29.06.2009

Gehl agrees credit amendment

Gehl, the US affiliate of Manitou, has reached an amendment with its lenders to amend the terms of its credit lines. The new terms provide a total credit commitment of $105 million for a term of 24 months.

This agreement includes two separate credit facilities:

1) A revolving credit line of $80 million based on the Company’s North American inventories and accounts receivable maturing on June 26, 2011.

2) A term loan of $25 million payable in quarterly installments through June 26, 2011.

As part of the amended credit agreement, Gehl has granted a security interest over all of its North American assets. to its lenders. The amended credit agreement replaces the Company’s October 2006 $125 million unsecured credit facility.

The amended agreement addresses all matters that gave rise to the Forbearance Agreement the company entered into with its U.S. bank lenders on April 16th. Since when the company has significantly reduced its outstanding borrowings “using operating cash-flows created, in part by the cost savings initiatives implemented over the past months.”

Malcolm “Mac” F. Moore, President of Gehl said: “ In an
unprecedented financial and economic environment, the Gehl team has been successful in renegotiating its credit line. This important achievement should bolster the confidence of our business partners and employees and allow us to devote our full attention to running the business and preparing for the eventual upturn of the compact equipment marketplace”.

Gehl given more time
Gehl breaches covenants

Vertikal Comment

This agreement is no surprise, what we do not know at this stage is what the cost has been, lenders do like to extract their pound of flesh for agreeing such changes to the terms of their loans.

In this case though, Manitou threatened to put the business into Chapter 11 if an agreement was not found, and the new agreement has some security, where the old one did not.

Perhaps……. Manitou has managed to amend its facility at a more modest cost than most of the other companies that have had to do the same? Regardless of this the business is now on a firmer footing leaving the management to get on and prepare for the upturn, and the opportunities it offers.