Manitou says Gehl in breach of bank covenants

11 March 2009

A Gehl skid steer loader.

A Gehl skid steer loader.

Manitou said its newly acquired US business, Gehl, has been unable to comply with some bank covenants and was now negotiating with banks to avoid early repayment demands. Manitou said Gehl's problems stem from the sharp deterioration of the US market.

The French manufacturer said it now expected overall revenues for 2009 to be 40% lower than 2008 and that the group could report a loss for the year. "Against this backdrop, the Group has stepped up measures aimed at lowering operating costs and downsizing production capacity to the lower level of activity", said the company.

Manitou said Gehl's negotiations were being conducted "in an independent manner and are contained in US...In this respect, Manitou will be particularly vigilant in preserving its corporate interest so as not to increase its exposure to the downturn in the North American market."

Manitou said it would consider providing financial support for Gehl "only if conditions in
terms of risk mitigation and visibility are satisfactory".

Meanwhile, Manitou has opened discussions with its own bankers to try to change the terms and conditions of the syndicated loan arranged in September last year in support of the Gehl acquisition. Manitou has already drawn €317 million from this loan, which has a ceiling of €357 million.

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