Standard & Poor's Ratings Services said Tuesday it has placed its ratings for United Rentals Inc. on CreditWatch with negative implications after the equipment renter announced a $1.4 billion stock buyback program.
The new outlook includes the noninvestment-grade "BB-" long-term corporate credit rating, and ratings could be lowered by one notch, S&P said.
The Greenwich, Conn., company said Tuesday it will launch a modified "Dutch auction" tender offer to buy back up to 27.16 million of its shares for up to $679 million, which represents about 31.4 percent of its total outstanding stock.
Meanwhile, United Rentals said it has repurchased all of its outstanding series C and D preferred stock for about $679 million.
"In addition to adding a significant amount of debt on the balance sheet, this transaction comes at a time when conditions in end markets, especially for nonresidential construction, are expected to weaken, which adds to the risk," Standard & Poor's credit analyst John Sico said in a release.
The CreditWatch outlook also affects the United Rentals (North America) Inc. unit, S&P said.
Shares fell 15 cents to $21.94 in after-hours trading Tuesday.
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