Maxim Crane Works Files for Chapter 11 Bankruptcy Protection

July 7, 2004 - Once determined to become the largest crane rental company in the United States, Pittsburgh-based Maxim Crane Works spent the late 1990s and early 2000s expanding its territory with a series of acquisitions and unifying its various properties under the same name. But as its balance sheet became highly leveraged and the economic slowdown further added to its financial troubles, Maxim Crane Works announced in mid-June it was filing for Chapter 11 bankruptcy protection as part of an agreement reached with its lenders to restructure its financial statement.

Maxim Crane Works, which operates more than 45 branch offices in the United States, insists the issues faced were financial and not operational. "Over the past three years, we have systematically adjusted our cost structure and have always generated positive cash flow," Chief Executive Officer Al Bove said. "With the economy showing signs of recovery, now is the time to strengthen our capital structure."

Prior to filing for Chapter 11, Maxim's secured lenders agreed to reduce the company's $700 million in outstanding debt to $450 million in exchange for majority ownership of the company. Maxim intends to file the plan with the courts by mid-summer and emerge from bankruptcy protection during the fourth quarter of this year.

Fulfilling obligations to its employees, customers, and suppliers are commitments Maxim Crane Works promises to maintain while under bankruptcy protection. To fund operations during the restructuring, Maxim secured up to $70 million in debtor-in-possession financing from a group of lenders led by Goldman Sachs and Fleet Boston. The funding will cover pre- and post-petition employee wages, salaries, and benefits and post-reorganization expenses to purchase goods and services.

According to Arthur Innamorato, president of Maxim Crane Works, bonds and permits on existing projects will stay in place, and insurance coverage will continue while under protection. Bove also noted Maxim has been in contact with many of its major suppliers and customers, who have indicated they will support the company during the restructuring process.

Days after filing for Chapter 11, Maxim announced that during first-day motions the U.S. Bankruptcy Court in Pittsburgh approved the debtor-in-possession financing and granted the company immediate use of its debtor-in-possession financing facility to continue operations, pay employees, and purchase goods and services going forward. "The Court has granted us permission to continue all the programs that are vital to our daily operations, ensuring that it should be business as usual during the restructuring," Bove said.

Looking ahead, Bove said the bankruptcy filing "removes the cloud of uncertainty under which we all have been operating." Additionally, he said the reduction in debt service will increase Maxim's ability to invest in new equipment purchases and other growth initiatives in the future.

Maxim Crane Works filed its voluntary petitions under the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh .