Essex Rental Corp. (Nasdaq: ESSX; ESSXW; ESSXU) ("Essex")
today announced that it was recognized as the successful bidder to
acquire, out of bankruptcy, the assets of privately held Coast
Crane Company (“Coast”). Coast, which was founded in 1970 and is
based in Seattle, Washington, is a leading provider of crane rental
services and specialty lifting solutions on the West Coast. As
previously announced by Essex, Coast filed a voluntary petition for
relief under the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the Western District of Washington on
September 22, 2010 and placed its assets for sale pursuant to
Section 363 of the United States Bankruptcy Code.
Essex will pay approximately $80 million for Coast’s assets,
approximately $48 million of which will be financed by a new,
fully-committed credit facility for the acquired business, and
assume certain of Coast’s liabilities. The acquisition price
reflects a significant discount to the replacement value of Coast’s
assets. The transaction has been approved by Essex’s Board of
Directors and is expected to close by the end of this year. Closing
is subject to customary conditions, including the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and approval by the U.S. Bankruptcy
Court.
Following the closing, Essex will operate the acquired business
through a new, wholly-owned subsidiary to be named Coast Crane
Company, independent of Essex’s existing operating business, Essex
Crane Rental Corp. (“Essex Crane”). Coast’s management team is led
by Dan Goodale.
For the twelve months ended September 30, 2010, Coast generated
revenues of approximately $85 million, based on Coast’s (unaudited)
financial information for such period. Essex expects the operations
of the acquired business to be meaningfully accretive to Essex’s
2011 free cash flow per share and net asset value per share.
Ron Schad, President and Chief Executive Officer of Essex,
commented, “We believe that the acquisition of Coast will deliver a
variety of strategic and economic benefits to Essex. Essex Crane
and Coast share the same bare rental business model characterized
by medium- to long-duration leases. The asset mix of both companies
is primarily comprised of assets with long economic lives, ranging
from 10 to over 30 years, which supports the Return on Capital
business model under which our companies operate. Coast has earned
a reputation for quality and dependability over its 40-year
history, and we look forward to partnering with Dan and his team to
grow and enhance our operations.”
“Strategically, Coast will broaden our product offering to
include rough terrain cranes, a wide range of self-erecting and
stationary tower cranes, elevators and hoists, boom truck cranes
and other lifting equipment used in heavy construction. We have no
asset overlap, but instead, Coast’s assets are contiguous and
complementary to our fleet of crawler cranes. The introduction of a
broader product and service portfolio will allow us to leverage the
meaningful customer and project overlap of that the two companies
share, and drive higher asset utilization. The acquisition also
expands Essex’s geographic reach into Western North America,
Alaska, Hawaii, Guam and the South Pacific where Coast has
well-established customer relationships and a strong brand name.
These new markets complement Essex’s existing national footprint,
building on its strong presence in the southeast, and Gulf coast,
and our growing presence in the northeast and the
mid-Atlantic.”
Dan Goodale, CEO of Coast, added, “Throughout the reorganization
process we have conducted business as usual, remaining focused on
our customers while providing them with the industry’s best
products and services, and working diligently to support all of our
employees. With the reorganization under Chapter 11 behind us, we
will be positioned to execute on our strategy and fully intend to
capitalize on the improving market conditions and grow our market
position while remaining focused on our customers’ needs, and
generating sustainable value over the long-term. Additionally, I
believe the prospect of drawing upon the highly qualified people
and best practices found at both Coast and Essex will provide
opportunities for growth for all of our employees while increasing
our ability to better serve our customers."
On October 29, 2010, Essex entered into subscription agreements
providing for the sale of an aggregate of 3,300,000 shares of the
Company’s common stock at a price of $4.30 per share, generating
gross proceeds of $14,190,000, in a private offering. Closing of
the private offering and issuance of the common shares are
contingent upon the closing of the Coast acquisition. Proceeds from
the private offering, along with cash on hand, will be used to help
fund the cash portion of the purchase price for Coast’s assets.
Additional information regarding the acquisition of Coast Crane
will be available in a Form 8-K filing by Essex on or about
November 17, 2010. These filings will be available at the
Securities and Exchange Commission’s web site, www.sec.gov, and at
the “Investor Relations” section of Essex’s web site at
www.essexcrane.com.
Conference Call to Further Discuss Acquisition
Essex’s management team will conduct a conference call to
discuss the acquisition of Coast on November 17, 2010 at 9:00 a.m.
ET. Interested parties may participate in the call by dialing 1
(800) 585-5263 (Domestic) and (706) 902-1803 (International),
conference ID# 24883955. Please call in 10 minutes before the call
is scheduled to begin, and ask for the Essex Rental Corp.
Acquisition of Coast Crane call.
The conference call will be webcast live via the Investor
Relations section ("Events and Presentations") of the Essex Rental
Corp. website at www.essexcrane.com. To listen to the live call,
please go to the website at least 15 minutes early to register,
download and install any necessary audio software. If you are
unable to listen live, the conference call will be archived on the
website.
About Coast Crane Company
Founded in 1970, Coast Crane Company has grown to become the
market leader for innovative lifting solutions throughout Western
North America, Alaska, Hawaii, Guam and the South Pacific. The
Company provides both used and new equipment including rough
terrain cranes, boom trucks, tower cranes, and other lifting
equipment. Products are rented and sold through a regional network
including 13 branch locations and covering over 3,000 customer
accounts. Coast Crane enjoys strong working partnerships with the
leading crane and lifting manufacturers in the U.S. and has a
dedicated and unparalleled customer service and support team.
About Essex Rental Corp.
Headquartered outside of Chicago, Essex, through its subsidiary,
Essex Crane Rental Corp., is one of North America's largest
providers of lattice-boom crawler crane and attachment rental
services. With over 350 cranes and attachments in its fleet, Essex
supplies cranes for construction projects related to power
generation, petro-chemical, refineries, water treatment and
purification, bridges, highways, hospitals, shipbuilding, offshore
oil fabrication and industrial plants, and commercial
construction.
Some of the statements in this press release and other written
and oral statements made from time to time by Essex, Coast and
their respective representatives are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include statements regarding the intent
and belief or current expectations of Essex, Coast and their
respective management teams and may be identified by the use of
words like "anticipate", "believe", "estimate", "expect", "intend",
"may", "plan", "will", "should", "seek", the negative of these
terms or other comparable terminology. Investors are cautioned that
any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the
forward-looking statements. Important factors that could cause
actual results to differ materially from Essex’s or Coast’s
expectations include, without limitation, the continued ability of
Essex and Coast to successfully execute their respective business
plans, the possibility of a change in demand for the products and
services that Essex provides (through its subsidiary, Essex Crane)
and that Coast provides, the failure to obtain Bankruptcy Court
approval of the Coast acquisition, intense competition which may
require us to lower prices or offer more favorable terms of sale,
our reliance on third party suppliers, our indebtedness which could
limit our operational and financial flexibility, global economic
factors including interest rates, general economic conditions,
geopolitical events and regulatory changes, our dependence on our
management team and key personnel, as well as other relevant risks
detailed in our Annual Report on Form 10-K and other periodic
reports filed with the Securities and Exchange Commission and
available on our website, www.essexcrane.com. The factors listed
here are not exhaustive. Many of these uncertainties and risks are
difficult to predict and beyond management’s control.
Forward-looking statements are not guarantees of future
performance, results or events. Essex assumes no obligation to
update or supplement forward-looking information in this press
release whether to reflect changed assumptions, the occurrence of
unanticipated events or changes in future operating results or
financial conditions, or otherwise.
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