Manitou negotiates with banks over Gehl credit

21 December 2009

A Gehl skid steer loader.

A Gehl skid steer loader.

Manitou said negotiations are underway with Gehl's banking syndicate because the subsidiary faces a "technical default" as a result of still depressed conditions in the US.

During last week's extraordinary general meeting of shareholders at Ancenis, Manitou said Gehl's problems would lead to one-off charges "that will weigh on Manitou's consolidated net income". Manitou said its banking covenants in France were not affected by the Gehl situation.

Manitou's new president and chief executive officer, Jean-Christophe Giroux, said; "Continuing sluggish economic conditions in the US have resulted in a still depressed business for Gehl, who faces today a technical default with its banking syndicate. Negotiations are already taking place with a view to finding a long-term solution."

Manitou had previously announced in June that Gehl had amended its bank credit agreement to allow for continued borrowing for the next two years. The amended agreement provided for a total credit commitment of US$105 million. Manitou acquired Gehl in October 2008.

During the meeting, Mr Giroux said that visibility into Manitou's markets was still very poor; "but the fourth quarter shows stabilising revenue, after five consecutive quarters of decline. We also believe that our efforts on costs and working capital (especially inventories) will result in a more acceptable operating loss and also in a fast-reducing net debt. This confirms the fast and deep adaptation of Manitou to its new environment."

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