Strongco, the Mississauga, Ontario-based distributor of Case CE, Manitowoc, Grove, Volvo CE and many other equipment brands, has announced plans to sell 100 percent of its shares of U.S. subsidiary Chadwick-BaRoss to ISH Capital for $12.75 million on or about Sept. 9.
Strongco, which has locations across Canada and operates several Chadwick-BaRoss locations in the northeast U.S., says it is selling Chadwick-BaRoss due to “challenging economic conditions,” which have stymied growth for the company, citing negative cash flow in 2014 and 2015.
Chadwick-BaRoss offers forestry, construction and rental equipment, serves the recycling and municipality markets and carries Volvo parts.
Despite improving sales figures for 2016, gross margins are down even with reductions in expenses and interest, the company says.
“The current financial situation is no longer sustainable and the company cannot wait to realize the results of these actions or for markets to recover,” the company reports. “Given the company’s current financial position, management and the board have determined that an injection of additional new cash is essential and the sale of Strongco’s U.S. subsidiary, Chadwick-BaRoss, is potentially the best means to provide additional financial resources in the shorter term until market conditions improve.”
“I remain optimistic that the goal of getting our Canadian operations back on stable footings for the future is within reach,” says Executive Chairman Robert Beutel. “The disposition of Chadwick-BaRoss would provide us the funds to assist our recovery. With the advantage of hindsight our previous expansion was poorly timed, but we are refocusing to create the most value for our customers, employees and our shareholders.”
