Essex Rental Corp. announced this week that it was named the successful bidder to acquire the assets of privately held Coast Crane Co. out of bankruptcy. Coast Crane, founded in 1970 and based in Seattle, is a leading provider of crane rental solutions on the West Coast. The company filed for Chapter 11 bankruptcy protection in September.
Essex will pay about $80 million for Coast Crane’s assets, about $48 million of which will be financed by a new, fully committed credit facility for the acquired business. The facility will also assume some 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 the year.
Following the closing, Essex will operate the acquired business through a new wholly owned subsidiary to be named Coast Crane Co., independent of Essex’s existing operating business. Coast’s management team is led by Dan Goodale.
For the 12 months ended Sept. 30, Coast generated revenues of about $85 million. Essex expects the operations to be accretive to Essex’s 2011 free cash flow per share.
Coast Crane Co. is No. 34 on the RER 100, based on reported 2009 rental volume of $38 million.
“We believe that the acquisition of Coast will deliver a variety of strategic and economic benefits to Essex,” said Ron Schad, president and CEO of Essex. “Essex 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, Schad said, Coast will broaden Essex’s 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,” added Schad. “The introduction of a broader product and service portfolio will allow us to leverage the meaningful customer and project overlap 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.”
“Throughout the reorganization process, we have conducted business as usual, remaining focused on our customers,” said Goodale. “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.”
Based in the Chicago suburb of Buffalo Grove, Ill., Essex Rental Corp. is No. 40 on the RER 100.