After months of searching for fresh capital to kick start production, Moreno Valley, Calif.-based MVP RV has located a private equity firm and is in the due diligence process leading up to inking a final agreement.
Partners Brad Williams, Roger Humeston and Pablo Carmona jointly told RVBUSINESS.COM today (Sept. 11) they are hopeful the pact can be signed soon and production of the company’s travel trailers and fifth-wheels resumed within a month thereafter.
The owners, formerly with Thor California Inc., have $3 million in confirmed dealer orders ready to fill once production resumes. MVP RV halted production in early June when it ran out of money.
The U.S.-based private equity firm’s capital would not only be used to finance new construction but also to pay suppliers and make good on outstanding warranty claims, they said.
Williams would not disclose the name of the equity firm, the amount of its proposed investment or any other terms.
Their statement came on the heels of a related announcement on Thursday in which they said they formed a separate company – MVP-EV – to build electric vehicles for CT&T United, the American subsidiary of CT&T Korea Ltd. Those vehicles, from motorcycles and golf carts to small cars and buses, will be built in one of the buildings on the MVP compound in Moreno Valley.
CT&T is making its first push into the American market and eventually plans to employ as many as 2,600 people in the country, operating several factories along with research and management teams to market several models of battery-operated vehicles.
MVP-EV holds the West Coast franchise to build the vehicles, thereby having the potential of employing hundreds of workers in Southern California.
CT&T is not the source of the private equity capital in question, Williams said. “They’re (CT&T) not interested in RVs at all,” he said.
The RV and electric vehicle companies are separate but could well use some of the same suppliers, a prospect that became more likely as RV suppliers have come forward since Thursday’s announcement and offered their services, Humeston noted.
MVP RV has less than 100 suppliers, but the electric vehicle business will have some 400 separate suppliers, based on CT&T estimates.
Williams, MVP RV president and CEO, said he went public with the RV company’s progress in finding private equity in part to allay concerns by some suppliers that, amid Thursday’s announcement, the RV firm may have closed.
On the contrary, MVP RV has a variety of vehicles in various stages of production on all its lines and continues to garner dealer interest in its products, Williams said.
Chief among them are the Coast, an aerodynamic, lightweight trailer, and the Envy, a fully-loaded a toy hauler. Both products were designed to fill the void left when Weekend Warrior exited the business, Williams said.
In July 2008, MVP RV Acquisition Corp., an affiliation of top executives at Thor California Inc., agreed to purchase Thor California Inc., a subsidiary of Thor Industries Inc.
As MVP RV, the company continued to manufacture the Wave, Summit and Jazz travel trailers and fifth-wheels along with Tahoe and Vortex toy hauler lines, previously produced by Thor California.
They’ve also developed new products such as the Beacon, a microlight trailer, and the Sonoma, an inexpensive, entry-level travel trailer.
The company was actively selling through nearly 100 dealerships in 11 Western states and three Canadian provinces. Williams estimated at the start of the summer that 65% of MVP RV’s products built in the first year have already sold
The company survived the credit crunch that began a year ago and was aggressive in developing new products, such as the Coast and Envy, but when orders began arriving in the spring, the company was out of cash and had to stop production. But it did not fold, Williams stressed.
“We right-sized and cut and slashed expenses every way you could imagine,” Williams said earlier this summer. “We’ve positioned ourselves so that when we do come up running, our break-even is very low. We’re lean and mean and in position to take advantage.
“We were struggling with profitability through most of last year until this spring. We started to show a profit, which indicated all the changes we had made took hold. Then we got into this cash flow tug of war situation.
“The beauty here is, no bank holding us hostage. We have no long-term debt. Our intent is to get a cash injection and get squared away with our suppliers.
“The time is right for this; we think the worst is behind us. This is the best time to invest in an RV company,” Williams said.