Manitowoc Shares Surge on Refinancing

Manitowoc, teetering near the brink, refinances its debt -- and relieved investors send the heavy equipment manufacturer's shares surging.
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MANITOWOC, Wisc. (TheStreet) -- Investors bid up shares of crane maker Manitowoc (MTW) - Get Report in fierce trading Thursday after the company announced that it would be able refinance some of its debt.

The news, announced after Wednesday's close, appeared to give relief to battered Manitowoc shareholders. In a note to clients,

Morgan Stanley's

(MS) - Get Report

heavy equipment analyst, Robert Wertheimer, said the refinancing reduces the risk of Manitowoc issuing equity and diluting holders or, worse, rolling toward default.

In Thursday's early going, shares of Manitowoc were changing hands at $12.03, up nearly 13%. Thirty minutes into the trading day, volume surpassed 2.4 million shares, matching the daily average.

The company and its stock price have been laid low by the collapse of the construction industry in the U.S. But as the market for its cranes improves, investors appear to believe that the stock could run far higher -- or that the company could become ripe for a takeout.

Manitowoc shares have been mired under $15 since April. The stock cratered during the recession after reaching all-time highs at the peak of the housing bubble in 2007 of nearly $50.

As for the refinancing, Manitowoc, which also makes equipment for the food-service industry, said it will issue $500 million in unsecured notes, most likely in October. The refinancing will lengthen the maturity of its long-term debt to 2013 and beyond.

Manitowoc didn't reveal terms of its reworked credit agreements, but Wertheimer said he expects them to have "materially looser covenants."

The analyst kept his rating on Manitowoc stock at overweight and his price target at $16.

-- Written by Scott Eden in New York

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