Columbus McKinnon calls $40.25 million of 10% senior secured notes due 2010

By Angela McDaniels

Seattle, Nov. 17 - Columbus McKinnon Corp. said it is calling for redemption $40.25 million of its outstanding 10% senior secured notes due 2010 using the equity clawback provision.

The notes will be redeemed at a price of 110% of the principal amount plus accrued interest up to, but excluding the redemption date of Dec. 16.

After the partial redemption, $74.75 million principal amount of the notes will remain outstanding, the company said.

"The success of our recent stock sale is enabling us to redeem the maximum amount of the 10% 2010 notes as is currently allowed by the terms of the notes," president and chief executive officer Timothy Tevens said in a company news release.

"Our capital structure strategy has been to reduce high-cost debt to further improve earnings, to have the financial flexibility to invest in growth opportunities and to be in a strong financial position regardless of the point in the economic cycle."

After the redemption the company will be at 60% debt to total capitalization, down from 75% at the end of fiscal 2005 in September and below the 81% of a year ago.

At Oct. 2, total debt was $280.7 million and shareholders' equity was $93.4 million, the company said.

On a pro forma basis after the partial redemption of the notes and the Oct. 14 redemption of the company's remaining senior subordinated notes, total debt will be $214.8 million and shareholders' equity, taking the stock sale into consideration, will be $144.5 million.

The company said it will use a portion of the $56 million in net proceeds from its recent stock sale for the redemption.

"This capital restructuring will also have a strong positive impact on future earnings. The $4.03 million annual reduction in interest expense from this redemption will substantially convert directly to earnings because of our fully reserved U.S. federal tax loss carryforwards." Tevens said in the release.

This annual interest savings equates to about $0.22 per share, the company said.

Amherst, N.Y.-based Columbus McKinnon designs, manufactures and markets material handling products, systems and services.

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