Pending Loan Tempers Monaco’s 3Q Net Loss
Shares of Monaco Coach Corp. closed higher Wednesday (Oct. 29) as analysts said news of its pending finalization of a loan agreement outweighed lower third-quarter performance.
In a note to investors, Craig Kennison with Robert W. Baird & Co. stated: “Monaco reported an awful quarter as the RV industry shows no sign of recovery. However, management expects to secure a $129 million credit agreement to provide urgently needed liquidity to its operations.”
In its earnings statement, Monaco said it plans to finalize the new loan agreement this week. According to Kennison, management expects to secure a $39 million term loan and $90 million credit facility. He added that the structure of the agreement will come at a “steep cost,” including a 13.75% interest rate on the term loan.
Kennison also noted the impact of heavy discounting by Monaco during the quarter. “Retail demand fell 39% and dealers are reluctant to order, forcing Monaco to sell inventory at cost,” he said.
Monaco’s third-quarter earnings statement showed a 48% decline in revenue and a $71.8 million net loss, aggravated by one-time restructuring and impairment charges of $65 million related to the closure of facilities.