SHADY GROVE, Pa. — Grove Worldwide began voluntary restructuring under Chapter 11 in May and received Bankruptcy Court approval to pay pre-petition and post-petition employee wages, salaries and benefits.
The court also approved $10 million of interim debtor-in-possession financing to continue operations, pay employees and purchase goods and services. Grove received commitments for up to $35 million in DIP financing from a group of its pre-petition lenders led by Chase Manhattan Bank. The final hearing on the DIP agreement was held May 30.
“We expect the DIP financing to provide adequate funding for our post-petition trade and employee obligations,” said Jeffry Bust, Grove CEO.
Grove also announced that it reached an agreement with its secured lender bank group and is negotiating with its senior bondholders on a financial restructuring of the company. Under the reorganization, Grove will trade $379 million worth of debt for company stock, lowering the company's debt from $584 million to $205 million and reducing annual interest expense from $63 million to $17 million.
Bust said Grove has been in contact with its major suppliers and customers, who have agreed to support the company during the restructuring process. The bankruptcy court granted approval for the company to honor all warranties, refunds and other customer service programs. He added that operations will continue uninterrupted and vendors will be paid.
“Ours is a balance sheet problem, not an operational one,” added Bust. “From an operational standpoint, the company has never been stronger. Since 1999 we have invested more than $41 million to improve design and manufacturing processes.”
Bust said the improvements were paying off with increased productivity and product quality and the launch of 15 new models in the past 18 months.
More than 1,000 Grove employees have lost their jobs since Keystone Inc., a Fort Worth, Texas-based investment firm, bought the company in April 1998 for $605 million.
The filing includes Grove's U.S. operations and its National Crane subsidiary based in Waverly, Neb. The company's operations outside the United States are excluded from the filing.