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Grove bankruptcy plan approved

May 08, 2001

Grove bankruptcy plan approved



By RICHARD F. BELISLE / Staff Writer, Waynesboro


SHADY GROVE, Pa. - The approval Monday of a Chapter 11 bankruptcy restructuring plan for Grove Worldwide "means good news for the community, our employees, customers and suppliers," said Jeffry D. Bust, company chairman and chief executive officer.

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Under the reorganization approved by the U.S. Bankruptcy court of the Middle District of Pennsylvania in Harrisburg, Grove will trade $379 million worth of debt for company stock, Bust said.

Before the restructuring, Grove owed its group of secured lender banks $584 million, a level of debt that cost $63 million a year in interest.

The stocks-for-debt agreement cuts the company's debt to $205 million with an annual interest payment of $17 million.

In addition, lender banks led by Chase Manhattan Bank agreed to commit up to $35 million in interim funds so Grove can continue manufacturing operations, pay its employees and buy goods and services while operating under Chapter 11.

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"This means business as usual," Bust said.

Grove has worked hard to modernize its production line, cut costs, flatten its organizational structure and develop new products, he said.

More than 1,000 Grove employees have lost their jobs since Keystone Inc., a Fort Worth, Texas, investment firm, bought the giant crane maker in April 1998 for $605 million.

At the time of the purchase Grove was Franklin County's largest employer with 2,500 workers. The work force is down to around 1,400 today, company officials have said.

Getting the company's balance sheet in order was the next step, Bust said Monday.

"Ours is a balance sheet problem, not an operational one," Bust said in a statement released earlier Monday. "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" at the Shady Grove facility.

He said the improvements were paying off with increased productivity and product quality and the launch of 15 new models in the past 18 months.

Daily operations will continue as usual without interruption and vendors will be paid, Bust said in the statement. Customers were reacting favorably to the financial reorganization, company officials said.

Bust said the restructuring will make Grove a much stronger company. He said the process should be complete in a matter of months.

"It directly addresses our balance sheet issues and removes the uncertainties and concerns created by our burdensome debt obligations," he said in the statement.

The restructuring will have no impact on company employees, Grove's customers and its suppliers, he said.

Management has been meeting with employees to keep them up to date on the bankruptcy process.

Bust, in the prepared statement, said that although Grove does not expect to close any facilities or have additional layoffs as a direct result of the bankruptcy filing, "we will continue to evaluate our strategic and staffing needs as part of an ongoing review of the business and will make these decisions based upon what is in the best long-term interests of the company."

He said later in a telephone interview that he was aware of Grove's impact on the area.

"We know we are a big part of this community," he said.

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