Tower Tech buying Brad Foote Gear Works

Manitowoc, Wis.-based wind tower support structure maker Tower Tech Holdings (OTC BB: TWRT) said yesterday it would buy Brad Foote Gear Works, a Cicero, Ill., manufacturer of gearing systems for the wind turbine, oil and gas and energy-related industries.

Under the the cash and stock deal, Brad Foote shareholders will receive $64 million in cash and 16 million Tower Tech shares. Tower Tech also plans to take on $21 million of senior debt from Brad Foote.

Tower Tech expects to close acquisition by the fourth quarter of this year.

The company said the cash part of the transaction would be funded through both debt and equity financing, with Tontine Capital Partners agreeing to buy 12.5 million Tower Tech shares in a private placement for $4 per share.

Tontine will also provide $25 million of additional interim debt financing in the form of senior subordinated convertible notes.

In addition to the backing from Tontine, Tower Tech said it plans to raise an additional $25 million in equity capital through a rights offering to existing shareholders.

Founded in 1924, Brad Foote manufactures and repairs gear systems at two plants in Cicero and one facility in Pittsburgh.

The Illinois company had 2006 revenues of $59 million and currently provides gear sets to manufacturers of wind turbines up to 2.5 megawatts.

Once the deal is complete, J. Cameron Drecoll, CEO of Brad Foote, will become chief executive of the combined company. Tower Tech, headed up by president and co-founder Raymond Brickner, does not have a CEO.

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