Oshkosh credit agreement amended, no big deal:
Why's it such a big deal on this board, everyone worried about credit agreement violations? It's a fluid business thing, both parties go with the punches this year.
There is a risk of default/bankruptcy priced in, and rightfully so.
If earnings do continue to fall, MTW does not have much wiggle room. You saw that with the markdown of Enodis' icemaker division.
I don't think the covenants are as big of a deal as some on this board seem to think. They are likely to be restructured favorably. But cashflow continues to be a concern. MTW is a good bet, I think. But it is a bet, even if covenants are restructured.
Well bmsundevil and daa069 you're still at it. We have here two shorts lecturing us on the gloom & doom and the demise of MTW. Bankruptcy and what else.
Well to your knowledge, MTW is one of the few companies that are still generating profits in this terrible environment while many other so called solid entitities are generating nothing but losses.
nothing based on past???
here is link of past dividends
this dividend is the same if not a fuzz more then what has been given the past 20 years besides what was given in one good year... doesnt seem that they are doing that bad, or it would have been cut like 100's of other companies that dropped the dividend
The amendment increased interest expense by about $120m a year not including fees. Last year they had pretax income of $190m.
you dont think thats a big deal. That means they will most likely lose money this year.
Murah, where did you get your figure of $120m a year, is that a random number? Amendment increased total net interest rates 400 basis points. On $3.1B that is $12.4M (not over $100M!). And the $100M was pre-paid debt.
In any case, if this is an example of the worst that can happen due to MTW's debt convenants I am moving on to other concerns.
I'll refer to the market's net reaction today. The name of the game this year is to keep your head above water and be better prepared than competitors for the next sales up-cycle (if not acquire competitors).
what you have failed to tell everyone on your post is that sure the bank restructured the debt but OSK had to pay 100 million dollars up front. This is based on restructuring 3 billion, MTWs debt is not that far off 2.5billion. If MTW is forced to do something of this nature after the Enodis down grade that would be devastating and nearly wipe out the cash on hand. Then a bankruptcy would be almost certain not just wishy washy.
MTW will need to navigate away from this for as long as they can to survive. The road is going to be very bumpy and rough, let's just hope all the bad news is behind us. If anymore problems come out of the wood work I would be willing more investors and institutions will walk away from this along with many sales that are already diminished.
Just because one company gets their debt re-worked, doesn't mean another company will get the same deal.
Do you think these lenders are just nice guys handing out cash? Don't think so. These guys can be ruthless. "Shark" is the best term I can think of.
MTW may well be bankrupt by year end. If revenues fall off at an accelerating pace, how can they possibly pay the debt?
The world's oil wells may very well dry up by the end of the year. If they do, just think how many companies will go bankrupt. If that doesn't happen, the sun could burn out. Then what?
Question to anyone who thinks they know the answer: when MTW sells Enodis Ice, why couldn't they take the cash to JP Morgan and amend their credit agreement in a proactive fashion, just to clear the water up? They want to pay off the revolver anyway, why not get something more out of it. This would avoid a potentially difficult and more costly situation at a later date.
that would fall under the terms of basically starting a new loan and to do so it require another payment of a large sum of money they do not have. I do believe to be in a mediation on the terms of the current loan they will have to have already demonstrated financial dispare and plead there case as to a resolution. Then the bank would hold a meeting with thier lending board and determine thier conditions that would be reqiured and MTWs viability to pay the debt down if allowed to restructure. Even during this process there would be added fees and raised interest. Which a fraction of a percent could add a tremendous amount of money to the already 2.5 billion dollar loan.
I think MTW is just waiting for the last resort before they have to play this card. But I would believe that this is a subject of daily meetings at the Head Quarters. Boy it would be great to be a fly on the wall, that is one place I bet the air is tense.