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Country Coach Now Faces Liquidation Unless…
Posted By RVBusiness On November 24, 2009 @ 9:34 am In Breaking News | No Comments
Junction City, Ore., RV maker Country Coach is heading for liquidation unless a last-gasp bid by an outside investor to settle the company’s debts and bring it out of bankruptcy comes to fruition in short order, according to The Register-Guard, Eugene, Ore.
In U.S. Bankruptcy Court on Monday (Nov. 23), lawyers for the company and its main creditor, Wells Fargo Bank, said Country Coach is out of money and out of options, unless a Washington businessman named Roger McCombs can secure a stay of execution. If McCombs deposits $1 million in earnest money in a Wells Fargo escrow account by this afternoon, he’ll have 10 days to negotiate a deal to pay off the debt to the bank and attempt to breathe new life into the company.
Privately held Country Coach, founded in 1968, has been in Chapter 11 bankruptcy since March, providing it with some breathing room from creditors while it sought to reorganize its finances and business model. But even operating with a vastly smaller work force, the company has been steadily losing money. The company has posted losses of $8.8 million since April, company officials testified.
Wilson Muhlheim, the Eugene attorney for Wells Fargo, said Country Coach has consistently been in default on the terms of its loan agreement. Company officials said they have a negative balance of $450,000 on their line of credit with the bank.
“Now we’re at the end of the road,” Muhlheim said. “There is no deal on the table.”
But Country Coach CEO Jay Howard said there could be a deal. He testified that he’s been talking with McCombs since July, that McCombs toured the Country Coach plant in October, and that he’s serious about making a bid.
McCombs is founder and board chairman of Composite Power Corp. and the patent holder of the company’s composite energy delivery system, according to the company’s website. The company, based in Richland, Wash., with an office in Las Vegas, makes utility poles made from composite materials that are lighter, stronger and cheaper than wooden utility poles, and which don’t have to be treated with carcinogenic chemicals, like wood poles, according to the financial website The Hot Pinks, which follows companies whose stocks are traded over the counter.
“He’s an amazing entrepreneur,” Howard said outside court.
In addition to building motorcoaches at the Country Coach plant, McCombs is interested in building mobile medical coaches, using Country Coach’s chassis, and in utilizing magnetic-levitation technology, or maglev, an area in which he holds a patent, Howard said.
“By Dec. 3 we’ll know if McCombs is in or out,” Howard said. “If not, we have no other sponsor.”
Howard said an earlier proposed deal, involving a Texas company called Recreation Live and other investors, appears dead.
If the McCombs deal doesn’t come together, Country Coach’s Chapter 11 case will be converted to Chapter 7 for the purpose of liquidating the company’s assets, Rad cliffe ruled.
Howard said the company has 10 coaches completed and ready for sale, with a total value ranging from $5 million to $9 million, depending on whether they’re sold at auction or sold retail. The company has another 15 coaches that are in progress.
Howard said the company stopped building coaches in September and just recently laid off the remaining staff. Only Howard and CFO Mark Andersen remain on the job, he said.
Even if McCombs is able to strike a deal with Wells Fargo, he’ll also have to come to terms with Country Coach’s landlord, Lee Joint Venture.
David Wade, the landlord’s attorney, said the Lee group was prepared to begin eviction proceedings unless someone makes good on $160,000 owed in property taxes and $263,000 to repair the roofs of the factory buildings.
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