04.01.2011

General Crane & Equipment acquired

Florida based General Crane has been acquired out of Chapter by Allegiance Crane & Equipment which is owned by previous General Crane owner, Jim Robertson and Prophet Equity, a Southlake, Texas based private equity firm.
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Allegiance paid $40 million for the assets of General Crane in a deal that was approved by the bankruptcy court on December 17th after receiving the support of its major secured creditors – Wells Fargo, SL Financial and Bank Midwest – which had a total of $62.4 million in secured claims.

Prophet Equity’s chief executive Ross Gatlin said: “In one fell swoop, the assets that were General Crane became the assets of Allegiance and the old set of encumbrances were dealt with.”

“It was a $40 million purchase, and the three major lenders were paid a substantial amount, and we agreed to terms and conditions of a restructured loan. They didn’t come out completely whole, but they came out better than if we had filed for liquidation.” said Robertson.

General Crane filed for protection under Chapter 11 bankruptcy rules in December 2009 with around $100 million in debts. Click here to see original report .
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The company said that it is looking for opportunities in areas such as school construction, highways, ports, power plants and petrochemical industries. It also intends to expand into areas such as Alabama, Louisiana, Mississippi, Texas and Oklahoma.

Vertikal Comment

While it is good to see a company rescued rather than going under, it is the smaller unsecured creditors who always lose out in deals such as this, while the banks usually come out relatively well.

Those crane rental companies that have weathered the downturn and are still struggling to trade under normal rules will not appreciate having to compete with a newly aggressive company that has had a good portion of its old debts removed, while acquiring its key assets at a discount.

However it must be said in this case that one of the causes for General Cranes difficulties was the bankruptcy of several of its customers in the Florida and Las Vegas markets.

The US Chapter 11 process is though a far fairer and more balanced process than most European bankruptcy codes. Particularly compared to that of the UK.