Amerco looks past bankruptcy

Amerco's filing for Chapter 11 bankruptcy protection on June 20 is among the largest filings ever in the bankruptcy court in Reno, and the company already has pledges for nearly $1 billion in financing to help it reorganize.

Reno-based Amerco is the holding company for U-Haul, Republic Western Life Insurance Co., Oxford Life Insurance Co.

and a real estate subsidiary.

None of the subsidiaries are involved in the Chapter 11 filing.Most of the company's operations are in Phoenix; only its headquarters is in Reno.

In its voluntary filing, the company said it has assets of $3.75 billion and liabilities of $3.22 billion meaning shareholders had equity of about $520 million when the bankruptcy petition was filed.

Amerco's press release, in fact, emphasized that the company is solvent, plans to pay all its creditors in full and won't dilute existing equity.

Its biggest creditors? Amerco owes AIG Global Investment Group of New York City $110.5 million and Conseco Capital Management of Carmel, Ind., $29.6 million.

Nineteen other creditors, mostly banks and insurance companies, are owed anywhere form $8 million to $25 million.

Another indication of the size of the Amerco bankruptcy is that a Trenton, N.J., outfit that specializes in newsletters about big business bankruptcies such as Kmart, Ames Department Stores and Global Crossing had its first edition about the Amerco filing out to subscribers within a couple of days of the filing.

Bankruptcy Creditors' Service Inc., the newsletter publisher, said the roots of Amerco's Chapter 11 filing can be traced to a dispute with PricewaterhouseCoopers, its former auditing company.

Two corporations known as SAC Holdings Corp.

and SAC Holding II Corp.

own self-storage units which are managed by U-Haul.

Amerco doesn't have any ownership interest in the companies.

PricewaterhouseCoopers in February 2002, however, told the company that SAC Holdings should be included in Amerco's financial statements.

That, Amerco claims, made it impossible to refinance debt coming due.

It defaulted on three major obligations, and that triggered defaults on other debts.

Amerco is suing the auditing firm for $2.5 billion.

Before it filed its bankruptcy petition, Amerco lined up a $300 million commitment for debtor-in-possession financing from a unit of Wells Fargo.

That financing would allow the company to pay off $205 million it owes to a group of banks led by JP Morgan Chase Bank, Bank of America and Bank One.

Amerco also lined up commitments for $650 million from the Wells Fargo unit and Credit Suisse First Boston to finance its operations as it emerges from Chapter 11.

Joe Shoen, chairman of Amerco, said he's confident that cost-cutting measures and the breathing space provided by the Chapter 11 filing will provide a solid base for the company.

"Business fundamentals at the company remain strong," he said in a prepared statement.

"We are getting our financial house in order." Judge Gregg Zive will oversee the Amerco reorganization.