13.04.2015

Essex looks for alternatives

US based Essex Rental has retained RBC Capital Markets to evaluate strategic alternatives for Essex Crane Rental – the crawler crane rental division of the company.

The announcement suggests that the company is not currently planning to sell or change its Coast Crane mobile and tower crane sales and rental operation. In 2014 the company as a whole reported revenues of $103.5 million, with a pre-tax loss of $18.1 million.

The company also announced that two of its long serving directors, John Nestor and Dan Blumenthal, will not stand for re-election in 2015 and will step down at the Annual General Meeting this year. A search to identify possible replacement candidates has been launched.

Chairman Laurence Levy said: "We thank John and Dan for their years of service and commitment to our board of directors, and for their valuable contributions and insights. The turnover of seats on the board furthers our commitment to responsible corporate governance, and will bring fresh perspectives and highly credentialed and relevant expertise to the board for the benefit of our stockholders”.

“We are confident that our search for director candidates will yield highly qualified professionals with strong credentials in the equipment rental sector or other relevant areas of expertise, and as a result of this reconstitution, the board will be optimally positioned to continue our progress to date in both addressing the challenges faced by the company and pursuing the opportunities available to it."

Vertikal Comment

Essex Rental has been struggling for several years, with little sign of being able to move back to profit and reach a position where it could pay down its growing debt burden. It is hard to see any alternative to a trade sale of the crawler crane business, or even both operations.

Essex acquired Coast in late 2010 after the recession had forced it into Chapter 11 bankruptcy. The old adage ‘The combination of two loss making businesses does not a profitable business make’ has been true with the merged companies struggling ever since. It seems that the higher the revenues the deeper the losses.

This one may take a while?