Manitowoc (NYSE: MTW), which manufactures cranes and construction equipment, recently announced a deal that would expand one of its revolving credit facilities by $100 million to $500 million. The sense is that Manitowoc is looking to boost its financial structure as the economic recovery gains footing, but I see something else brewing. Before reaching any conclusion, however, we should look deeper into the financials of the company and see whether it is prepared to take on more leverage.

Financials speak
Although Manitowoc's earnings have been on a generally upward trajectory recently, its capital structure is rather shaky. A declining debt level hasn't helped matters either as the debt-to-equity ratio has zoomed to an all-time high of 428.1%. Compared to companies such as Terex (NYSE: TEX) and Lennox International (NYSE: LII), which have reported much lower debt-to-equity ratios of 64.8% and 96.2%, respectively, in 2010, Manitowoc is on ever shaky ground. Were I the bank, I'm not sure I'd be extending more credit at this time.

The debt-to-equity ratio has risen over the last three years, in fact, indicating Manitowoc has been relying more on debt to finance its operations. The assumption of that debt though hasn't had a desirable effect on the company's operations as revenues have shown a declining trend.

In fairness, I heard there was a little bit of a fall-off in construction spending during the Great Recession, which is recovering. But meanwhile, the rising costs of debt have raised serious liquidity concerns. The latest step with the credit facility appears to be an attempt to soothe those concerns -- albeit temporarily. If I were an investor here, I'd consider bailing out. Companies cannot run indefinitely on debt.

Look at more of the company's numbers and you'll confirm the same thing. The interest coverage ratio, which has been declining since 2008, and higher general interest expenses from mounting debts have also added to the long-term solvency woes of Manitowoc. Beware.

Why this deal?
Manitowoc's plan to refinance its credit facilities with a total of $1.15 billion has been necessitated by the liquidity issues that the company is facing. The proposed plan that includes lower interest rates can reduce the repayment burdens and, possibly, help improve the interest coverage ratio. The task, however, isn't easy. More significant, the ultimate point is that Manitowoc will have to take measures to improve its top line.

The Foolish outlook
For shareholders, there is a big concern here. Will the company stick around long enough to ensure that investors' money is safe? If so, what will the state of the balance sheet be when it does? Credit isn't free, after all -- even low-cost credit.

I doubt most investors find Manitowoc to be an attractive bet. That's fair. Investors need to be cautious here.