Manitou subsidiary Gehl Company has reached a significant milestone in its refinancing effort.

Manitou says Gehl has sold USD36 million of existing finance contracts receivables to a third-party lender. Proceeds of the transaction were used to fully repay Gehl's exisiting securitisation program and reduce the principal amount outstanding under Gehl's revolving credit facility to USD20 million.

Manitou CEO Jean-Christophe Giroux says the company is "very pleased with this important milestone (which) recognises Gehl's constant focus on cash generation over the last 18 months, as well as a gradually improving business environment in the US".

Giroux adds that the company is now actively working towards a "new and improved" financial structure to support Gehl's development and long-term success.

Gehl has also fully reimbursed the term loan portion of its credit facility in March. At the same time, the company amended its June 2009 credit facility, mainly for all past defaults to be waived by its lenders and to reduce the maximum available amount of the revolving tranche to USD45 million. The amended credit facility will be available to Gehl until 15 September 2010.

According to Manitou, the amended credit facility will provide Gehl with liquidity for the near-term and sufficient time to reorganise long-term financing sources.

Gehl holds its annual general meeting on 24 June and reports its first half 2010 sales on 20 July.

In June 2009, Manitou announced that Gehl had renegotiated its 2006 bank credit agreement enabling it to continue borrowing up to USD105 million for 24 months. The amended agreement granted Gehl's lenders a security interest in all of its North American assets (Forkliftaction.com News #417).