Monaco Coach Corp., which terminated 2,000 employees and filed for bankruptcy protection earlier this month, has received a letter from a large company interested in buying the Coburg, Ore.-based RV maker for $50 million.
The proposed purchase plan by the unnamed company is outlined in parts of a 60-page document filed Wednesday (March 25) by Monaco in U.S. Bankruptcy Court in Delaware, according to the Register-Guard, Eugene, Ore. The overall document is a routine motion, asking the court for permission to use money from sales of RVs to pay the bills and keep operating at a scaled-back level.
But portions of the filing refer to the letter of intent received Monday from “a major public company” that would pay cash or stock for “substantially all assets of (Monaco) related to (the company’s) core RV manufacturing business.”
The proposed sale would enable Monaco’s secured lenders – Bank of America and Ableco – to be repaid “all or a material part” of what the RV maker owes them, according to the court papers.
In addition, the document says, “jobs would be preserved for the local communities so heavily affected by the … current circumstances and certain creditors would be benefited by the continuation of (Monaco’s) business lines.”
Monaco spokesman Craig Wanichek declined to discuss the proposed sale on Wednesday, but hinted that a deal may be close.
“We’re not going to make an announcement (on Wednesday),” Wanichek said. “We intend that the announcement will be forthcoming (Thursday) or Friday.”
He would not address questions regarding the number of employees that might be rehired if a sale is completed or to what extent the purchasing company might resume operations. He also would not discuss the unnamed company that is mentioned in the court documents.
“That will be in our announcement,” Wanichek said. “Obviously, there’s a lot of different parties involved (in bankruptcy negotiations).”
Monaco currently owes Ableco $37.4 million on a $39.3 million, fixed-term loan that was obtained last November. The company owes Bank of America and other lenders another $36.3 million on an $80 million revolving loan fund that was also negotiated in November.
In its bankruptcy filing, Monaco estimated that it has 25,000 to 50,000 creditors.
Its factory in Coburg and its service center in Harrisburg have both been idle since December. A holiday furlough was extended three times before the company terminated 2,000 of its 2,145 employees on March 2. Three days later, the company filed for Chapter 11 bankruptcy protection in Delaware – the state where it filed incorporation papers.
In the documents filed Wednesday, Monaco laid out alternate budgets that account for operations with or without the sale of its assets. The company could file a motion in Bankruptcy Court by April 15 to allow a sale to go forward. A sale could be completed by June 19, according to the papers.
The documents mention dates this spring for bidding and an auction related to the “major asset sale.” Wanichek would not say whether those actions will be necessary if the proposed sale of Monaco is accepted by the bankruptcy court.
Monaco was founded in 1968 in Junction City as Caribou Manufacturing Co., and builds motorhomes and trailers under the brand names Monaco, Beaver, Safari, Holiday Rambler, McKenzie and R-Vision. It also operates motorhome resorts in California, Florida, Nevada and Michigan.
But it closed three Indiana factories last summer, idling 1,400 workers, then suspended its dividend and cut production in half. The company began cutting jobs last April, laying off 600 workers in Indiana and Oregon after the first in a series of quarterly losses.
Early this year, Monaco hired the investment banking firm Imperial Capital to help it find a buyer.
Its stock was trading for $10 per share a year ago on the New York Stock Exchange, but it was delisted when its share price fell to 6 cents after this month’s layoffs. It now trades under the ticker symbol MCOA on the Pink Sheets, where its stock rose by a penny per share on Wednesday to 9.5 cents.
Also on Wednesday, Monaco filed notice with the Securities and Exchange Commission that it has been unable to complete its year-end 10-K financial report due to the bankruptcy filing and related issues. Also, the company said, key people in its accounting department have resigned, including employees who handle SEC filings. The company indicated that it would file a completed report by or after April 3.