Management, Dutch company expected to bid

2 VIE FOR ELLICOTT DREDGING

July 09, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

A large Dutch conglomerate and a management group from the dredge division of Baltimore-based Ellicott Machine Corp. are expected to compete to buy the division, the nation's largest maker of dredging equipment.

The likely bidders are IHC Caland N.V., a Dutch company that makes equipment for the dredging and the offshore oil industries, and a management group led by Peter A. Bowe, president of the division.

Richard E. Bowe, chairman of Ellicott Machine and Peter Bowe's father, said he is taking an impartial position in the bidding. The offers might be unveiled tomorrow morning at Ellicott's board of directors meeting, Richard Bowe said. However, he said he does not know the terms of the offers.

But IHC officials have said that if their offer is accepted, the company probably will reduce the Baltimore operation to an engineering and sales office and eliminate the manufacturing operation, Mr. Bowe said. That would cut the 125-person work force to 15 or 20 people, he said.

Peter Bowe confirmed that management plans to make an offer for the division tomorrow. He declined to disclose the amount or how much management would borrow for the purchase. But he said the debt-to-equity ratio would be "fairly conservative."

Peter Bowe said his management group has loan commitments from the state and city governments and that he expects the U.S. Small Business Administration to be involved. "We have had tremendous support from the state of Maryland and the city of Baltimore," he said.

If the management offer is accepted, Peter Bowe said, he expects the unit's operation generally to continue unchanged. "It is my understanding that more people would be employed under our proposal," he said.

In a telephone interview from Schiedam, the Netherlands, J. D. Bax, managing director of IHC Caland, declined to say whether the company would make an offer.

Ellicott Machine also owns the McConway & Torley Corp., which operates steel foundries in Pittsburgh and Kutztown, Pa., which together have 400 employees. The subsidiary is not a subject of the bidding, Richard Bowe said.

The offers have been prompted because much of the stock of the privately owned company is held by family trusts after the death three years ago of Donald Sherwood, the company's largest stockholder, Richard Bowe said. He would not disclose the size of Mr. Sherwood's stake in the company but said it was substantial. Trusts are obligated to consider such offers.

Founded in 1885, the dredge-making division has been at its Bush Street headquarters in South Baltimore since the turn of the century, Mr. Bowe said. It specializes in building equipment that deepens channels, harbors and other waterways.

Recent years have been hard on Ellicott and other maritime-related companies. "It has been quite difficult," Richard Bowe said. "But we are at about break-even."

The company averages about $50 million in annual sales, and exports account for much of its revenues, Richard Bowe said.

Ellicott Machine's dredges also are used in the Baltimore area, including a quarry operation in Timonium operated by Genstar Stone Products Co., Richard Bowe said. The BRESCO incinerator on Russell Street also keeps a Ellicott dredge available to clear the waterway that feeds the plant, he said.

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