orperformance expressed or implied by the forward-looking statement. Theinformation contained in this announcement is subject to change without noticeand none of the Company, UBS, JPMorgan Cazenove or Evolution assumes anyresponsibility or obligation to update publicly or review any of theforward-looking statements contained herein.No statement in this announcement is intended to be a profit forecast or toimply that the earnings of Ashtead for the current year or future years willnecessarily match or exceed the historical or published earnings of Ashtead orNationsRent.The Glossary contains the definitions of certain terms used in this Part 2.Glossary of terms"Acquisition" the proposed acquisition of the entire issued share capital of NationsRent; "Acquisition Agreement" the merger agreement between the Company, NationsRent Ventures Group, Inc. (a newly incorporated Delaware corporation and a wholly-owned indirect subsidiary of the Company) and NationsRent, dated 18 July 2006, in relation to the Acquisition; "Admission" admission of the New Ordinary Shares, nil paid, to the Official List and to trading on the main market for listed securities of the London Stock Exchange; "A-Plant" a brand name of Ashtead Plant Hire Company Limited (together with "Tool Hire Shops") through which the Group's operations in the United Kingdom are principally conducted; "Ashtead" or "the Ashtead Group plc, a company incorporated in England Company" and Wales with registered number 01807982, whose registered office is at King's Court, 41-51 Kingston Road, Leatherhead, Surrey, KT22 7AP, United Kingdom; "Ashtead Group" or "the the Company together with its subsidiaries and Group" subsidiary undertakings; "Board" the board of directors of the Company from time to time; "Circular" The circular issued by the Company in respect of the Acquisition, setting out the basis for the Rights Issue (amongst other things), together with the notice of the Extraordinary General Meeting; "Closing Price" the closing middle market quotation of an Existing Ordinary Share, as published in the Daily Official List; "CREST" the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CRESTCo Regulations operated by CRESTCo; "Debt Issue" The proposed issue of the New Senior Loan Notes; "Director" a director of the Company; "Enlarged Group" the Company together with its subsidiaries and subsidiary undertakings, as enlarged by the Acquisition; "Evolution" Evolution Securities Limited; "Existing Ordinary the ordinary shares of 10 pence each in the capital Shares" of the Company at the date of this document; "Extraordinary General the extraordinary general meeting of the Company to Meeting" be convened pursuant to the notice set out at the end of this document (including any adjournment thereof); "Fully Paid Rights" rights to acquire New Ordinary Shares, fully paid; "IFRS" International Financial Reporting Standards; "JPMorgan Cazenove" JPMorgan Cazenove Limited; "J.P. Morgan Securities" J.P. Morgan Securities Ltd.; "12% Loan Notes" the 12% second priority senior secured loan notes (ranking pari passu with the 8.625% Loan Notes) due 2014, issued by Ashtead Holdings plc; "8.625% Loan Notes" the 8.625% second priority senior secured loan notes (ranking pari passu with the 12% Loan Notes) due 2015, issued by Ashtead Holdings plc; "London Stock Exchange" London Stock Exchange plc or its successor(s); "Lowe's" Lowe's Companies, Inc.; "NationsRent" NationsRent Companies, Inc. and/or its subsidiaries and subsidiary undertakings (as the context requires); "NationsRent Loan Notes" the 9.5% senior secured notes due 2010 and the 9.5% senior unsecured notes due 2015 issued by NationsRent; "New Ordinary Shares" the ordinary shares of 10 pence each in the capital of the Company to be issued by the Company pursuant to the Rights Issue; "New Senior Loan Notes" the second priority senior secured loan notes (ranking pari passu with the 8.625% Loan Notes and the 12% Loan Notes) due 2016, to be issued by Ashtead Capital, Inc., a direct subsidiary of the Company; "New Senior Secured the first priority loan and security agreement to be Credit Facility" entered into after the date hereof between, inter alios, the Company (as representative and guarantor) and certain of its direct and indirect subsidiaries, Bank of America, N.A. (as agent) and certain financial institutions; "Nil Paid Rights" rights to acquire New Ordinary Shares, nil paid; "Official List" the official list of the UK Listing Authority; "Ordinary Shares" Existing Ordinary Shares and/or New Ordinary Shares, as the context requires; "Performance Related the deferred cash consideration of up to US$89 Consideration" million, in aggregate, to which the NationsRent Shareholders may become entitled under the terms of the Acquisition Agreement (dependent upon the performance of the share price of the Ordinary Shares by reference to an agreed price which has presently been set at 223.5 pence per share measured over a three year term, commencing on the date of the Acquisition Agreement); "Prospectus" the document dated 19 July 2006, comprising a prospectus relating to the Company for the purpose of the Rights Issue and the listing of the New Ordinary Shares on the London Stock Exchange (together with any supplements or amendments thereto); "Provisional Allotment the provisional allotment letter to be issued to Letter" Qualifying non-CREST Shareholders; "Qualifying CREST Qualifying Shareholders holding Ordinary Shares in Shareholders" uncertificated form; "Qualifying non-CREST Qualifying Shareholders holding Ordinary Shares in Shareholders" certificated form; "Qualifying Shareholders" holders of Existing Ordinary Shares on the register of members of the Company on the Record Date; "Record Date" the close of business in London on 2 August 2006; "Resolutions" the resolutions to be proposed at the Extraordinary General Meeting; "Restricted Shareholders" Shareholders with registered addresses in, or who are citizens, residents or nationals of, jurisdictions outside the United Kingdom; "Rights Issue" the offer by way of rights to Qualifying Shareholders to acquire New Ordinary Shares, on the terms and conditions set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter; "Rights Issue Price" 100 pence per New Ordinary Share; "NationsRent all the existing shareholders of NationsRent, who areShareholders" to sell all of their issued and outstanding shares of common stock and preferred stock, as the case may be, pursuant to the Acquisition Agreement (including, inter alios, Baupost Private Investments A-1, L.L.C., Baupost Private Investments C-1, L.L.C., Baupost Private Investments H-1, L.L.C. and Phoenix Rental Partners, LLC); "Senior Secured Credit the first priority loan and security agreement dated Facility" 12 November 2004 between, amongst others, the Company (as representative and guarantor) and certain of its direct and indirect subsidiaries, Bank of America, N.A. (as agent) and the financial institutions named therein, as amended on 14 November 2005; "Shareholders" holders of Ordinary Shares; "Sunbelt Rentals" or Sunbelt Rentals, Inc.; "Sunbelt" "UBS" or "UBS Investment UBS Limited; Bank" "Underwriters" J.P. Morgan Securities Ltd, UBS and Evolution; "Underwriting Agreement" the conditional underwriting agreement dated 19 July 2006 between the Company, JPMorgan Cazenove and the Underwriters; "United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland; "UK Listing Authority" the Financial Services Authority acting in its capacity as the competent authority for the purposes of FSMA; "United States" or "US" the United States of America, its territories and possessions, any state of the United States and the District of Columbia; "US$", "US dollars" or the lawful currency of the United States. "$" ENDASHTEAD GROUP PLCRelated Shares:
Ashtead Group