The pro rata tranche of Maxim Crane Works, formerly Anthony Crane Rentals, softened around five points to the 73 1/2-75 1/2 context from the 78 1/2 level, where it was trading in mid-April. Since then, around $30-40 million of Maxim Crane's debt has traded, a dealer said. Joe Vacarello, Maxim Crane's cfo, did not return calls.
Two months ago the bank debt levels shot up 20 points when rumors about a potential restructuring surfaced. A restructuring would likely give the lenders a portion of restated bank debt and a piece of equity in a reorganized company (LMW, 3/15). However, some in the market believe an equity stake in the company may not be worth what it would cost lenders to buy the bank debt today. "[Anthony Crane] is trading at five to six times EBITDA and that is not cheap," a trader said.
He noted that the debt would need to go down to the 60s level in order for the market to start buying it again. "It is a small and tough business, that needs a lot of capital," he said, adding Maxim Crane may have to file for bankruptcy. Market participants believe Maxim Crane has significant bank debt liabilities of about $460 million that have to be reduced.
Another trader attributed Maxim Crane's softness to the cyclical nature of the crane rental industry. "People are worrying that interest rates will hike," he said. He also noted that the debt became a little bit overvalued. "The market is going up quite a bit on the paper and it may just be a little ahead of itself," he said. The company was acquired by Bain Capital in 1998. A Bain spokesman did not provide comment.