04.08.2016

Essex cranes to be auctioned

Cranes from the fleet of US based Essex Crane Rental will be sold at auction on Friday August 12th in a sale organised by its lenders. The move follows a default by its Coast Crane division.

The lenders hope to raise a minimum of $150 million to pay off overdue debts, Essex has been operating under a number of forbearance agreements in relation to a credit agreement since May 2014.

The company has been struggling for several years as it racked up ongoing losses leading to the forbearance agreement. The notice of default against Coast Crane was served in April with a reservation of rights letter from Wells Fargo Capital Finance, due to noncompliance with reporting requirements within its credit facility. Since then Essex has been working with legal advisors to evaluate strategic alternatives, including the sale or refinancing of Coast Crane. The directors eventually decided against a sale and have been focusing on refinancing Coast Crane’s revolving credit facility.

The company has not filed any results since the start of the year, having delisted its shares in December, but says that the market is showing signs of improving, thanks to bridge and general building work, as a result tower crane utilisation and average rental rates have improved, but crane sales remain soft along with activity in the petrochemical market hitting the larger Rough Terrain crane market.

Chief executive Nick Matthews said: “Over the past year, Essex Crane has been operating under forbearance agreements and working with its lenders to identify the way to best maximise value for all of its shareholders. Throughout this process, we have explored several options including the sale of Essex Crane as a going concern, selling equipment assets in auctions and by other means and restructuring around a smaller level of debt. At this point, our lenders have chosen to offer Essex Crane’s assets in a public auction in an effort to increase the value received in exchange for those assets. It is unclear if the public auction will provide more value than the other strategies already pursued or what other alternatives the lenders may choose to pursue if the auction does not result in the sale of all or a portion of Essex Crane’s assets.”