18.10.2004

Maxim forced to sell up

Judge M. Bruce McCullough of the U.S. Bankruptcy Court for the District of Pennsylvania in Pittsburgh has rejected Maxim Crane Works chapter 11 reorganization plan and directed unsecured creditors to work with Maxim to come up with a sale process.
This latest move has caused Amquip and Maxim’s president Al Bove, to withdraw their alternative plan offer which was essentially an offer to buy the business for $273 million.

However the intention of the offer was precisely to put an end to the exclusivity period that the incumbent owner, (Bain Capital) has in such cases. Having achieved this they are almost certain to line up and bid for the assets or part of the business that is of most interest to them.

"We withdrew our motion because we achieved our objection," said Michael Kaminski, Bove and AmQuip's counsel at DKW Law Group LLC in Pittsburgh. "The judge made clear that the company is in play and it's up for sale." Before McCullough's decision, Bove and AmQuip believed they were facing a bruising court battle just to be considered an alternative to the prenegotiated plan”. "Up until the hearing, everybody was closed out," Kaminski added. "Now we can get in and do due diligence. AmQuip is still very interested in pursuing a purchase."
The prenegotiated reorganization plan saw the secured lenders exchanging around half of the company’s outstanding debt, which totals around $700 million, for equity in the restructured business.

Vertikal Comment:
In addition to the potential to make one of the most significant acquisitions possible in the north American crane business, Amquip also has a vested interest in simply preventing the prenegotiated reorganisation going ahead in that it would, in Maxims words have put the company, which is located on Amquips “doorstep”, back on the street with one of the strongest balance sheets in the business and in great shape to do battle with Amquip in what is still a tough market.

Amquip will benefit regardless of the outcome of the liquidation, they either manage to take over the entire business and thus more than double their size OR the assets are sold off in a fragmented way dissipating the market leader while giving Amquip the opportunity to pick up only those parts of the business that they want or can handle.