Hyde Park Acquisition Corp. recently announced that it has entered into a definitive agreement to acquire privately held Essex Crane Rental Corp., which owns the largest specialized fleet of lattice-boom crawler cranes and attachments in North America. Buffalo Grove, Ill.-based Essex has a fleet of about 400 high-lift capacity crawler cranes.
The company’s primary markets include bridge and road construction, power, water treatment, refineries, alternative energy and other infrastructure-related projects. With strong growth trends in these areas, Essex is benefiting from a favorable utilization and rental rate environment, said officials of the private equity group.
For the fiscal year ended December 31, Essex generated revenues of $64.2 million and total EBITDA of $37.2 million, including rental EBITDA of $32.5 million, providing a 51 percent margin, and invested maintenance capital expenditure of about $2.1 million.
Under the terms of the transaction, Hyde Park will acquire Essex from private equity firm Kirtland Capital Partners for $210 million, plus transaction expenses and an adjustment for crane purchases and sales prior to closing. The deal will be financed through a combination of $100 million in proceeds from Hyde Park, a $5 million equity investment by the Essex management team; a $5 million investment by Kirtland Capital Partners, the current owners; and a $117 million drawdown of a fully committed asset-backed credit facility through a consortium of institutional lending sources.
“Essex is intimately linked to key infrastructure end-markets, such as transportation, utilities and energy,” said Laurence Levy, chairman and CEO of Hyde Park. “After a comprehensive due diligence effort, we found Essex to be a company with a leading market position in the niche crawler crane rental space, a sector characterized by long economic equipment lives, strong supply-demand dynamics, 6 to 18-month rental periods and limited obsolescence risk. Furthermore, Essex has an outstanding management team, headed by CEO Ron Schad, who are experts in their field and committed to maintaining and growing Essex’ leading market position. We are acquiring Essex at an attractive valuation of about 84 percent of its orderly liquidation value.”
Levy also noted Essex’ contract backlog and limited maintenance capital expenditure requirements.
Schad, a 26-year veteran of the crawler-crane industry, will continue as CEO.
“Essex’s market position has improved dramatically under Kirtland Capital’s ownership,” added Schad. “We have invested heavily in our fleet, our people and our processes to improve the quality of our the cranes and services we provide to our customers. Our focus on providing cranes to our customers that complete their projects on schedule and on budget has proven incredibly valuable to North America’s leading infrastructure contractors. I believe Essex has an excellent opportunity to grow significantly, both organically and through acquisition, in coming years and feel that this transaction places us in a strong position to realize our potential.”
The transaction is expected to close in the second half of 2008. After the closing, Hyde Park will change its name to Essex Crane Rental Corp. and will seek a NASDAQ listing.