The unexpected drop has struck a nerve with officials at Woods Equipment, according to observers. Woods Equipment is also contending with unfavorable conditions in the high-yield debt markets, where it is planning to issue bonds to finance the acquisition. Alamo Group Chief Financial Officer Jim Smith declined to comment. Likewise, Woods Equipment officials would not discuss the situation. According to the recently filed 8-K document, Douglass received a letter from Wood on Nov. 18, after the adjournment of a special stockholders' meeting in which Alamo Group stockholders voted to approve the merger.
Wood ends the letter by suggesting the two sides sit down to discuss the matter.
A second letter from Wood to Douglass, dated Nov. 18, reiterates that Alamo Group will not be able to satisfy the terms of the merger agreement unless the company's performance improves substantially. But the Alamo Group's future earnings prospects aren't the only concern threatening to stall the deal. Wood's correspondence also identifies conditions in the high-yield debt market as a roadblock. The debt markets are still experiencing fallout from the stock market's late summer correction. New issuances are lagging, and companies that do issue bonds are being forced to pay higher yields to investors.