Grove Worldwide’s plans for financial restructuring were approved by the US bankruptcy court on 17 September, allowing the company to emerge from its voluntary Chapter 11 proceeding.

‘The decision by the court represents very good news because it paves the way for a stronger and more financially secure Grove to compete in the global marketplace,’ said Jeff Bust, Grove’s chairman and chief executive officer.

A consortium of more than 20 banks is now the major Grove shareholder, at about 80%, while the remaining 20% is in the hands of bondholders. This is in accordance with the original Chapter 11 plan to turn debt into equity.

‘Under the terms of the plan, Grove Worldwide’s debt will be reduced from $584m to $205m and annual interest expense will be reduced from $63m to $17m, thus providing the company with additional resources to compete more effectively in the marketplace, along with added financial flexibility to invest in the company’s future,’ Bust said.

Over the next few weeks further details are expected to emerge from Grove regarding such issues as the new board of directors representing the various bondholders that now have equity in the company, and the company’s future plans.

As this issue of Cranes Today went to press the last of the credit agreements were being completed before the first meeting of the new Grove board on 9 October.

Seeking a public listing through flotation remains a firm option, although the prospect of the various institutions that now own Grove accepting a takeover bid can still not be ruled out.

‘Management’s attention is on exiting from the restructuring activity but if anything comes along in the form of an interesting strategic alliance possibility then we will look at it,’ said John Wheeler, Grove president and chief operating officer, speaking at the opening of a new sales and service facility for Deutsche Grove in Langenfeld, Germany last month.

Strategy for the future in North America, according to Bust, is to build on the dominant share (43% to 46%) that Grove has of the US mobile crane market, a figure that has already grown by between 8% and 10% in the last three years.

In Europe Wheeler says there are still opportunities in the slowing EU market where Grove is ‘close to number one’ and that now being targeted are eastern Europe, Russia and the Middle East, where applications are mainly expected to be in the oil and gas industries.

Grove products are technologically up to date, Bust said, and the company is looking at expanding its product development. A range-topping AT is to be launched at next year’s Conexpo and the smaller end of the range is being looked at to maintain competitiveness.

When asked about the cause of the situation at Grove Bust said that the initial problem had been that it was a purchase with too little equity and too much debt ($530m) when Grove was bought from Hanson in 1998. Also at that time the US market was at the peak of a boom. ‘On a long term basis I am not sure if the capital structure was sustainable,’ Bust said.

Other contributory factors were problems implementing the resource planning computer system, and a changing market place where the rental sector was being consolidated.