Maxim Crane Works' bank debt has picked up 20 points since the company filed for bankruptcy in June, and holders of the paper are now betting on the potential equity value of the company and the completion of its restructuring plan to lift it higher. The debt traded in the 88-90 range last week. "There's going to be an exit financing that will pay off part of the credit's exposure and the rest of the recovery will be in equity. Clearly, to receive par, it's going to require the equity to appreciate," said a distressed investor following the situation.
Carl Marks Strategic Investments, The CIT Group/Business Credit, Eaton Vance Management, Wayzata Investment Partners, Goldman Sachs Credit Partners, GE Capital, and Fleet Bank--now Bank of America, are on the tranche "A" steering committee, holding approximately $465 million of bank debt. Goldman is set to provide the exit facility and currently leads the company's $70 million debtor-in-possession facility with B of A. Officials at the funds either declined comment or did not return calls.
Maxim Crane, previously called Anthony Crane Rentals and 70%-owned by Bain Capital, filed for bankruptcy with $700 million of bank and bond debt. The investor noted that some of the bank debt holders are feeling positive as they bought the debt at a discount and have strong expectations for the company's turnaround when it emerges. "Anthony Crane is a failed LBO. Bain tried to roll up a bunch of crane companies and was unable to achieve any of the synergies to work under that capital structure, so they tried to restructure out of court but ultimately had to bite the bullet and file," said the investor. An overall economic recession also pressured the company and now there is the opportunity for Maxim Crane to participate in better non-residential construction environments than in 2002-03.
The debt meanwhile will be reduced to approximately $250 million if the plan is approved by the court on Dec. 30. The investor said emergence should be January or February, but he cautioned that this is a live reorganization. At the time of the filing, the consensual agreement was between the first, second-and third-lien creditor groups, but not with the bondholders. Since then an agreement has been reached with the bondholders, he said, adding that the capital structure was convoluted due to the attempt to restructure out-of-court. Spokesmen for Bain and Goldman did not provide comment.