Creditors must decide Maxim's future

US rental company Amquip is in negotiations with senior creditors of Maxim Crane Works in a bid to persuade them to accept Amquip's takeover in preference to Maxim's own pre-negotiated plan for emergence from Chapter 11 bankruptcy protection. Maxim, which is still legally called Anthony Crane Rental, although has done business as Maxim Crane Works since being taken over by venture capitalist Bain Capital in 1999, filed for Chapter 11 bankruptcy protection on 14 June.

A rescue deal had been pre-planned; in exchange for reducing Maxim's debt from approximately $700m to around $250m, primary creditors (banks and financial institutions) would take ownership of the business. $533m of the debt is secured, lent by major banks such as Bank of America and Goldman Sachs. But rival Amquip, together with Maxim's own president, Al Bove, submitted a petition to the bankruptcy court on 27 September, seeking to open up Maxim to outside bidders. Amquip put itself forward as a stalking-horse bidder with a proposed opening bid of $273m. By the end of the week Bove had parted company with Maxim.

On 7 October the US Bankruptcy Court for the District of Pennsylvania in Pittsburgh threw out Maxim's pre-negotiated debt-for-equity plan and ordered the business to be liquidated. Amquip and Bove withdrew their motion. According to Maxim's senior management, their rescue plan remains live and will proceed in the next couple of months. Amquip, however, has since raised its offer to $325m, representing about 65 cents returned for every dollar owed. It is in negotiations with several major creditors who, according to Amquip general manager Frank Bardanaro, have said they are willing to sell their paper in Maxim, but are asking for 78 cents in the dollar. Maxim's pre-negotiated plan, already agreed by creditors, represents about 50 cents in the dollar plus ownership of the business. The decision facing the creditors is whether they continue to believe that Maxim's management can produce future earnings that will get them their money back, or whether to cash in for as much as possible now. Bidders have until 29 December to submit firm offers, although that deadline could be pushed back by legal processes.

The creditors are holding out for an offer in the region of $475m, but Bove has put it at $400m. Amquip is reluctant to go higher than its current bid (as of end of October) of $325m. Bardanaro said that Amquip would not pay any premium for the brand name. 'There is no value in the brand name,' he said. 'They even allow their machines to remain named as Anthony, Carlisle, Husky and other companies. They haven't even changed them after five years. So I think that speaks for itself in the brand name recognition.' It is unlikely that Amquip would seek to hold the entire Maxim enterprise together. 'There are certain assets that need to be identified as not the right mix for the company. That's something we'll only know after,' said Bardanaro. The tower crane division, however, has already been identified as one that will be kept. If Amquip lacks the appetite to expand across the breadth of the country, Bragg Crane is keen to pick up Maxim's West Coast operations. George Bragg said: 'I don't know any strategic buyer [as opposed to institutional investor] that is large enough or willing to take the risk to take over the whole thing.' He said he expected the business to broken up into regions and that Bragg would be watching closely. 'We are going to keep our options open and if there is an opportunity to take over the Western operations, we are going to be in the game,' he said. Jack Swan, CEO of All Erection said that while his company would not want the whole package, it would be interested in picking up 'some of the facilities, equipment and possibly some personnel that would fit into the fold of our current business'. Bigge Crane & Rigging, now under the management of the young Settlemeir brothers, Weston and Reid, is also believed to be interested.

Source: Cranes Today

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