Essex Rental Corp., Buffalo Grove, Ill., today announced that it will acquire the assets of privately-held Coast Crane Co., Seattle, Wash. Coast filed a voluntary petition for relief in U.S. Bankruptcy Court in September, and placed its assets for sale .
Essex will pay approximately $80 million for Coast’s assets, some $48 million of which will be financed by a new credit facility for the acquired business, and will assume certain Coast liabilities. The transaction has been approved by Essex’s board of directors, and is expected to close by the end of this 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 September 30th, Coast generated revenues of approximately $85 million, based on unaudited financial information. Essex expects the operations of the acquired business to be positive for Essex’s 2011 free cash flow per share and net asset value per share.
“We believe the acquisition of Coast will deliver a variety of strategic and economic benefits to Essex,” said Ron Schad, Essex president and CEO. “Essex and Coast share the same bare-rental business model characterized by medium- to long-duration leases. The 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 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, explained Schad. “We have no asset overlap, but instead, Coast’s assets are contiguous and complementary to our fleet of crawler cranes.” He said the introduction of a broader product and service portfolio will allow Essex to leverage meaningful customer and project overlap 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,” Schad continued. “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.”
Coast CEO Goodale said it’s been business as usual throughout the reorganization process, and his company has focused on customers and support of employees. He said he believes “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."
Essex will conduct a conference call to discuss the acquisition on Nov. 17th at 9:00 a.m. ET. Anyone interested should dial 800-585-5263 in the U.S., or 706-902-1803 internationally, 10 minutes before the call is scheduled to begin, enter the conference ID# 24883955, and ask for the “Essex Rental Corp. Acquisition of Coast Crane” call. The conference call will be webcast live via the Investor Relations section of the Essex’s website. To listen, go to the website at least 15 minutes early to register, and download and install audio software. The conference call will also be archived on the website.
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