Consequently, Hirepool has been in discussion with its bankers and said it has “obtained agreement” from its lenders to amend financial covenants.
“The directors consider the revised financial covenants provide a sufficient level of headroom based on the latest forecast performance of the group ... and that further earnings and cash management measures can be put in place if required to address any performance below revised forecast levels to ensure financial covenants continue to be met,” a note in the accounts said.
Hirepool owes $231m in interest-bearing debts, $214m of which is long-term.
Senior lenders include Westpac, Aware Super, ASB Bank and Kiwibank.
Hirepool is New Zealand’s biggest equipment rental firm having operated for more than 60 years.
It has 70 branches nationwide with more than 30,000 products available for hire ranging from landscaping and earthmoving equipment to trade tools and machinery. It also supplies vehicle rental, continental events and portaloo hire.
Hirepool had been largely profitable since 2014 when private equity owner Next Capital tried to sell the business in a $262m initial public offering but had to call that off when institutional investors pushed back against the sale price.
Next remains Hirepool’s largest shareholder, with 59.7% of all shares.
In recent years Hirepool has issued share options to key management as part of an incentive scheme linked to a shareholder exit event.
Other Hirepool shareholders include Perpetual Corporate Trust and current chief executive Brian Stephen.
