Manitou negotiates with bankers

By Murray Pollok02 April 2009

Manitou said it was pursuing negotiations with its bankers and also those of US subsidiary Gehl following breaches in banking covenants. The company said there was a possibility that Gehl would seek bankruptcy protection under US Chapter 11 laws.

The French manufacturer said Gehl's banks demanded early repayment of financing on 31 March; "This could lead Gehl to seek bankruptcy protection under Chapter 11 US bankruptcy law, although this is by no means certain or automatic as no surety is attached to this financing."

"In these circumstances and in view of the negative earnings outlook for 2009, the Group is pursuing discussions with its banking partners in the United States and Europe with the aim of securing the financing of Gehl while continuing to contain the risk in the United States".

Manitou confirmed its earlier outlook statement for 2009, with sales forecast to fall by 40% and a likely operating loss for the year. "The low level of investment in capital goods and sharp deterioration in economic conditions over the past nine months could continue throughout 2009", said the company.

Manitou reported revenues of €1.278 billion for 2008, including a two month contribution of €20 million from Gehl. This was 1.4% higher than 2007 and almost flat on a like-for-like basis. The company posted a net profit of €4 million, after accounting for a €52 million impairment charge relating to Gehl.

In response to the economic crisis, Manitou has established a strategy plan up to 2011 designed to enable it to "weather the crisis and...preserve its capacity to finance its business when the recovery occurs." The plan will cost €20 million in 2009 and Manitou said it would improve cash-flow generation and reduce net debt by close to €150 million by the end of 2009.

"The plan is based on a significant lowering of the breakeven point by adapting operating costs and general overheads, and by reducing staff levels at all entities (around 650 jobs worldwide out of a total workforce of 3300 at the end of 2008)."

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