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Manitowoc to pay down about $150 million of term loan, could violate some debt covenants
By Susanna Moon
Chicago, March 30 - Manitowoc Co. Inc. said it plans to repay some of its term loan due 2010 with proceeds from the sale of its Enodis global ice machine operations to Braveheart Acquisition, Inc., an affiliate of Warburg Pincus Private Equity X, LP, for $160 million.
The sale is expected to be completed in May 2009.
The company said it plans to use the after-tax net proceeds of about $150 million to reduce a portion of the debt incurred in November to acquire Enodis plc.
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the financial advisers.
The lower-than-expected proceeds from the sale of the Enodis ice machine operations increases the possibility that the company could violate certain debt covenants during the second half of 2009, according to a company press release.
The result of the sale process combined with the lower projected earnings results further increases that risk, the company said. At this time, however, all covenant requirements are being met, and the company said it is making business adjustments to remain in compliance with its covenants.
Manitowoc said that it would work with its lender group if needed to obtain covenant relief. Any relief could involve upfront fees, higher interest cost and other terms potentially less favorable to the company than those in its current credit agreement, the company noted.
Manitowoc is a Manitowoc, Wis.-based provider of lifting equipment for the construction industry, manufacturer of cold-side equipment for the foodservice industry, and provider of shipbuilding, ship repair and conversion services.
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