Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-169832
Prospectus Supplement to Prospectus dated October 7, 2010
Up to $13,469,000
Fixed Rate Secured Notes Series UIC-14C, 15C, 16C, 17C, 18C, 19C, 20C, 21C, 22C and 23C
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AMERCO is offering up to $13,469,000 aggregate principal amount of its Fixed Rate Secured Notes Series UIC- 14C, 15C, 16C, 17C, 18C, 19C, 20C, 21C, 22C and 23C (the “notes”). The notes will be issued over a period of time and from time to time , in up to ten separate series, with each series having one or more separate sub-series bearing a unique interest rate and term as provided herein. As notes are offered, prospective investors shall have the opportunity to select the series and sub-series of notes for which such prospective investor is subscribing. The notes are fully amortizing. Principal and interest on the notes will be credited to each holder’s U-Haul Investors Club™ account in arrears every three months, beginning three months from the issue date, until the maturity date; provided, however, principal and interest payments with respect to notes issued under Series UIC-19C, 20C, 21C, 22C and 23C will be credited to such holder’s U-Haul Investors Club™ account in arrears three months fr om the issue date of the first subseries of notes issued to any investor under such respective Series, and shall be based on the actual number of days the holder is invested in such notes during such quarter.
In all cases subject to collateral substitut ions as provided herein, the notes issued under Series UIC-14C are secured by a first-priority lien on a pool of U-Haul AO Trailers manufactured in fiscal year 2000 (the “AO Trailers”); the notes issued under Series UIC-15C are secured by a first priority lien on a pool of AV Trailers manufactured between fiscal years 1991 and 2004 (the “AV Trailers”); the notes issued under Series UIC-16C are secured by a first priority lien on a pool of U-Haul RV Trailers manufactured between fiscal years 1993 and 2001 ( the “RV Trailers”); the notes issued under Series UIC-17C are secured by a first priority lien on a pool of U-Haul FS Trailers manufactured between fiscal years 2008 and 2009 (the “FS Trailers”); the notes issued under Series UIC-18C are secured by a firs t priority lien on a pool of U-Haul DC Trucks manufactured between fiscal years 2007 and 2008 (the “DC Trucks”); the notes issued under Series UIC-19C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Hay ward, located in Hayward, California (the “Hayward Property”); the notes issued under Series UIC-20C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Van Buren, located in Riverside, California (the “Van Buren Property”); the notes issued under Series UIC-21C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Tully Road, located in San Jose, California (the “Tully Road Property”); the notes issued under S eries UIC-22C are secured by a first priority lien on the real property and improvements thereon known as U-Haul at Spruce Hills, located in Bettendorf, Iowa (the “Spruce Hills Property”); and the notes issued under Series UIC-23C are secured by a first pr iority lien on the real property and improvements thereon known as U-Haul of Fry Blvd., located in Sierra Vista, Arizona (the “Fry Blvd. Property”)
For each $1,000 invested with us in the notes under Series UIC-14C, we will pledge to the trustee, for the benefit of the noteholders, one AO Trailer. For each $1,000 invested with us in the notes under Series UIC-15C, we will pledge to the trustee, for the benefit of the noteholders, one AV Trailer. For each $1,600 invested with us in the notes under Series UIC-16C, we will pledge to the trustee, for the benefit of the noteholders, one RV Trailer. For each $1,000 invested with us in the notes under Series
UIC-17C, we will pledge to the trustee, for the benefit of the noteholders, one FS Trailer. For each $ 5,300 invested with us in notes under Series UIC-18C, we will pledge to the trustee, for the benefit of the noteholders, one DC Truck . Once $100 has been invested with us in notes under S eries UIC-19C, 20C, 21C, 22C and 23C , we will grant a mortgage or dee d of trust lien, as appropriate in the respective jurisdiction, to the trustee, for the benefit of the noteholders, on the respective property sele cted by Company management to secure such series of notes .
With respect to each sub-series of the notes , the term and interest rate are as follows:
- All sub-series of notes with a 3-year term shall bear interest at 3.75% per annum
- All sub-series of notes with a 4-year term shall bear interest at 4.27% per annum
- All sub-series of notes with a 5-year term shall bear interest at 4.80% per annum
- All sub-series of notes with a 6-year term shall bear interest at 5.32% per annum
- All sub-series of notes with a 7-year term shall bear interest at 5.85% per annum
- All sub-series of notes with a 8-year term shall bear interest at 6.37% per annum
- All sub-series of notes with a 9-year term shall bear interest at 6.51% per annum
- All sub-series of notes secured by equipment with a 10-year term shall bear interest at 6.65% per annum
- All sub-series of notes secured by real property with a 10-year term shall bear interest at 6.60% per annum
- All sub-series of notes with a 15-year term shall bear interest at 6.90% per annum
- All sub-series of notes with a 20-year term shall bear interest at 7.20% per annum
- All sub-series of notes with a 25-year term shall bear interest at 7.50% per annum
Notes issued under Series UIC-14C shall be limited in aggregate principal amount to $138,000. Notes issued under Series UIC-15C shall be limited in aggregate principal am ount to $606,000. Notes issued under Series UIC-16C shall be limited in aggregate principal amount to $2,094,000; and notes issued under Series UIC-17C shall be limited in aggregate principal amount to $96,000. Notes issued under Series UIC-18C shall be l imited in aggregate principal amount to $4,505,000. Notes issued under Series UIC-19C shall be limited in aggregate principal amount to $1,120,000. Notes issued under Series UIC-20C shall be limited in aggregate principal amount to $1,250,000; and notes is sued under Series UIC-21C shall be limited in aggregate principal amount to $1,240,000. Notes issued under Series UIC-22C shall be limited in aggregate principal amount to $1,180,000; and notes issued under Series UIC-23C shall be limited in aggregate pri ncipal amount to $1,240,000.
No underwriter or other third-party has been engaged to facilitate the sale of the notes in this offering.
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The n otes are not savings accounts, deposit accounts or money market funds. The n otes are not guaranteed or insured by the Federal Deposit Insurance Corporation, the Federal Reserve or any other governmental agency .
See “Risk Factors” beginning on page S-10 of this prospectus supplement to read about important facts you should consider before buyi ng the notes.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any represent ation to the contrary is a criminal offense.
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Per Note |
Total |
Offering Price |
100% |
$13,469,000 |
Proceeds to AMERCO (before expenses) |
100% |
$13,469,000 |
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The notes are being issued in uncertificated book-entry form only, and will not be listed on any
securities exchange.
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Prospectus Supplement dated November 26, 2013 .
Prospectus Supplement |
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About T his Prospectus Supplement |
S-i |
Where You Can Find More Information |
S-i |
Note Regarding Forward-Looking Statements |
S-ii |
Prospectus Supplement Summary |
S-1 |
Summary Selected Consolidated Financial Information |
S- 8 |
Risk Factors |
S-10 |
Use of Proceeds |
S- 20 |
Ratio of Earnings to Fixed Charges |
S- 20 |
Description of Notes |
S- 20 |
U-Haul Investors Club |
S- 42 |
Material U. S. Federal Income Tax Consequences |
S- 44 |
Plan of Distribution |
S- 46 |
Legal Matters |
S- 46 |
Experts |
S- 46 |
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Prospectus |
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About This Prospectus |
1 |
About AMERCO |
3 |
Risk Factors |
4 |
Note Regarding Forward-Looking Statements |
4 |
Description of Securities |
5 |
Use of Proceeds |
5 |
Ratio of Earnings to Fixed Charges |
5 |
Plan of Distribution |
5 |
Legal Matters |
7 |
Experts |
7 |
Incorporation of Certain Information by Reference |
7 |
Where You Can Find More Information |
8 |
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the p rospectus s upplement, which contains the terms of this offering of n otes. The second part, the accompanying prospectus dated October 7 , 2010, gives more general information, some of which may not apply to this offering.
We have n ot authorized any one to provide any information or to make any representations other than those contai ned or incorporated by reference in this p rospectus s upplement, the accompanying p rospectus or in any free writing prospectuses that AMERCO may prep are. We take no responsibility for, and can provide no assurance as to the reliability of, any other inform ation that others may give you. This p rospectus s upplement and the accompanying p rospectus is an offer to invite subscriptions to purchase n otes, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this p rospectus s upplement and the accompanying p rospectus is current only as of the respective dates of such documents.
If there is any inconsistency between the information in this prospectus s upplement and the accompanying p rospectus, you should r ely on the information in this p rospectus s upplement.
WHERE YOU CAN FIND MORE INFORMATION
AMERCO is subject to the informational requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith file s reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”) . AMERCO’s filings are available to the public over the Internet at the SEC’s website at sec.gov , as well as at AMERCO’s website , amerco.com . You may a lso read and copy, at prescribed rates, any document AMERCO file s with the SEC at the Public Reference Room of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732 -0330 for further information on the SEC’s Public Reference Room.
In this prospectus supplement, as permitted by law, we “incorporate by reference” information from other documents that AMERCO files with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus supplement and should be read with the same care. When AMERCO updates the information contained in documents that have been incorporated by reference by making future filings with the SEC, the info rmation incorporated by reference in this prospectus supplement is considered to be automatically updated and superseded. In other words, in case of a conflict or inconsistency between information contained in this prospectus supplement and information inc orporated by reference into this prospectus supplement, you should rely on the information contained in the document that was filed later.
We incorporate by reference in this prospectus supplement the documents listed below:
• our Annual Report on Form 10 -K for the fiscal year ended March 31, 2013;
• those portions of our definitive proxy statement on Schedule 14A dated July 17, 2013, incorporated by reference in our Annual Report on Form 10-K for the year ended March 31, 2013;
• our Quarterly Reports on For m 10-Q for the fiscal quarters ended June 30, 2013, September 30, 2013 and December 31, 2012; and
• our current reports on Form 8-K filed on August 27, 2010, September 10, 2010, February 3, 2011, February 22, 2011, February 25, 2011, March 1, 2011, March 2, 2011, March 4, 2011, March 22, 2011, March 22, 2011, April 1, 2011, April 7, 2011, April 22, 2011, June 23, 2011, July 20, 2011, August 17, 2011, August 29, 2011, September 28, 2011, October 31, 2011,
December 13, 2011, December 28, 2011 (Form 8-K/A), Jan uary 18, 2012, February 2, 2012, February 14, 2012, March 26, 2012, May 15, 2012, June 12, 2012, August 21, 2012, two such filings on September 4, 2012, January 15, 2013, May 30, 2013, September 3, 2013, September 5, 2013 and October 4, 2013.
Unless stat ed otherwise in the applicable report, information furnished under Item 2.02 or 7.01 of our Current Reports on Form 8-K is not incorporated by reference.
Other than any documents expressly incorporated by reference, the information on our website and any other website that is referred to in this prospectus supplement is not part of this prospectus supplement.
You may obtain any of the documents incorporat ed by reference in this prospectus supplement from the SEC through the SEC’s website at the address provided above. You also may request a copy of any document incorporated by reference in this prospectus (excluding any exhibits to those documents, unless the exhibit is specifically incorporated by reference in this document), at no cost. Requests should be directed to AMERCO, Corporate Secretary, c/o U-Haul International, Inc., 2727 N. Central Avenue, Phoenix, AZ 85004, telephone (602) 263- 6788.
We own the registered trademarks or service marks “ U-Haul ®”, “ AMERCO® ” , “ In-Town® ” , “ eMove® ”, “ C.A.R.D.® ”, “ Safemove® ”, “ WebSelfStora g e ®”, “ webselfstorage.com (SM) ”, “ uhaul.com ® ”, “ Lowest Decks (SM) ”, “ Gentle Ride Suspension (SM) ”, “ Mom’s Attic ® ”, “ U-Box ®”, “ Moving Help ®”, “ Safestor® ” , “U-Haul Investors Club™”, “uhaulinvestorsclub.com (SM) ”, “U-Note™”, among others, for use in connection with the moving and storage business. This prospectus supplement also includes product name and other trade names and servic e marks owned by AMERCO or its affiliates .
NOTE REGARDING FORWARD - LOOKING STATEMENTS
This prospectus supplement contains “forward-looking statements” regarding future events and our future results of operations. AMERCO may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. We believe such forward-looking statements are within the meaning of the safe -harbor provisions of Section 27A of the Securities Act of 1 933, as amended (the “Securities Act”) , and Section 21E of the Exchange Act. Such statements may include, but are not limited to, projections of revenues, earnings or loss, estimates of capital expenditures, plans for future operations, products or servic es, financing needs and plans; our perceptions of our legal positions and anticipated outcomes of government investigations and pending litigation against us, liquidity, goals and strategies, plans for new business, storage occupancy, growth rate assumptio ns, pricing, costs, and access to capital and leasing markets as well as assumptions relating to the foregoing. The words “believe,” “expect,” “anticipate,” “estimate,” “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could significantly affect resu lts include, without limitation: the risks enumerated in the “Risk Factors” section beginning on page S-10 of this prospectus supplement , as well as the following: our ability to op erate pursuant to the terms of our credit facilities; our ability to maintain contracts that are critical to our opera tions; the costs and availability of financing; our ability to execute our business plan; our ability to attract, motivate and retain employees; general economic conditions; fluctuations in our costs to maintain and update our fleet and facilities; our abi lity to refinance our debt; changes in government regulations, particularly environmental regulations; our credit ratings; the availability of credit; changes in demand for our products; changes in the general domestic economy; the degree and nature of our competition; the resolution of pending litigation against us ; changes in accounting standards and other factors described in this report or the other documents AMERCO file s with the SEC. The above factors, as well as other statements in this prospectus supplement or in the incorporated documents , could contribute to or cause such risks or uncertainties, or could cause our performance to fluctuate dramatically. Consequently, forward-looking statements should not be regarded
as representations or warranti es by us that such matters will be realized and readers are cautioned not to place undue reliance on them . We assume no obliga tion to update or revise any forward-looking statements, whether in response to new information, unforeseen events, changed circu mstances or otherwise.
You should carefully consider the trends, risks and uncertainties described in the “Risk Factors” section beginning on page S-10 of this prospectus supplement and other information in this prospectus and reports filed with the SEC before making any investmen t decision with respect to the n otes. If any of the se trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected. All forward-looki ng statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus supplement and may not contain all the information that you need to consider in making your investment decision with respect to the notes. You should carefully read this entir e prospectus supplement, and the accompanying prospectus, as well as the information incorporated by reference herein, before deciding whether to invest. You should pay special attention to the “Risk Factors” section beginning on page S-10 of this prospec tus supplement to determine whether an investment in the notes is appropriate for you.
About AMERCO and U-Haul
AMERCO, a Nevada corporation (“AMERCO”), is the holding company for U-Haul International, Inc. (“U-Haul”), Amerco Real Estate Company (“Real Es tate”), Repwest Insurance Company (“Repwest”) and Oxford Life Insurance Company (“Oxford”). Unless otherwise indicated or unless the context requires otherwise, all references in this p rospectus s upplement to “we”, “us”, “our” or the “Company” me an AMERCO and its subsidiaries; and all references in this prospectus supplement to “AMERCO” mean AMERCO only, excluding its subsidiaries.
Through U-Haul, we believe that we are North America’s largest and most comprehensive “do-it-yourse lf” moving and storage operator. Our primary focus is to provide our customers with a wide selection of moving rental equipment, convenient self-storage rental facilities and related moving and self-storage products and services. We are able to expand our distribution and impr ove customer service by increasing the amount of moving equipment and storage rooms and portable storage boxes available for rent, expanding the number of independent dealers in our network and expanding and taking advantage of our growing eMove ® capabilit ies, an online marketplace that connects consumers to independent Moving Help ™ service providers and independent self-storage facilities.
About AMERCO and U-Haul
As of March 31, 2013, the U-Haul system included approximately 1,490 owned and managed retai l moving centers and approximately 16,400 independent dealer locations. U-Haul is a leader in supplying products and services to help people move and store their h ousehold and commercial goods.
Each of the owned and managed retail moving centers and the i ndependent d ealer locations rent distinctive orange and white U-Haul trucks and trailers. The owned and managed retail moving centers typically also offer self-storage rooms to customers, and U-Haul has thousands of independent storage affiliates. M any of the locations also sell U-Haul brand boxes, tape and other moving and self-storage products and services to moving and storage customers, and U-Haul sells similar products and services to such customers through its website , uhaul.com .
In addition, c ustomers are offered moving and storage protection packages such as SafeMove™ and SafeTow™, providing moving and towing customers with a collision damage waiver, cargo protection and medical and life coverage. For customers who desire additional coverage over and above the standard SafeMove™ protection, U-Haul also offers its SafeMove Plus ™ product. This package provides the rental customer with a layer of primary liability protection. T he current provider of SafeMove™ and SafeMove Plus ™ coverage is Repwes t .
We believe that U-Haul is the most convenient supplier of products and services addressing the needs of the United States and Canadian “do-it-yourself” moving and storage market. The U-Haul s ystem’s broad geographic coverage throughout the United St ates and Canada and the extensive selection of U-Haul brand moving equipment rentals, self-storage rooms and portable storage boxes and related moving and storage products and services provide U-Haul customers with convenient “one-stop” shopping. As of March 31, 201 3 , the U-Haul rental fleet consisted of approximately 112,000 trucks and vans, 90,000 trailers and 34,000 tow devices.
Prior and subsequent to this offering of notes, AMERCO is issuing additional series of collateralized notes through the U- Haul Investors Club. Additionally, AMERCO intends to offer further series of notes, in the future, through the U-Haul Investors Club.
AMERCO is a publicly traded Nevada corporation. AMERCO’s common stock is listed on the NASDAQ Global Selec t Market under the symbol “UHAL ” . AMERCO’s principal executive offices are located at 1325 Airmotive Way, Suite 100, Reno, Nevada 89502-3239. Its website address is amerco.com .
You can get more information regarding our business by reading our A nnual R eport on Form 10-K for the fiscal year ended March 31, 2013 and the other reports and information that AMERCO file s with the SEC. See “Wher e You Can Find More Information” on page S- i of this prospectus supplement.
The Offering
The following summary describes the principal terms of the notes and the U-Haul Investors Club. Certain of the terms and conditions below are subject to important limitations and exceptions. For a more det ailed description of the terms and conditions of the notes and the U-Haul Investors Club, see “ Description of the Notes ” beginning on page S-20 of this prospectus supplement and “U-Haul Investors Club” beginning on page S-42 of this prospectus supplement.
Issuer |
AMERCO. |
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Notes Offered; Notes Issued in Sub-Series |
Up to $13,469,000 aggregate principal amount of Fixed Rate Secured Notes Series UIC- 14C, 15C, 16C, 17C, 18C, 19C, 20C, 21C, 22C and 23C (the “notes”). The notes will be issued from time to time in up to ten separate series, with each series having one or more separate sub-series bearing a unique interest rate and term as provided herein. As notes are offered, prospective investors shall have the opportunity to select the series and sub-series of notes for which such prospective investor is subscribing.
Notes issued under Series UIC-14C shall be limited in aggregate principal amount to $138,000. Notes issued under Series UIC-15C shall be limited in aggregate principal amount to $606,000. Notes issued under Series UIC-16C shall be limited in aggregate principal amount to $2,094,000; and notes issued under Series UIC-17C shall be limited in aggregate principal amount to $96,000. Notes is sued under Series UIC-18C shall be limited in aggregate principal amount to $4,505,000. Notes issued under Series UIC-19C shall be limited in aggregate principal amount to $1,120,000. Notes issued under Series UIC-20C shall be limited in aggregate principa l amount to $1,250,000; and notes issued under Series UIC-21C shall be limited in aggregate principal amount to $1,240,000. Notes issued under Series UIC-22C shall be limited in aggregate principal amount to $1,180,000; and notes issued under Series UIC-2 3C shall be limited in aggregate principal amount to $1,240,000.
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Issue Date |
Notes will be issued within five business day following our receipt and acceptance of investor subscriptions with respect to any sub-series of the notes in the aggregate pr incipal amount of $100 for such sub-series, or at such other time as AMERCO determines in its sole discretion. Interest on issued notes shall commence to accrue on the issue date. |
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Sub-Series Interest Rate and term |
The respective sub-series of notes hereunder shall bear the following interest rate and term:
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the notes issued under Series UIC-16C are secured by a first priority lien on a pool of U-Haul RV Trailers manufactured between fiscal years 1993 and 2001 (the “RV Trailers”). For each $ 1,600 invested with us in the notes under Series UIC- 16C , we will ple dge to the trustee, for the benefit of the noteholders, one RV Trailer;
the notes issued under Series UIC-17C are secured by a first priority lien on a pool of U-Haul FS Trailers manufactured between fiscal years 2008 and 2009 (the “FS Trailers”). For e ach $ 1,000 invested with us in the notes under Series UIC- 17C , we will pledge to the trustee, for the benefit of the noteholders, one FS Trailer;
The notes issued under Series UIC-18C are secured by a first priority lien on a pool of U-Haul DC Trucks manu factured between fiscal years 2007 and 2008 (the “DC Trucks”). For each $ 5,300 invested with us in the notes under Series UIC- 18C , we will pledge to the trustee, for the benefit of the noteholders, one DC Truck;
The notes issued under Series UIC-19C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Hayward, located in Hayward, California (the “Hayward Property”). Once $100 has been invested with us in notes under Series UIC-19C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Hayward Property;
the notes issued under Series UIC-20C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Van Buren, located in Riverside, California (the “Van Buren Property”). Once $100 has been invested with us in note s under Series UIC-20C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Van Buren Property;
the notes issued under Series UIC-21C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Tully Road, located in San Jose, California (the “Tully Road Property”). Once $100 has been invested with us in notes under Series UIC-21C , we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Tully Road Property;
the notes issued under Series UIC-22C are secur ed by a first priority lien on the real property and improvements thereon known as U-Haul at Spruce Hills, located in Bettendorf, Iowa (the “Spruce Hills Property”). Once $100 has been invested with us in notes under Series UIC-22C, we will grant to the t rustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Spruce hills Property;
the notes issued under Series UIC-23C are secured by a first priori ty lien on the real property and improvements thereon known as U-Haul of Fry Blvd., located in Sierra Vista, Arizona (the “Fry Blvd. Property”) Once $100 has been invested with us in notes under Series UIC-23C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Fry Blvd. Property; and
together with the base indenture, the indent ure supplement, and any other instruments and documents executed and delivered pursuant to the foregoing documents, as the same may be amended, supplemented or otherwise modified from time to time, the “financing documents”) among AMERCO, the trustee and O wner. The financing documents contain certain covenants for the benefit of the holders. These covenants consist of:
• maintenance of a first-priority lien on the Collateral; and
• prohibition of additional liens on the Collateral. |
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Optional Redemption |
Under the terms of the financing documents, the notes or any sub-series thereof may be redeemed by AMERCO in its sole discretion at any time, in whole or in part on a pro rata basis, without penalty, premium or fee, at a price equal to 100% of the principa l amount then outstanding, plus accrued and unpaid interest, if any, through the date of redemption. |
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Use of Proceeds |
AMERCO intends to use the net proceeds from this offering to reimburse its subsidiaries and affiliates for the cost of production of the Collateral and for other general corporate purposes. |
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Listing |
The notes will not be listed on any national securities exchange. |
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Rating |
The notes will not be rated by any statistical rating organization. |
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U-Haul Investors Club |
Through this offering, AMERCO is extending to investors the opportunity to subscribe to purchase notes. In order to subscribe to purchase notes, prospective investors must become a member of the U-Haul Investors Club and comply with the instructions available on our w ebsite at uhaulinvestorsclub.com . Among other things, this will require the prospective investor to:
• complete a membership application;
• complete a note subscription offer;
• set up a U-Haul Investors Club online account through which investors will be able to transfer funds from their linked U.S. bank account to pay for the notes ; and
• receive and deliver in electronic format any and all documents, statements and communications related to the offering, the notes and the U-Haul Investors Club.
AMERCO reserves the right to reject, in whole or in part, in its sole discretion, any subscription to purchase notes. Before AMERCO closes the offering, investors may withdraw their subscription to purchase note s.
AMERCO intends to offer additional securities through the U-Haul Investors Club simultaneously with this offering and in the future. |
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Form of Notes |
The notes are being issued in uncertificated book-entry form only, through the U-Haul Investors Club website. |
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Transferability |
The notes are not transferable except between members of the U-Haul Investors Club through privately negotiated transactions relating exclusively to non-qualified accounts. The notes will not be listed on any securities exchange, and there is no anticipated public market for the notes. Therefore, investors must be prepared to hold their notes until the maturity date. |
Servicer |
The notes will be serviced exclusively by U -Haul International, Inc., a subsidiary of AMERCO, or its designee. |
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Risk Factors |
An investment in the notes involves substantial risk. See “Risk Factors” beginning on page S- 10 for a description of certain risks you should consider before investing i n the notes.
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SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial information for AMERCO and its consolidated subsidiaries as of and for the years ended March 31, 2013, 2012, 2011, 2010 and 2009 and for the six-months ended September 30, 2013 and 2012. You should read this summary of selected consolidated financial information together with Management’s Discussion and Analysis of Financial Condition and Results of Operations an d the consolidated financial statements and related notes in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013 and our Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2013, September 30, 2013 and December 31, 201 2 , which are incorporated by reference herein.
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Six Months Ended September 30, |
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2013 |
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2012 |
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(Unaudited) |
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(In thousands, except share and per share data) |
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Summary of Operations: |
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Self-moving equipment rentals |
$ |
1,120,580 |
$ |
1,005,355 |
Self-storage revenues |
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87,671 |
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72,714 |
Self-moving and self-storage products and service sales |
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136,070 |
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128,908 |
Property management fees |
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10,453 |
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9,762 |
Life insurance premiums |
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80,510 |
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94,093 |
Property and casualty insurance premiums |
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18,833 |
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16,190 |
Net investment and interest income |
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38,949 |
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30,370 |
Other revenue |
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90,256 |
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54,401 |
Total revenues |
|
1,583,322 |
|
1,4 11 ,7 9 3 |
|
|
|
|
|
Operating expenses |
|
660,041 |
|
593,607 |
Commission expenses |
|
147,005 |
|
129,671 |
Cost of sales |
|
70,102 |
|
63,139 |
Benefits and losses |
|
80,625 |
|
9 6 , 810 |
Amortization of deferred policy acquisition costs |
|
9,740 |
|
5,899 |
Lease expense |
|
52,825 |
|
62,387 |
Depreciation, net of (gains) losses on disposals of (($20,876) and ($13,048), respectively) |
|
120,642 |
|
115,079 |
Total costs and expenses |
|
1,140,980 |
|
1,06 6 ,5 9 2 |
|
|
|
|
|
Earnings from operations |
|
442,342 |
|
345,201 |
Interest expense |
|
(46,446) |
|
(45,604) |
Pretax earnings |
|
395,896 |
|
299,597 |
Income tax expense |
|
(144,937) |
|
(109,608) |
Earnings available to common shareholders |
$ |
250,959 |
$ |
189,989 |
Basic and diluted earnings per common share |
$ |
12.84 |
$ |
9.74 |
Weighted average common shares outstanding: Basic and diluted |
|
19,550,128 |
|
19,507,456 |
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
Property, plant and equipment, net |
$ |
3,033,204 |
$ |
2,571,575 |
Total assets |
|
5,776,345 |
|
5,136,964 |
Notes, loans and leases payable |
|
1,775,119 |
|
1,556,891 |
Stockholders' equity |
|
1,461,819 |
|
1,235,921 |
|
|
|
|
|
RISK FACTORS
An investment in the notes involves substantial risk. You should carefully consider the risks described below and the risk factors included in our Annual Report on Form 10-K for the year ended March 31, 2013, as well as the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, before making an investment decision. Our business, financial condition or results of operations cou ld be materially adversely affected by any of these risks. The market value of the notes, if any market develops or exists, could decline due to any of these risks, and you may lose all or part of your investment. This prospectus supplement also contains f orward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewh ere in this prospectus supplement and the accompanying prospectus.
Risk Relating to Our Business
We operate in a highly competitive industry.
The truck rental industry is highly competitive and includes a number of significant national, regional and local competitors. We believe the principal competitive factors in this industry are convenience of rental locations, availability of quality rental moving equipment, breadth of essential services and products and total cost. Financial results for the Comp any can be adversely impacted by aggressive pricing from our competitors. Some of our competitors may have greater financial resources than we have. We cannot assure you that we will be able to maintain existing rental prices or implement price increases. Moreover, if our competitors reduce prices and we are not able or willing to do so as well, we may lose rental volume, which would likely have a materially adverse affect on our results of operations.
The self-storage industry is large and highly fragmented. We believe the principal competitive factors in this industry are convenience of storage rental locations, cleanliness, security and price. Competition in the market areas in which we operate is significant and affects the occupancy levels, ren tal rates and operating expenses of our facilities. Competition might cause us to experience a decrease in occupancy levels, limit our ability to raise rental rates or require us to offer discounted rates that would have a material affect on results of ope rations and financial condition. Entry into the self-storage business may be accomplished through the acquisition of existing facilities by persons or institutions with the required initial capital. Development of new self-storage facilities is more diffic ult however, due to land use, zoning, environmental and other regulatory requirements. The self-storage industry has in the past experienced overbuilding in response to perceived increases in demand. We cannot assure you that we will be able to successfull y compete in existing markets or expand into new markets.
As of March 31, 2013, we had total debt outstanding of $1,661.8 million and total undiscounted lease commitments of $236.6 million. Although we believe, based on existing i nformation, that additional leverage can be supported by our operations and revenues, our existing debt could impact us in the following ways among other considerations:
• require us to allocate a considerable portion of cash flows from operations to debt s ervice payments;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• limit our ability to obtain additional financing; and
• place us at a disadvantage compared to our competitors who may have less debt.
Our ability to make payments on our debt depends upon our ability to maintain and improve our operating performance and generate cash flow. To some extent, this is subject to prevailing economic and competitive conditions and to certain financia l, business and other factors, some of which are beyond our control. If we are unable to generate sufficient cash flow from operations to service our debt and meet our other cash needs, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. If we must sell our assets, it may negatively affect our ability to generate revenue. In addition, we may incur additional debt that would exacerbate the risks associated with our indeb tedness.
Economic conditions, including those related to the credit markets, may adversely affect our industry, business and results of operations.
The United States economy has undergone a period of slowdown and unprecedented volatility, which resulted in a recession. It is difficult to gauge the pace of the economic recovery or if such recovery may stall or reverse course in the future. Consumer and commercial spending is generally affected by the health of the economy, which places some of the factors affecting the success of our business beyond our control. Our industries, although not as traditionally cyclical as some, could experience significant downturns in connection with or in anticipation of, declines, or sustained lack of recovery, in general e conomic conditions. In times of declining consumer spending we may be driven, along with our competitors, to reduce pricing which would have a negative impact on gross profit. We cannot predict if another downturn, or sustained lack of recovery, in the ec onomy may occur which could result in reduced revenues and working capital.
Should credit markets in the United States tighten or if interest rates increase significantly we may not be able to refinance existing debt or find additional financing on favorab le terms, if at all. If one or more of the financial institutions that support our existing credit facilities fails, we may not be able to find a replacement, which would negatively impact our ability to borrow under credit facilities. While we believe t hat we have adequate sources of liquidity to meet our anticipated requirement for working capital, debt servicing and capital expenditures through fiscal 2014, if our operating results were to worsen significantly and our cash flows or capital resources pr ove inadequate, or if interest rates increase significantly, we could face liquidity problems that could materially and adversely affect our results of operations and financial condition.
Our fleet rotation program can be adversely affected by financial ma rket conditions.
To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Our rental truck fleet rotation program is funded internally through operations and externally from debt and lease financing. Our ability to fund our r outine fleet rotation program could be adversely affected if financial market conditions limit the general availability of external financing. This could lead us to operate trucks longer than initially planned and/or reducing the size of the fleet, either of which could materially and negatively affect our results of operations.
Another important aspect of our fleet rotation program is the sale of used rental equipment. The sale of used equipment provides us with funds that can be used to purchase new equip ment. Conditions may arise that could lead to the decrease in resale values for our used equipment. This could have a material adverse effect on our financial results, which would result in losses on the sale of equipment and decreases in cash flows from t he sales of equipment.
We obtain our rental trucks from a limited number of manufacturers.
Over the last ten years, we purchased the majority of our rental trucks from Ford Motor Company and General Motors Corporation. Our fleet can be negatively affected by issues our manufacturers may face within their own supply chain. Also, it is possible that our suppliers may face financial difficulties or organizational changes which could negatively impact their ability to accept future orders or fulfill existing or ders. The cost of acquiring new rental trucks could increase materially and negatively affect our ability to rotate new equipment into the fleet. Although we believe that we could contract with alternative manufacturers for our rental trucks, we cannot gua rantee or predict how long that would take. In addition, termination of our existing relationship with these suppliers could have a material adverse effect on our business, financial condition or results of operations for an indefinite period of time.
We m ay not be able to effectively hedge against interest rate changes in our variable debt.
In certain instances, the Company seeks to manage its exposure to interest rate risk through the use of hedging instruments including interest rate swap agreements and forward swaps. We enter into these arrangements with counterparties that are significant financial institutions with whom we generally have other financial arrangements. We are exposed to credit risk should these counterparties not be able to perform on th eir obligations. Additionally, a failure on our part to effectively hedge against interest rate changes may adversely affect our financial condition and results of operations. We are required to record these financial instruments at their fair value. Chang es in interest rates can significantly impact the valuation of the instruments resulting in non-cash changes to our financial position.
We are controlled by a small contingent of stockholders.
As of March 31, 2013, Edward J. Shoen, President and Chairman o f the Board of AMERCO, James P. Shoen, a director of AMERCO, and Mark V. Shoen collectively are the owners of 9,139,018 shares (approximately 46.6%) of the outstanding common stock of AMERCO. In addition, Edward J. Shoen, James P. Shoen, Mark V. Shoen, Ros marie T. Donovan (Trustee of the Shoen Irrevocable Trusts) and David L. Holmes (Successor Trustee of the Irrevocable “C” Trusts) (collectively, the “Reporting Persons”) are parties to a stockholder agreement dated June 30, 2006 in which the Reporting Perso ns agreed to vote as one as provided in this agreement (the “Stockholder Agreement”). Pursuant to the Stockholder Agreement, a collective 10,897,741 shares (approximately 55.6%) of the Company’s common stock are voted at the direction of a majority in int erest of the Reporting Persons. For additional information, refer to the Schedule 13Ds filed on July 13, 2006, March 9, 2007, June 26, 2009 and on May 1, 2013 with the SEC. In addition, 1,450,205 shares (approximately 7.4%) of the outstanding common stock of AMERCO are held by our Employee Savings and Employee Stock Ownership Trust.
As a result of their stock ownership and the Stockholder Agreement, Edward J. Shoen, Mark V. Shoen and James P. Shoen are in a position to significantly influence our business affairs and policies of the Company, including the approval of significant transactions, the election of the members of our Board of Directors (the “Board”) and other matters submitted to our stockholders. There can be no assurance that the interests of th e Reporting Persons will not conflict with the interests of our other stockholders. Furthermore, as a result of the Reporting Persons’ voting power, the Company is a “controlled company” as defined in the Nasdaq Listing Rules and, therefore, may avail itse lf of certain exemptions under Nasdaq rules, including exemptions from the rules that require us to have (i) a majority of independent directors on the Board; (ii) independent director oversight of executive officer compensation; and (iii) independent dire ctor oversight of director nominations. Of the above available exemptions, we currently avail ourself of the exemption from independent director oversight of executive officer compensation, other than with respect to the compensation of the President of A MERCO.
We bear certain risks related to our notes receivable from SAC Holdings.
At March 31, 2013, we held $72.4 million of notes receivable from SAC Holdings, which consist of junior unsecured notes. SAC Holdings is highly leveraged with significant indeb tedness to others. If SAC Holdings is unable to meet its obligations to its senior lenders, it could trigger a default of its obligations to us. In such an event of default, we could suffer a loss to the extent the value of the underlying collateral of SAC Holdings is inadequate to repay SAC Holdings senior lenders and our junior unsecured notes. We cannot assure you that SAC Holdings will not default on its loans to its senior lenders or that the value of SAC Holdings assets upon liquidation would be suff icient to repay us in full.
Our quarterly results of operations fluctuate due to seasonality and other factors associated with our industry.
Our business is seasonal and our results of operations and cash flows fluctuate significantly from quarter to quar ter. Historically, revenues have been stronger in the first and second fiscal quarters due to the overall increase in moving activity during the spring and summer months. The fourth fiscal quarter is generally weakest, due to a greater potential for advers e weather conditions and other factors that are not necessarily seasonal. As a result, our operating results for any given quarterly period are not necessarily indicative of operating results for an entire year.
Our operations subject us to numerous enviro nmental regulations and the possibility that environmental liability in the future could adversely affect our operations.
Compliance with environmental requirements of federal, state and local governments significantly affects our business. Among other thi ngs, these requirements regulate the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. Under environmental laws or common law principles, we can be held liable for hazardous substances that are fou nd on real property we have owned or operated. We are aware of issues regarding hazardous substances on some of our real estate and we have put in place a remediation plan at each site where we believe such a plan is necessary. See Note 19, Contingencies o f the Notes to Consolidated Financial Statements. We regularly make capital and operating expenditures to stay in compliance with environmental laws. In particular, we have managed a testing and removal program since 1988 for our underground storage tanks. Despite these compliance efforts, we believe that risk of environmental liability is part of the nature of our business.
Environmental laws and regulations are complex, change frequently and could become more stringent in the future. We cannot assure yo u that future compliance with these regulations, future environmental liabilities, the cost of defending environmental claims, conducting any environmental remediation or generally resolving liabilities caused by us or related third parties will not have a material adverse effect on our business, financial condition or results of operations.
We operate in a highly regulated industry and changes in existing regulations or violations of existing or future regulations could have a material adverse effect on ou r operations and profitability.
Our truck and trailer rental business is subject to regulation by various federal, state and foreign governmental entities. Specifically, the U.S. Department of Transportation and various state and federal agencies exercise broad powers over our motor carrier operations, safety, and the generation, handling, storage, treatment and disposal of waste materials. In addition, our storage business is also subject to federal, state and local laws and regulations relating to environ mental protection and human health and safety. The failure to adhere to these laws and regulations may adversely affect our ability to sell or rent such property or to use the property as collateral for future borrowings. Compliance with changing regulatio ns could substantially impair real property and equipment productivity and increase our costs. In addition, the Federal government may institute some regulation that limits carbon emissions by setting a maximum amount of carbon entities can emit without pe nalty. This would likely affect everyone who uses fossil fuels and would disproportionately affect users in the highway transportation industries. While there are too many variables at this time to assess the impact of the various proposed federal and stat e regulations that could affect carbon emissions, many experts believe these proposed rules could significantly affect the way companies operate in their industries.
Our ability to attract and retain qualified employees, and changes in laws or other labor issues could adversely affect our business and our results of operations.
The success of our business is predicated upon our workforce providing excellent customer service. Our ability to attract and retain this employee base may be inhibited due to prevai ling wage rates, benefit costs and the adoption of new or revised employment and labor laws and regulations. Should this occur we may be unable to provide service in certain areas or we may experience significantly increased costs of labor that could adver sely affect our results of operations and financial condition.
We are highly dependent upon our automated systems and the Internet for managing our business.
Our information systems are largely Internet-based, including our point-of-sale reservation system and telephone systems. While our reliance on this technology lowers our cost of providing service and expands our abilities to serve, it exposes us to various risks including natural and man-made disasters. We have put into place backup systems and altern ative procedures to mitigate this risk. However, disruptions or breaches in any portion of these systems could adversely affect our results of operations and financial condition.
A.M. Best financial strength ratings are crucial to our life insurance business.
In May 2013, A.M. Best affirmed the financial strength rating for Oxford, Christian Fidelity Life Insurance Company, North American Insurance Company and Dallas General Life Insurance Company of B++ and the outlook remains positive. Financial str ength ratings are important external factors that can affect the success of Oxford ’s business plans. Accordingly, if Oxford ’s ratings, relative to its competitors, are not maintained or do not continue to improve, Oxford may not be able to retain and attra ct business as currently planned, which could adversely affect our results of operations and financial condition.
We may incur losses due to our reinsurers’ or counterparties’ failure to perform under existing contracts or we may be unable to secure suffi cient reinsurance or hedging protection in the future.
We use reinsurance and derivative contracts to mitigate our risk of loss in various circumstances; primarily at Repwest and for our Moving and Storage operating segment. These agreements do not release us from our primary obligations and therefore we remain ultimately responsible for these potential costs. We cannot provide assurance that these reinsurers or counterparties will fulfill their obligations. Their inability or unwillingness to make payments to us under the terms of the contracts may have a material adverse effect on our financial condition and results of operation.
At December 31, 2012, Repwest reported $1.7 million of reinsurance recoverables, net of allowances and $176.4 million of reserve s and liabilities ceded to reinsurers. Of this, Repwest’s largest exposure to a single reinsurer was $72.1 million.
Risks Related to our Indebtedness and an Investment in the Notes
The notes are not transferable except between members of the U-Haul Inves tors Club through pr ivately negotiated transactions. In addition, t he notes will not be listed on any securities exchange, and there is no anticipated public market for the notes. Therefore, you must be prepared to hold the notes until the maturity date.
The notes are not transferable except between members of the U-Haul Investors Club through privately negotiated transactions relating exclusively to non-qualified (non-retirement/non IRA) accounts, as to which neither AMERCO, the servicer, the trustee, nor any of their respective affiliates will have any involvement. In addition, the notes will not be listed on any securities exchange, there is no anticipated public market for the notes, and it is unlikely that a secondary “over-the-counter” market for the notes will develop between bond dealers or bond trading desks at investment houses. Therefore, you must be prepared to hol d your n otes until the maturity date. Transfers of the n otes held in q ualified a ccounts are not permissible, other than transfers constituting Required Minimum Distributions (RMD). The notes are not a liquid investment. If you believe you will need acces s to the funds you are otherwise planning on
investing in notes prior to the stated maturity date of such notes, then you should not invest in the notes at this time.
Even if you are able to privately negotiate the sale of your notes to another U-Haul Inv estors Club member, you may not be able to find a purchaser for the notes who is willing to pay you an amount equal to the principal amount outstanding on the notes, or at all.
Even if you are able to privately negotiate the sale of your notes to another U-Haul Investors Club member, the price of the notes in such market may be lower than the price you pay to purchase the notes from us. If you purchase notes in this offering, you will pay a price that was independently determined by us, and therefore neit her established in a competitive market nor negotiated with any representative acting in your best interest, including the trustee. This price may not be indicative of prices that could prevail, if any, after this offering. The ability to sell your notes to another U-Haul Investors Club member through a privately negotiated transaction does not guarantee that you will be able to find a purchaser willing to buy the notes for an amount equal to the principal amount outstanding on the notes, or at all. In a ddition, our operating performance, the status and condition of the Collateral, general market and economic conditions and other factors could impair the value of your notes and your ability to sell them in a privately negotiated transaction to another U-H aul Investors Club member , if such opportunity were to develop.
Our currently outstanding indebtedness , and additional indebtedness that we are permitted to incur, could prevent AMERCO from fulfilling its obligations under the notes .
In addition to our currently outstanding indebtedness and the indebtedness AMERCO will incur pursuant to the offering of the notes, we are able to incur substantial additional indebtedness, including secured indebtedness, in the future. Any additional ind ebtedness we may incur could have important consequences for the holders of the notes, and could limit AMERCO’s ability to satisfy its obligations to pay principal and interest with respect to the notes.
The value of the Collateral may not be sufficient to satisfy AMERCO’s obligations under the notes .
AMERCO’s o bligations under the notes are secured by a first- priority lien on the Collateral in favor of the trustee (or its agent or nominee), for the benefit of the holders of the notes. By its nature, some or all of the Collateral may be illiquid , is subject to attrition, including casualty, loss or theft, and, to the extent the Collateral includes real property, may be subject to condemnation. The Collateral may have no readily ascertainable market value , and the income generated from the Collateral is not part of the Collateral. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, no assurance can be given that the proceeds from any sale or liquidation of the Collateral will be su fficient to pay AMERCO’s obligations under the notes, in full or at all. There also can be no assurance that the Collateral will be saleable and, even if saleable, the timing of its liquidation would be uncertain. Accordingly, there may not be sufficient C ollateral to pay all or any of the amounts due on the notes. Any claim for the difference between the amount, if any, realized by holders of the notes from the sale of the Collateral and the obligations under the notes will rank equally in right of payment with all of AMERCO’s other unsecured unsubordinated indebtedness and other obligations, including trade payables. The trustee’s security interest and ability to foreclose could also be limited by the need to meet certain requirements of state and federal law . If these requirements cannot be met , the security interests may be invalid and the holders of the notes will not be entitled to the Collateral or any recovery with respect ther eto. These requirements may limit the number of potential bidders for the Collateral in any foreclosure and may delay any sale, which may have an adverse effect on the sale price of the Collateral. Therefore, the practical value of r ealizing on the Collateral may be limited.
AMERCO has the right, in its sole discretion, to voluntarily make or cause to be made an unlimited number of Collateral substitutions, and to determine the value of the Replacement Collateral and the Released Collateral.
AMERCO has the right, in its sole discretion, to voluntarily make or cause to be mad e an unlimited number of Collateral substitutions and to determine the value of the Replacement Collateral and the Released Collateral. AMERCO is not required to obtain the consent of the holders of the notes, the trustee or any third party to make a Coll ateral substitution, and neither the trustee nor any other third party will review or evaluate AMERCO’s determination of the value of the Replacement Collateral and the Released Collateral on your behalf. Any such determination by AMERCO will be final and binding on the trustee and the holders. Therefore, although it is a condition of each Collateral substitution, there can be no assurance that the value of the Replacement Collateral will in actuality be at least 100% of the value of the Released Collatera l, which could diminish the value of the Collateral securing the notes and impair your investment.
No appraisal of the Collateral, including the Initial Collateral, has been or will be prepared by us or on our behalf in connection with this offering or any substitution of Collateral, and to the extent the Collateral constitutes equipment, its value is expected to depreciate.
No appraisal of the Collateral, including the Initial Collateral, has been or will be prepared by us or on our behalf in connection wi th this offering or any substitution of Collateral, and to the extent the Collateral constitutes equipment, its value is expected to depreciate. The value of the Collateral will depend upon a number of factors, including market and economic conditions at the time, the availability of appropriate buyers and the extent of attrition, if any, with respect to the Collateral. For these and other reasons, we cannot assure the holders of the notes that the proceeds of any sale of the Collateral, in the event of a foreclosure, insolvency proceeding, liquidation or otherwise, would be sufficient to satisfy, or would not be substantially less than, all of AMERCO’s obligations under the notes. Moreover, to the extent the Collateral includes real property, no lender’s policy of title insurance, real property survey, zoning report, mortgage enforceability legal opinion, environmental assessment or engineering study has been or will be obtained in connection with the offering.
Although these notes are secured by the Co llateral, they are effectively subordinated to AMERCO’s other existing or future secured indebtedness.
Although these notes are secured by the Collateral, they are effectively subordinated to AMERCO’s other existing and future secured indebtedness, to th e extent of the value of the assets securing such other indebtedness . I n the event of a bankruptcy or s imilar proceeding involving AMERCO, any of AMERCO’s assets which serve as collateral for AMERCO’s existing or future secured indebtedness , other than th e Collateral, will be available to satisfy the obligations under such secured indebtedness before any payments are made on the notes or AMERCO’s other unsecured indebtedness. In the event that the value of the Collateral is insufficient to repay all amoun ts due on the notes, the holders of the notes would have “undersecured claims” through which they would only be entitled to participate ratably with all holders of AMERCO’s other unsecured indebtedness, and potentially with all of AMERCO’s other general cr editors, based upon the respective amounts owed to each holder or creditor, in AMERCO’s remaining assets. In any of the foregoing events, AMERCO may not have sufficient assets to pay amounts due on the notes. As a result, if holders of the notes receive any payments, they may receive less, ratably, than holders of any other secured indebtedness that AMERCO may incur.
The notes are only the obligations of AMERCO, and will not be guaranteed by any of AMERCO’s subsidiaries, including U-Haul.
The notes are on ly the obligations of AMERCO, and are not guaranteed by any of AMERCO’s subsidiaries, including U-Haul, through which we conduct a substantial amount of our operations. All of the obligations of our subsidiaries, including U-Haul, must be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to AMERCO or the holders of the notes. This means that claims of holders of the notes will be structurally subordinated to the claims of existing and future creditors of AMERCO’s subsidiaries, including U-Haul.
The Collateral is subject to attrition, including casualty risks, theft (to the extent the Collateral includes equipment) and condemnation (to the extent the Collateral includes real property), and
we are under no obligation to maintain the condition of th e Collateral or to replenish or replace damaged, destroyed, condemned, stolen or taken Collateral.
We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our business. However, we may not maintain cas ualty insurance on the Collateral and there are certain other losses in our business that may be either uninsurable or not economically insurable, in whole or in part. In the normal course of our business, to the extent the Collateral includes equipment, we anticipate that a significant amount of the Collateral will be lost through attrition, including due to casualty and theft, and to the extent the Collateral includes real property, it is subject to condemnation in whole or in part. We are under no oblig ation to replenish or replace damaged, destroyed, condemned, stolen or taken Collateral and we are not obligated to repay the notes in whole or in part as a result of such an occurrence. A reduction in the size of the Collateral pool will reduce the value of the Collateral. In addition, we are under no obligation to maintain the Collateral in good condition, repair and working order, which could impair its value.
The value of the Collateral is dependent upon, among other things, its continued integration in the U-Haul system.
Through the U-Haul system, which involves the participation of numerous independent dealers and affiliates, we rent our moving and storage equipment. If the U-Haul system deteriorates, ceases or fails, and an alternative rental system is not available, or if the Collateral is removed from continuous integration in the U-Haul system, such as through the repossession and sale of the Collateral following a foreclosure on the Collateral, then we may not be able to rent or use the Collateral in an efficient and cost-effective manner and its value could be impaired.
The success of the U-Haul system is in part dependent on continued participation by our numerous independent dealers and affiliates.
As a part of the U-Haul system, we work with numerous independent dealers and affiliates that provide retail outlets through which U-Haul rental equipment is rented to our customers. Our contracts with these independent dealers contain provisions allowing the independent dealer to term inate the contract for any reason upon 30 days’ advance notice. If a significant number of independent dealers were to terminate their contracts, it could adversely impact the U-Haul system and decrease our ability to rent equipment, which could impair ou r ability to repay the notes.
Rights of holders of notes may be adversely affected by the failure to perfect liens in the Collateral.
Pursuant to the terms of the financing documents , the Owner ha s granted a first-priority security interest in the Initial Collateral to the t rustee for the benefit of the holders. The servicer will be responsible for ensuring that perfection with respect to the Collateral has occurred and shall continue. If, because of a clerical error, fraud, forgery or otherwise, t he lien of the tr ustee is not properly reflected and filed, the t rustee will not have a perfected security interest in the Collateral and its security interest may be subordinate to the interests of certain third parties. No legal opinions are being issu ed or obtained in connection with the enforceability or perfection of the Collateral documentation. Additionally, under federal law and the laws of many states, certain possessory liens, including mechanic’s liens, and certain tax liens may take priority o ver a perfected security interest in the Collateral . Such failures may result in the loss of the practical benefits of the trustee’s first-priority lien on the Collateral.
The trustee (or its agent, nominee or nominee mortgagee or titleholder) is the on ly party with the ability to foreclose on the Collateral, and certain laws and regulations may impose restrictions or limitations on foreclosure on the Collateral.
If AMERCO default s on the notes, the financing documents provide that the trustee (or its ag ent, nominee or nominee mortgagee or titleholder) is the only party with the ability to foreclose on, repo s sess and sell the Collateral, and no individual holder of notes may do so independently. The trustee’s ability to foreclose on the Collateral on beh alf of the holders may also be subject to state law requirements and practical problems associated with the realization of the trustee’s security interest or lien on the Collateral, including locating the Collateral, which will likely be disbursed througho ut the U.S. and Canada, as well as cure rights, foreclosing on the Collateral within the time periods permitted by third parties or prescribed by laws, obtaining third party consents, making additional filings and obtaining necessary approvals from governm ental entities. Therefore, we cannot assure you that foreclosure on the Collateral will be straightforward or expeditious, which may impair the value of the Collateral. Certain provisions of the financing documents may also restrict the trustee’s, or its agent’s or nominee’s ability to foreclose on the Collateral.
The ability to foreclose on the Collateral may be adversely affected by bankruptcy proceedings.
If AMERCO default s on the notes, the ability to foreclose on, repossess and sell the Collateral m ay be signifi cantly impaired by federal bank ruptcy law if bankruptcy proceedings are commenced by or against AMERCO prior to or possibly even after the trustee has repossessed and disposed of the Collateral. Under the U.S. Bankruptcy Code, a secured credi tor, such as the trustee for the notes, is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without bankruptcy court approval. Moreover, bankruptcy law would permit AMERCO, as the debtor , to continue to retain and use the Collateral, and the proceeds, products, rents, or profits of the Collateral, even though AMERCO could be in default under the financing documents , provided that the trustee were given “adequate prote ction”. The meaning of the term “ adequate protection ” may vary according to circumstances, but it is intended in general to protect the value of a secured creditor's interest in c ollateral and may include cash payments or the granting of additional securi ty, if and at such time as the court in its discretion determines, for any diminution in the value of such collateral as a result of the stay of repossession or disposition or any use of such collateral by the debtor during the pendency of the bankruptcy c ase. In view of the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the notes could be delayed following commencement of a bankruptcy case, whether or when the trustee would repossess or dispose of the Collateral, or whether or to what extent holders of the notes would be compensated for any delay in payment of loss of value of the Collateral through the requirements of “adequate protection.” Furthermore, in the event the bankruptcy court determines tha t the value of the Collateral is not sufficient to repay all amounts due on the notes, the holders of the notes would have “ undersecured claims ” as to the difference. Federal bankruptcy laws do not permit the payment or accrual of interest, costs, and att orneys' fees for “ undersecured claims ” durin g the debtor's bankruptcy case.
The notes are not insured or guaranteed by the FDIC.
The notes ar e not savings accounts, deposit accounts or money market funds, and are not guaranteed or insured by the FDIC, the Federal Reserve or any other governmental agency.
AMERCO may redeem the notes at any time without penalty, but AMERCO is under no obligation to do so.
Under the terms of the financing documents, the notes may be redeemed by AMERCO in its sole discretion at any time, in whole or in part, without penalty, premium or fee, at a price equal to 100% of the principal amount then outstanding, plus accrued and unpaid interest, if any, t hrough the date of redemption . In such event, holders woul d not receive all of the interest payments that holders originally expected . However, AMERCO is under no obligation to redeem the notes in whole or in part under any circumstances. Accordingly, investors must be prepared to hold the notes until the matur ity date.
Our subsidiaries, affiliates, directors, officers, controlling stockholders and employees have the right to purchase an unlimited number of notes in the offering.
Our subsidiaries, affiliates, directors, officers, controlling stockholders and employees have the right to purchase an unlimited number of notes in the offering. If these parties end up owning a majority of the notes outstanding, we and they could exert significant influence with respect to a variety of matters affecting the notes under the financing documents, including the ability to waive an event of default, amend the notes or enforce or waive rights related to the notes and the Collateral.
No under writer or other third-party has been engaged to facilitate the sale of the notes in this offering.
In many public offerings, an experienced underwriter or other third party, such as a placement agent, is engaged to facilitate the sale of an issuer’s secur ities by, among other things, helping develop and negotiate the terms of the offering, the terms of the securities and the documents governing the securities and conducting due diligence with respect to the issuer, its affiliates and/or their respective as sets . In such circumstances, an underwriter’s participation can lead to offering and securities terms that are more favorable to the purchasers of the securities. No underwriter or other third-party has been engaged to facilitate the sale of the notes in this offering, the terms of which were developed solely by us and not with the input of any representative acting in your best interest. It is your responsibility to determine if the terms of this offering and the notes meet your investment needs.
Risks Related to the U-Haul Investors Club
The notes are being issued in uncertificated book-entry form only and exclusively serviced by U-Haul, AMERCO’s subsidiary.
The notes are being issued in uncertificated book-entry form only through the U-Haul Investors Club website and exclusively serviced by U-Haul, AMERCO’s subsidiary (in such capacity, the “servicer”), or its designee. In this capacity, among other duties, the servicer will record and file Collateral perfection documents as appropriate, credit principal and interest into the U-Haul Investors Club accounts maintained by each holder, perform recordkeeping and registrar services and electronically receive and d eliver all documents, statements and communications related to the offering, the notes and the U-Haul Investors Club. No assurance can be given that the servicer will be able to adequately fulfill its servicing obligations with respect to the notes. Addi tionally, because the notes are being serviced by U-Haul instead of by a neutral third party, this may present a conflict of interest if a dispute regarding the servicing of the notes arises with the holders of the notes.
One or more significant disruptions in service on the U-Haul Investors Club website could significantly inhibit the servicer’s ability to effectively service the notes and impair the U-Haul Investors Club.
The servicer will service the notes through the U-Haul Investors Club web site. Therefore, the satisfactory performance, reliability and availability of the U-Haul Investors Club website and our technology and underlying network infrastructure will be critical to the servicer’s ability to effectively service the notes, and to t he viability of the U-Haul Investors Club. One or more significant disruptions in service on the U-Haul Investors Club website , whether as a result of us, any third party that we retain to perform website hosting or backup functions or events that are out side of our control, such as computer viruses or power or Internet-telecommunications failures, could significantly inhibit the servicer’s ability to effectively service the notes , including processing and crediting of principal and interest into the appro priate U-Haul Investors Club accounts in a timely manner, and impair the viability of the U-Haul Investors Club .
Through the U-Haul Investors Club, we will rely on a third-party commercial bank to process transactions between U-Haul Investors Club member accounts and their linked outside bank accounts.
Because we are not a bank, we cannot belong to and directly access the Automated Clearing House (“ACH”) payment network. As a result, we will rely on an FDIC-insured depository institution to process U-Hau l Investors Club transactions between U-Haul Investors Club member accounts and their linked U.S. bank accounts. If we fail to obtain such services from such an institution or elsewhere, or if we cannot transition to another processor quickly, our ability to process payments will suffer and our ability to fund the offering, as well your ability to transfer principal and interest payments on the notes from your U-Haul Investors Club account to your outside bank accounts, may be impaired.
USE OF PROCEEDS
Assuming the notes in this offering are fully subscribed, AMERCO expects to receive net proceeds from this offering of approximately $13,468,400, after deducting estimated expenses payable by it. AMERCO intends to use the net proceeds from this offering t o reimburse its subsidiaries and affili ates for the cost of production of the Collateral, and for o ther general corporate purposes .
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is our ratio of earnings to fixed charges for the six months ended September 30, 2013 and for each year in the five year period ended March 31, 2013. Earnings consist of earnings before interest expense and lease expense. Fixed charges consist of interest expense and an estimate of the portion of lease expense related t o the interest component.
|
Six Months Ended |
Year Ended March 31, |
||||
|
September 30, 2013 |
2013 |
2012 |
2011 |
2010 |
2009 |
Ratio of earnings to fixed charges |
7.1x |
4.1x |
3.4x |
3.1x |
1.7x |
1.1x |
DESCRIPTION OF NOTES
The following description is a summary of the material p rovisions of the notes and the financing documents under which the notes are being issued . Each of the financing documents and the notes that will be executed and delivered upon the issuance date , and not the description of the financing documents and the notes in this prospectus supplement, defines your rights as holders of the notes. Copies of the financing documents will be available electronically through the U-Haul Investors Club website. Y ou may also request electronic copies of the financing documents from AMERCO as indicated under “Where You Can Find More Information” in this prospectus supplement.
Brief Description of the Notes
The notes are:
• The notes will be issued over a period of tim e and from time to time, in up to ten separate series, with each series having one or more separate sub-series bearing a unique interest rate and term as provided herein. As notes are offered, prospective investors shall have the opportunity to select the series and sub-series of notes for which such prospective investor is subscribing.
• being issued under a base indenture entered into between AMERCO and the trustee, an indenture supplement between AMERCO and the trustee, and a pledge and security agreem ent among AMERCO, the trustee and the Owner (collectively, and together with an y
other instruments and documents executed and delivered pursuant to the foregoing documents, as the same may be amended, supplemented or otherwise modified from time to time , t he “financing documents”);
• AMERCO’s obligations only, and not guaranteed by any of AMERCO’s subsidiaries, and therefore are structurally subordinated to the claims of existing and future creditors of AMERCO’s subsidiaries, including U-Haul ;
• obligations of AMERCO, secured by a first-priority lien on the Collateral;
• ranked equally among themselves; and
• being issued by AMERCO in uncertificated book-entry form only.
The notes will not be listed on any securities exchange. There is no market for the notes.
Principal, Maturity and Interest ; Amortization Schedule
The notes are secured debt securities under the financing documents and are limited to the aggregate princ ipal amount identified above. The notes will be issued over a period of time and from time to time, in up to ten separate series (Series UIC- 14C, 15C, 16C, 17C, 18C, 19C, 20C, 21C, 22C and 23C ), with each series having one or more separate sub-series bear ing a unique interest rate and term as follows:
- All sub-series of notes with a 3-year term shall bear interest at 3.75% per annum
- All sub-series of notes with a 4-year term shall bear interest at 4.27% per annum
- All sub-series of notes with a 5-y ear term shall bear interest at 4.80% per annum
- All sub-series of notes with a 6-year term shall bear interest at 5.32% per annum
- All sub-series of notes with a 7-year term shall bear interest at 5.85% per annum
- All sub-series of notes with a 8-year term shall bear interest at 6.37% per annum
- All sub-series of notes with a 9-year term shall bear interest at 6.51% per annum
- All sub-series of notes secured by equipment with a 10-year term shall bear interest at 6.65% per annum
- All sub-series of no tes secured by real property with a 10-year term shall bear interest at 6.60% per annum
- All sub-series of notes with a 15-year term shall bear interest at 6.90% per annum
- All sub-series of notes with a 20-year term shall bear interest at 7.20% per ann um
- All sub-series of notes with a 25-year term shall bear interest at 7.50% per annum
As notes are offered, p rospective investors shall have the opportunity to select the series and sub-series of notes for which such prospective investor is subscribing.
The notes issued under Series UIC-14C are secured by a first-priority lien on a pool of U-Haul AO Trailers manufactured in fiscal year 2000 (the “AO Trailers”). For each $ 1,000 invested with us in the notes under Series UIC- 14C , we will pledge to the trustee, for the benefit of the noteholders, one AO Trailer .
The notes issued under Series UIC-15C are secured by a first priority lien on a pool of AV Trailers manufactured between fiscal years 1991 and 2004 (the “AV Trailers”). F or each $ 1,000 invested with us in the notes under Series UIC- 15C , we will pledge to the trustee, for the benefit of the noteholders, one AV Trailer .
The notes issued under Series UIC-16C are secured by a first priority lien on a pool of U-Haul RV Trailers manufactured between fiscal years 1993 and 2001 (the “RV Trailers”). For each $ 1,600 invested
with us in the notes under Series UIC- 16C , we will ple dge to the trustee, for the benefit of the noteholders, one RV Trailer .
The notes issued under Series UIC-17C are secured by a first priority lien on a pool of U-Haul FS Trailers manufactured between fiscal years 2008 and 2009 (the “FS Trailers”). For ea ch $ 1,000 invested with us in the notes under Series UIC- 17C , we will pledge to the trustee, for the benefit of the noteholders, one FS Trailer .
The notes issued under Series UIC-18C are secured by a first priority lien on a pool of U-Haul DC Trucks manuf actured between fiscal years 2007 and 2008 (the “DC Trucks”). For each $ 5,300 invested with us in the notes under Series UIC- 18C , we will pledge to the trustee, for the benefit of the noteholders, one DC Truck .
The notes issued under Series UIC-19C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Hayward, located in Hayward, California (the “Hayward Property”). Once $100 has been invested with us in notes under Series UIC-19C, we will grant to the tr ustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Hayward Property .
The notes issued under Series UIC-20C are secured by a first priority lie n on the real property and improvements thereon known as U-Haul of Van Buren, located in Riverside, California (the “Van Buren Property”). Once $100 has been invested with us in notes under Series UIC-20C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Van Buren Property .
The notes issued under Series UIC-21C are secured by a first priority lien on the real property and improvements thereon known as U-Haul of Tully Road, located in San Jose, California (the “Tully Road Property”). Once $100 has been invested with us in notes under Series UIC-21C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Tully Road Property .
The notes issued under Series UIC-22C are secu red by a first priority lien on the real property and improvements thereon known as U-Haul at Spruce Hills, located in Bettendorf, Iowa (the “Spruce Hills Property”). Once $100 has been invested with us in notes under Series UIC-22C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Spruce hills Property .
The notes issued under Series UIC-23C are secured by a first prior ity lien on the real property and improvements thereon known as U-Haul of Fry Blvd., located in Sierra Vista, Arizona (the “Fry Blvd. Property”) Once $100 has been invested with us in notes under Series UIC-23C, we will grant to the trustee for the benefit of the noteholders, a mortgage or deed of trust lien (as appropriate in the respective jurisdiction where such property is located) on the Fry Blvd. Property .
The notes are being issue d in minimum denominations of $100 and integral multiples of $ 100 t hereof.
The respective notes accrue interest at the interest rates identified above, commencing as of the issue date. Interest on the notes is computed on the basis of a 360-day year comprised of twelve 30-day months.
The notes are fully amortizing. Payments of principal and the accrued interest will be credited to the respective holder’s U-Haul Investors Club account, in arrears every three months, commencing three months from the issue date and ending on the maturity date, as reflected in the follow ing payment schedules; provided, however , principal and interest payments with respect to notes issued under Series UIC-19C, 20C, 21C, 22C and 23C will be credited to such holder’s U-Haul Investors Club™ account in arrears three months from the issue date of the first subseries of notes issued to any investor under such respective Series, and shall be based on the actual number of days the holder is invested in such notes
during such quarter. Interest on the notes is calculated based upon the outstanding b alance of the notes at the time interest is due.
The following schedules illustrate investments of $100 in each of the sub-series of the notes which may be issued under series UIC- 14C, 15C, 16C, 17C, 18C, 19C, 20C, 21C, 22C and 23C
Notes accruing a t 3.75%, 3 year maturity :
Notes accruing at 4.27 %, 4 year maturity :
Notes accruing at 4.80 %, 5 year maturity :
Notes accruing at 5.32 %, 6 year maturity :
Notes accruing at 5.85 %, 7 year maturity :
Notes accruing at 6.37 %, 8 year maturity :
Notes accruing at 6.51 %, 9 year maturity :
Notes accruing at 6.65 %, 10 year maturity (Equipment Collateral) :
Notes accruing at 6.60 %, 10 year maturity (Real Property Collateral) :
Notes accruing at 6.90 %, 15 year maturity :
Notes accruing at 7.20 %, 20 year maturity :
Notes accruing at 7.50 %, 25 year maturity :
T he r ecord d ate is the first day of the month preceding the related due date for the crediting of principal and interest on the n otes in the h older’s U-Haul Investors Club account. If any date for the crediting of principal and interest into a h older’s U-Haul Investors Club account, including the maturity date , falls on a day that is not a b usiness d ay, the required crediting of principal and interest on the n otes shall be due and made on the next day constituting a b usiness d ay.
Additional Issuances
AMERCO may not create or issue ad ditional notes secured by the Collateral unless it obtains the consent of holders of at least 51% of the principal amount of the outstanding notes . However, AMERCO intends to offer additional securities through the U-Haul Inves tors Club simultaneously with this offering and in the future, including securities that are secured by assets owned by AMERCO or its subsidiaries other than the Collateral, which it may do in its sole discretion and without the consent of the holders of t he notes.
Ranking
The notes are the obligations of AMERCO only. The notes are not being guaranteed by any of AMERCO’s subsidiaries, and therefore will effectively be structurally subordinated to the claims of existing and future creditors of AMERCO’s subs idiaries, including U-Haul . Other than with respect to the Collateral, the notes rank equally in right of payment with any existing and future unsecured indebtedness of AMERCO.
Optional Redemption
The notes or any sub-series or other portion thereof may be redeemed by AMERCO in its sole discretion at any time, in whole or in part on a pro rata basis or on any other basis as determined by AMERCO in its sole discretion , without penalty, premium or fee, at a price equal to 100% of the principal amount then o utstanding, plus accrued and unpaid interest, if any, through the date of redemption. In the event of a redemption, AMERCO will cause noti ces of redemption to be emailed, to the email address associated with your account, at least 10 but not more than 30 days before the redemption date to each applicable registered holder of notes. However, AMERCO is under no obligation to redeem the notes in whole or in part, under any circumstances. Accordingly, investors must be prepared to hold the notes until the m aturity date.
Security Interest and Initial Collateral
The obligations of AMERCO with respect to the notes are initially secured by a f irst- p riority l ien o n the Initial Collateral. The Initial Collateral is being pledged by the Owner to the trustee (or t he trustee’s agent, nominee or nominee mortgagee or titleholder) for the benefit of the holders, pursuant to the financing documents .
AMERCO has the right, in its sole discretion, to voluntarily substitute or to cause one or mo re affiliates or third parties to substitute any assets (the “Replacement Collateral”) for all or part of the Collateral that from time to time secures the notes, including the Initial Collateral and any Replacement Collateral (the “Collateral”), provided that the value of the Replacement Collateral is at least 100% of the value of the Collateral that is released at the time of substitution (the “Released Collateral”) and provided further that the owner of such Replacement Collateral promptly enters a separ ate pledge and security agreement, substantially in the form of the pledge agreement, and executes such other documents and instruments as may be necessary or appropriate to grant to the trustee, for the benefit of the holders, a first-priority lien on suc h Replacement Collateral. In connection with any substitution of Collateral, the value of the Replacement Collateral and the Released Collateral is determinable by AMERCO in its sole discretion, and no appraisal will be prepared by us or on our behalf in this regard. AMERCO is permitted to make an unlimited number Collateral substitutions.
AMERCO may make a substitution of Collateral by delivering a written certificate to the trustee executed by an officer of AMERCO which contains (i) a description of the Replacement Collateral, (ii) a statement that such Replacement Collateral has been pledged by the owner thereof to the trustee, for the benefit of the holders, pursuant to the financing documents, (iii) a description of the Released Collateral and (iv) a certification by AMERCO that the value of the Replacement Collateral is at least 100% of the value of the Released Collateral. Upon the trustee’s receipt of such notice, the Replacement Collateral will be deemed “Collateral”, and the Released Collatera l will be released from the first-priority lien thereon and will no longer be subject to the terms of the financing documents. The trustee shall have no duty to evaluate the determination made in such certificate and shall be allowed to conclusively rely on such certificate from AMERCO.
Notwithstanding the foregoing, Collateral which is the subject of attrition, including casualty , theft (to the extent the Collateral includes equipment) and condemnation or threatened condemnation (to the extent the Coll ateral includes real property), may be released from the lien and will not be substituted.
Perfection of Security I nterest in the Collateral
The financing documents require AMERCO to file, or cause the filing of, such documents and instruments, in a ll appropriate jurisdictions and recording offices, as are necessary or appropriate to perfect and protect the trustee’s first-priority lien on the Collateral.
Use and Release of Collateral
Unless an Event of Default has occurred and is continuing, and t he trustee shall have commenced an enforcement of remedies under the financing documents, AMERCO and its subsidiaries, including U-Haul, have the right to:
• remain in possession and retain exclusive control of the Collateral;
• freely operate the Collateral, including, without limitation, by integrating the Collateral into the U-Haul system and using it or renting it to customers, as the case may be, in the ordinary course of business; and
• collect, invest and dispose of any income thereon, which income will not constitute part of the Collateral.
Release of Collateral . The financing documents provide that the f irst- p riority l ien on the Collateral with respect to the notes or any sub-series or other portion thereof will automatically be released , whether in full or incrementally, as the case may be, upon (1) satisfaction of all of AMERCO’s obligations with respect to the applicable notes , sub-series of the notes or other portion thereof, whether due to a
scheduled repayment in full or a redemption; or (2) dis charge, legal defeasance or covenant defeasance of AMERCO’s obligations with respect to the applicable notes or sub-series or other portion thereof, as described below under “Discharge, Defeasance and Covenant Defeasance”.
Further A ssurances; A fter A cquire d C ollateral
The financing documents provide that AMERCO shall, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper, or which the trustee may reasonably request, to evidence, perfect, maintain and enforce the first-priority l ien on the Collateral and the benefits intended to be conferred thereby , and to otherwise effe ctuate the provisions or purposes of, the financing documents .
Upon the acquis ition by the Company after the i ssue d ate of (1) any after-acquired assets, including, but not limited to, any after-acquired equipment or fixtures which constitute accretions, additions or technological upgrades to the equip ment or fixtures or any working capital assets that, in any such case, form part of the Collateral, or (2) any proceeds (as defined in the UCC of any relevant jurisdiction ) from a sale or other disposition of the Collateral , AMERCO shall execute and deliver, to the extent required, any information, documentation, financing statements or other certificates as may be necessary to vest in the trustee a perfected security interest, subject only to Permitted Liens, in such after-acquired property and t o have such after-acquired property added to the Collateral, and thereupon all provisions of the financing documents relating to the Collateral shall be deemed to relate to such after-acquired property to the same exte nt and with the same force and effect.
Change of Control , Merger, Consolidation or Sale of Assets
The holders of the notes do not have the right to require AMERCO to repurchase the notes in connection with a change of control of the Company, a merger of the Company, a consolidation of the Company or the sale of all or substantially all of the assets of the Company or it s subsidiaries, to or with any Person.
Covenants
The covenants with respect to the notes consist of the following:
Maintenance of first-priority lien on the Collateral. So long as any of the note s are outstanding, AMERCO and Owner are required to maintain, subject to Permitted Liens and to collateral substitutions as provided herein, and may not take any action to negate, the first-priority lien on the Collateral or the benefits intended to be conferred thereby. Notwithstanding the foregoing, Colla teral which is the subject of attrition, including casualty , theft (to the extent the Collateral includes equipment) and condemnation or threatened condemnation (to the extent the Collateral includes real property), may be released from the lien and will n ot be substituted.
Prohibition of additional liens o n the Collateral . Neither AMERCO nor Owner is permitted to incur any Lien of any nature whatsoever on the Collateral, other than the f irst- p riority l ien pursuant to the financing documents and Permitted Liens.
Events of Default, Waiver and Notice
The events of default with respect to the notes (each, an “Event of Default”) , consist of the following :
Nonpayment . The default in the crediting of principal or interest when due to a holder’s U-Haul Investors Club account, and the continuance of such default for a period of 30 days .
Failure to maintain first-priority lien on the Collateral . Failure by the Company or Owner to maintain the first-priority Lien on the Collateral, subject to Perm itted Liens, continued for 90 days after written notice thereof to the Company from the t rustee or to the Company and the trustee from the holders of at least 51% in principal amount of the outstanding notes, specifying such default or breach and requiring it to be remedied and stating that such notice is a “notice of default” pursuant to the financing documents.
Incurrence of additional Liens on the Collateral . The incurrence by the Company, Owner or any of their respective a ffiliates of any additiona l Lien on the Collateral, other than Permitted Liens and the Lien pursuant to the financing documents , continued for 90 days after written notice thereof to the Company from the t rustee or to the Company and the trustee from the holders of at least 51% in principal amount of the outstanding notes, specifying such default or breach and requiring it to be remedied and stating that such notice is a “notice of default” pursuant to the financing documents.
If an E vent of D efault under the indenture supplement or pledge agreement occurs and is continuing, then the trustee , on behalf of the holders, if it has notice or actual knowledge of such Event of Default, has the right to declare the principal amount of the notes outstanding to be due and payable imme diately by written notice to AMERCO and to the servicer . A default or Event of Default under the notes does not cause, and is not caused by, a default or event of default under any other notes issued pursuant to the U-Haul Investors Club.
Waiver . The indenture provide that the holders of not less than 51% in principal amount of the outstanding notes may waive any past D efault with respect to the notes and its consequences, except a D efault in the crediting of the principal and interest due on the n otes.
Notice . The trustee is