Essex Rental Corp. in the USA will acquire, out of bankruptcy, the assets of privately held Coast Crane Company. Based in Seattle, Washington, Coast Crane has offered crane rental since 1970.
Coast filed a voluntary petition for relief under the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Washington on September 22, 2010 and placed its assets for sale.
Essex said it will pay approximately US$80 million, about $48 million of which will be financed by a new, fully-committed credit facility for the acquired business, and assume certain of Coast's liabilities. The price reflects a significant discount to the replacement value of Coast's assets, according to Essex.
Essex said the Board of Directors approved the transaction, which is expected to close by the end of the year. Closing is subject to conditions and to approval by the U.S. Bankruptcy Court.Following the closing, Essex said it will operate the acquired business through a new, wholly-owned subsidiary to be named Coast Crane Company, independent of Essex's existing operating business, Essex Crane Rental Corp. ("Essex Crane"). Coast's management team is led by Dan Goodale.
For the 12 months ended September 30, 2010, Coast generated revenue of approximately $85 million, based on Coast's (unaudited) financial information.
"We believe that the acquisition of Coast will deliver a variety of strategic and economic benefits to Essex," said Ron Schad, Essex president and CEO. "Essex Crane and Coast share the same bare rental business model characterized by medium- to long-duration leases. The asset mix of both companies primarily comprises assets with long economic lives, ranging from 10 to over 30 years, which supports the Return on Capital business model under which our companies operate. Coast has earned a reputation for quality and dependability over its 40-year history, and we look forward to partnering with Dan and his team to grow and enhance our operations."
Schad said that Coast will broaden Essex's product offering to include rough terrain cranes, a wide range of self erecting and stationary tower cranes, elevators and hoists, boom truck cranes and other lifting equipment used in heavy construction.
"We have no asset overlap but, instead, Coast's assets are contiguous and complementary to our fleet of crawler cranes," Schad said. "The introduction of a broader product and service portfolio will allow us to leverage the meaningful customer and project overlap of that the two companies share, and drive higher asset utilization. The acquisition also expands Essex's geographic reach into Western North America, Alaska, Hawaii, Guam and the South Pacific where Coast has well-established customer relationships and a strong brand name."
Dan Goodale, Coast CEO, said, "Throughout the reorganization process we have conducted business as usual, remaining focused on our customers while providing them with the industry's best products and services, and working diligently to support all of our employees. With the reorganization under Chapter 11 behind us, we will be positioned to execute on our strategy and fully intend to capitalize on the improving market conditions and grow our market position while remaining focused on our customers' needs, and generating sustainable value over the long-term."