Essex Crane Rental’s lenders are selling the company’s assets in a public auction on August 12.

On July 1, 2016, Wells Fargo Capital Finance as agent for the lenders provided Essex Crane notice that it intends to offer for sale in a public auction all of the rights, title and interests of Essex Crane in, under and to substantially all of Essex Crane’s personal property, including, without limitation, all of Essex Crane’s accounts, inventory, machinery, equipment, investment property and general intangibles.

Essex Crane Rental entered into a sixth forbearance agreement with its revolving lenders under its fourth amended and restated credit agreement, including Wells Fargo Capital Finance, as administrative agent and a lender.

Under the terms of the forbearance agreement, Essex Crane will fund operating expenses using cash collections and no new revolving loans will be requested by or advanced to Essex Crane. Additionally, Essex Crane agreed to cooperate with the lenders with respect to the lenders’ plan to conduct and consummate a transfer under Article 9 of the Illinois Uniform Commercial Code with regard to some or all of the collateral.

Nick Matthews, president and CEO of Essex stated, “Over the past year, Essex Crane has been operating under forbearance agreements and working with its lenders to identify the way to best maximize value for all of its stakeholders. Throughout this process, we have explored several options including the sale of Essex Crane as a going concern, selling equipment assets in auctions and by other means and restructuring around a smaller level of debt. At this point, Essex Crane’s lenders have chosen to offer Essex Crane’s assets in a public auction in an effort to increase the value received in exchange for those assets. It is unclear if the public auction will provide more value than the other strategies already pursued or what other alternatives the lenders may choose to pursue if the auction does not result in the sale of all or a portion of Essex Crane’s assets.”

On April 5, 2016, the company’s subsidiary, Coast Crane, received a notice of default and reservation of rights letter from WFCF as a result of non-compliance with certain delivery and financial reporting requirements contained within the Coast Crane credit facility due to the delay in delivering the audited financial statements for the fiscal year ended December 31, 2015 and failure to record a valuation allowance related to net operating losses being carried forward in prior year financial statements.

Due to the existence of the event of default, the agent has elected that all obligations shall bear interest at a per annum rate equal to two percentage points above the per annum rate otherwise applicable under the agreement, and all other rights of the lenders have been reserved.

The event of default described may also trigger a default under the cross-default provisions contained within the company’s unsecured promissory notes, unless waived by the holders of those notes.

Despite the default, Coast Crane has continued to operate in excess of its performance-related covenants. The company has been and expects that it will be able to continue to use the Coast Crane revolving credit facility to fund operations.

The company has been working with Stifel, Nicolaus & Company over the past several months in an effort to evaluate strategic alternatives, specifically related to the sale or refinancing of Coast Crane. The results of the sale process were encouraging and indicated value, net of debt, in excess of the current market capitalization; however, values were not at a level that garnered support of the board of directors of the company. After reviewing market feedback assembled by Stifel, the board of directors elected not to continue to pursue a sale of Coast Crane at this time. Simultaneous to marketing the business for sale, the company has focused on refinancing the Coast Crane revolving credit facility, and continues to do so while also maintaining an ongoing dialogue with Stifel regarding potential future opportunities for Coast Crane.