United Rentals to buy back up to 27.16M shares

Equipment renter United Rentals Inc. 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.

The company plans to repurchase the shares _ which represent about 31.4 percent of its total outstanding stock _ for between $22 and $25 each, a premium of 13 percent to 28 percent over the stock's closing price of $19.50 on Monday.

United Rentals' shares surged $2.62, or 13.4 percent, to $22.12 in morning trading.

A modified "Dutch auction" offer allows shareholders to indicate how many shares and at what price within the company's specified range they wish to tender.

United Rentals also said it repurchased all its outstanding series C and series D preferred stock, most of which was held by Apollo Investment Fund IV LP and Apollo Overseas Partners IV LP, for about $679 million. The buyback prohibits former preferred shareholders from tendering any common stock they hold.

In addition, Leon Black and Michael Gross _ both company directors elected by the former preferred stockholders in relation to terms of the series C preferred shares _ have resigned.

United Rentals said that in connection with the share buybacks it began a new $1.25 billion asset-based loan facility and paid back about $464 million outstanding under a revolving credit facility and term loan. United Rentals issued the former preferred shareholders $425 million worth of 14 percent notes due 2014 as a partial payment for the preferred stock.

The company said it will fund the balance needed for the share buybacks, repayment of its old credit facility and term loan and related fees and expenses with existing cash and about $800 million of borrowings.

The company believes that, excluding a charge of about $235 million related to the preferred stock buyback, the common share repurchases will add to earnings per share.