Coast Crane names $80 million Essex Rental offer high bid for assets

By Caroline Salls

Pittsburgh, Nov. 12 - Coast Crane Co. has recognized Essex Rental Corp. as the successful bidder for its assets, with an $80 million purchase offer, according to an Essex news release.

Essex said about $48 million of the $80 million purchase price will be financed by a new, fully committed credit facility for the acquired business.

The buyer will also assume Coast's liabilities.

According to the release, the purchase price reflects a significant discount to the replacement value of Coast's assets.

Share sale

On Oct. 29, Essex entered into subscription agreements providing for the sale of a total of 3.3 million shares of its common stock at a price of $4.30 per share, generating gross proceeds of $14.19 million, in a private offering.

Closing of the private offering and issuance of the common shares are contingent upon the closing of the Coast acquisition. Proceeds from the private offering, along with cash on hand, will be used to help fund the cash portion of the purchase price for Coast's assets.

The Coast acquisition has been approved by Essex's board of directors and is expected to close by the end of the year, subject to approval by the U.S. Bankruptcy Court for the Western District of Washington and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Following the closing, Essex will operate the acquired business through a new, wholly owned subsidiary to be named Coast Crane Co., independent of Essex's existing operating business, Essex Crane Rental Corp.

Coast's management team is led by Dan Goodale.

Future outlook

"We believe that the acquisition of Coast will deliver a variety of strategic and economic benefits to Essex," Essex president and chief executive officer Ron Schad said in the release.

"Essex Crane and Coast share the same bare rental business model characterized by medium- to long-duration leases.

"The asset mix of both companies is primarily comprised of 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.

"Strategically, Coast will broaden our 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.

"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."

Goodale said in the release, "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."

Coast, a Seattle-based crane and lifting equipment provider, filed for bankruptcy on Sept. 22. The Chapter 11 case number is 10-21229.

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