Essex Rental Corp. announced that it entered into an amendment to its Coast Crane credit agreement. The modification to the credit agreement provides Essex with greater flexibility to capitalize on opportunities to increase revenues associated with the sale of new equipment. The modification also amends language in the existing credit agreement related to the application of asset sale proceeds from new and used equipment sales.
Kory Glen, chief financial officer stated, "The amendment to the revolving credit facility will allow us to take advantage of opportunities to grow our new equipment distribution business. In our experience, new equipment sales are enhanced if we are able to carry new equipment for resale in inventory. Prior to amending our loan agreement, we were limited in the amount of new equipment for resale that we could purchase, because such purchases were deemed capital expenditures, and therefore, were included in the calculation of our fixed charges. As a result of the loan amendment, these purchases are now deemed inventory and are not included in our fixed charge ratio. The loan modification will provide us with greater flexibility to capitalize on opportunities within this segment of our business."
Glen continued, "Additionally, we clarified language in our loan agreement to ensure that we are not required to use the proceeds from the sale of new or used equipment to permanently reduce debt."