14.04.2006

Manitowoc redeems debt

Manitowoc is to redeem the 10.3/8% notes that it issued in May 2001 to acquire Potain SAS. The notes were due to mature in 2011.

The company is paying 105.188 percent of the principal as set out in the prospectus. The cost of the redemption, including accrued interest and related costs will be around €195 million. The debt represents 44 percent of Manitowoc’s long term debt.

Vertikal Comment

With the crane manufacturing business going through one of its better times, and Manitowoc doing particularly well, it was only a matter of time before the company refinanced this high cost debt. No mention is made of what funds the company will use to pay off this debt...

The company might use the stronger dollar to convert the debt to dollars using the extension capability in its five-year, $300 million, secured revolving credit facility. On the other hand it will have no problem refinancing the debt in Euros with far more attractive terms.

The Potain acquisition must in hindsight look like a tremendous bargain.