Concrete equipment manufacturer Schwing America, St. Paul, Minn., has come out of Chapter 11 bankruptcy protection with a federally approved reorganization plan, new lenders and the full support of its creditors.
The company cited assets of $130.6 million and debts of $90.9 million when it filed for protection last September in U.S. Bankruptcy Court in St. Paul.
This July, the court approved Schwing’s reorganization plan under which 10 European banks that have relationships with Schwing America’s parent company, Schwing Group GmbH, Herne, Germany, have loaned Schwing America $22 million. Schwing used the borrowed $22 million as well as $5 million of its own cash to pay off its previous lender, Wells Fargo & Co.
“We just have new lenders now,” says Schwing America CEO Brian Hazelton. “We’ll be making payments to Europe instead of a U.S. lender.” Wells Fargo did not reply to requests for comment.
U.S. Dept. of Justice attorney Michael Fadlovich confirms Hazelton’s assessment, saying Schwing has “basically traded one lender for another.”
Christi Collins, executive director of the American Concrete Pumping Association, says, “We were confident they’d come out OK,” but says the concrete-pumping industry is in a rut. “Work is off an average of 50% and in some places off by up to 90%,” she says. “This is our industry’s third tough year in an row.”
Hazelton says Schwing’s new lenders have not imposed any special conditions.The company’s other creditors, mostly suppliers, voted unanimously for the reorganization plan, which calls for Schwing to pay them in full within 24 months.
A manufacturer of concrete pumping trucks, stationary pumps, placing booms, truck mixers, batch plants and concrete reclaiming equipment, Schwing America has several reasons to be optimistic:
• It slashed its U.S. workforce to about 100 employees today from about 600 three years ago.
• It moved production of its two largest concrete pumper trucks to Minnesota from Germany.
• U.S. sales territory expanded to include Central and South America, except for Brazil, a move Hazelton expects to help increase revenue. The company is already exceeding export-sales forecasts.
• A new online ordering system and a small uptick in the market seem to be boosting parts sales significantly. However, Hazelton declined to give a specific percentage.
“The market seems to be improving slightly,” he says. “Quoting activity and parts sales are up. That means equipment usage is up somewhat.” Still, Hazelton says, he expects the market to take a long time to recover.