Nacco Material Handling Group (NMHG), the global maker of Hyster and Yale forklifts, has set September 16 as a deadline for holders of USD250 million in debt to exchange senior financial notes, each in a denomination of USD1000, due in 2009.
A senior financial note is superior to other debt in terms of the business's obligation to repay the loaned funds.
Terms of the exchange will be substantially similar to 10 percent notes NMHG issued on May 9 as part of a rushed refinancing arranged outside the jurisdiction of US security laws. The current exchange of debt instruments makes the refinancing subject to the security laws.
The need for quick action hindered a one-step refinancing. As of March 31, NMHG had an available USD85 million of a USD350 million revolving credit facility that would have expired in June.
NMHG placed the May offering privately with institutional and non-USA investors and agreed with them at the time to file a registration statement covering the exchange offer with the US Securities & Exchange Commission (SEC).
The solution has a downside. "As a result of the refinancing, we expect our interest expense to increase significantly compared with prior periods," the company said in its securities filing. "In addition, a significant portion of NMHG's interest rate swap agreements will no longer qualify for hedge accounting treatment."
NMHG will not receive any proceeds from issuing the exchange notes and will not incur any increase in debt.
In another financial move, NMHG said it was talking with a non-US institution about obtaining a new European revolving credit facility of about USD43 million (GBP27.9 million). NMHG filed its intentions in a 176-page SEC registration statement and prospectus on August 13.
Nacco Material Handling Group Holding Co, based in Portland, Oregon, controls Hyster-Yale Materials Handling Inc and is a wholly-owned subsidiary of Nacco Industries Inc, which trades on the New York Stock Exchange.
Prospectus: http://www.sec.gov/Archives/edgar/data/1173519/000095015202006303/l94511fe424b3.txt