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Indy Bank Didn’t Give Carriage a ‘Fair Shake’

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October 20, 2011 by   15 Comments

The Carriage Cameo on display during the recent RV Open House Week in Elkhart.

Is 45-year-old Carriage Inc.’s plight an example of the kind of tough banking policies that the nation’s been facing since the recession and that continue to hurt — more than help — the U.S. economy?

Or is the Millersburg, Ind., company’s dilemma simply a case of a bank that finally lost its patience after a lengthy period of loan extensions and ultimately did what it had to do by filing suit against its client?

PNC Bank out of Indianapolis filed suit Tuesday (Oct. 18) to take possession of Carriage, a well-respected RV builder that owes the bank more than $5 million. The suit came a day after 180 Carriage workers were furloughed at the financially troubled firm.

The bank is demanding immediate payment of overdue loans from the bank, which maintains in the suit in Elkhart County Superior Court I that Carriage owner Glenn Cushman has been in default of his financial obligations to PNC Bank from as far back as September of 2009, requiring the issuance of several loan extensions, The Goshen News reports.

While a PNC official declined comment, spokesmen for Carriage, which manufactures the Cabo, Cameo, Carri-Lite and Royals International towable RV lines at its rural Elkhart County complex, feel they haven’t gotten a fair shake from a mega-bank that isn’t really interested in a workable plan and the general welfare of one small Hoosier town.

“We’ve had an outpouring of concern from Carriage owners, 90 dealers, nothing but positive support for us, and it’s sad,” says Ed Kinney, vice president of sales and marketing for Carriage. “It affects 200 people in the community, the vendors and dealers nationwide and in Canada. Actually, we’ve got units on line right now that are supposed to be going to England, and the bank won’t work with us to make this work.”

“We’ve got a bunch of units sitting off line, short parts,” he added, “and everything we’ve got in the system right now is retail sold to be delivered to customers. I mean, that’s what’s crazy.”

In fact, Kinney, an RV-building veteran, says Carriage’s situation reminds him of why some people are demonstrating in the streets right now because he’s convinced that Carriage is a viable company today, and he’s not alone in that view.

“You know what?” he asked, “I can sit right here now and say as an American citizen that I can understand why these people are protesting banks and Wall Street the way they are, because it’s happening right here in Millersburg, Ind., and it’s sad.”

Just as outspoken is Rick Van Es, who was hired six weeks ago at the request of PNC Bank to engineer a restructuring of the company. Van Es says that he’s questioned from the outset the intentions of Carriage’s lead creditor, PNC Bank, to forge an earnest plan to save the company.

“I found this process with PNC to be inconsistent and curious at best,” said Van Es, a certified restructuring advisor and CPA who feels that PNC has been more interested in him serving as an advisor rather than a take-charge chief restructuring officer who ran the company, made decisions and stood a realistic chance of pulling the firm out of an admitted financial hole.

Fact is, Van Es claims PNC officials never seemed real interested in talking to him at all, and never required him to assemble a turnaround plan, although he went ahead and did it, anyway. “We submitted the turnaround plan to (Carriage) management last week,” said Van Es of the proposal, which called for an immediate tamping down of expenses. “Management accepted the plan wholeheartedly, and their board was ready to implement my plan. And we began implementing it immediately.

“I submitted that plan to the bank, and I heard no comment,” he continued. “This plan restores the company to profitability within 30 days. And the company, even though it was not required by the bank, was willing to give me full executive authority to implement the plan.”

Thus, Van Es says he and Carriage’s management were “blindsided” by Tuesday’s suit filing. “We were very much blindsided because the other thing that has happened here is that the company was requested to find replacement financing for PNC. PNC had suggested that if the company could replace its operating line of credit — and also bring in enough money to pay down the mortgage to an 85% loan-to-value — that the bank would be happy to continue to move forward with the company.

“The company raised all the money that was required to achieve that, and we actually have not only commitment letters from those lenders, we were actually reviewing contracts and got to the point where our new lenders asked PNC for payoff letters, and PNC would not provide them. At the end of the day, what PNC said was ‘we’re not interested; we’re going to file a suit.’

“So we have money on the sidelines, and that would pay PNC down substantially and restore the banking relationship to what I would call a commercially reasonable relationship in terms of the amount borrowed,” Van Es noted. “And that, combined with the turnaround plan that I have authority to execute, would mean that Carriage would be a viable enterprise going forward.”

Van Es emphasizes that Carriage never missed a payment to PNC, even though it did violate some covenants and was admittedly feeling the pain of the recent recession. “But this is a company that met it’s obligations,” he said. “Granted, it was not profitable. The bank had every reason to be anxious and dissatisfied, and I don’t fault the bank one minute for that. But we just don’t understand their reluctance to support us when we have a viable enterprise and we have raised money that they asked us to raise from other sources to pay down on their debt. Fact is, they told us that ‘if you can’t pay us all the way off, we’re not interested.’”

Bottom line, says Van Es, he and Carriage’s management are at their “wit’s end” with the whole sequence of events and, especially, with the effect that Carriage’s failure could have on Millersburg.

“We are one of two employers in Millersburg,” Van Es said, “and this is going to devastate their local economy, and for no good reason because, one, we believe we are viable and, secondly, we have the financing in place to reduce the debt at PNC. And we believe in six months we could pay PNC off entirely. That’s not a good reason to put 200 people into the unemployment line.”

So, what does Carriage really want at this point?

“Frankly, we are hoping that we can get a meeting with PNC’s management,” he said. “To this point, we have been unable to do so because I believe that what’s missing in this equation – and I was hired rather late in the process, and I understand the bank had some fatigue by then, which is normal. However, my frustration is that we as business people have not been able to communicate with the bank because I think they’ve had their mind made up all along.”

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Comments

15 Responses to “Indy Bank Didn’t Give Carriage a ‘Fair Shake’”

  1. Paul Mercadante on October 21st, 2011 7:08 am

    I waited for years to be able to buy a Carraige Fifth wheel having 4 others prior to my Cameo purchase last July from Lazydays..There is no comparison in structure and Quality with some of the other junk that is out there.
    One friend replaced axels twice in 10K miles on one those newly ,cheap and cosmetically PREETY 5v’rs.
    Good luck on solving financial issues.
    Paul

  2. Chuck Spelman on October 21st, 2011 8:39 am

    Sir:
    I just tried to send a rather lengthy information report but it must have gotten dropped as it said you didn’t rec it. As of last week I was working with Carriage and have for the last year an half. My number is 910-975-1905 mobile or 910-673-2798 home.

    Thank You

  3. Byron Atkinson on October 21st, 2011 1:19 pm

    I don’t know if it will help, but I just wrote to both of Indiana Senators asking them why this company is being forced to close. I would hate to see them forced to close their doors.

  4. Dave Kellas on October 21st, 2011 1:47 pm

    Been Through it with Teton ( Another One Of The Best ). Let Carriage post how much their CEO & CFO got paid in saleries since they started getting into financial difficulties, I’ll bet their fancy CEO isn’t going to be in the soup line along with the Workers.

  5. Bob Zagami on October 21st, 2011 2:04 pm

    And people wonder what is wrong in this country? Let’s see how much PNC pays their executives in bonuses this year for destroying yet another legendary American manufacturer of qulaity RV’s. There is simply no logic to this action by the bank given the circustances outlined above. Isn’t business challenging enough today, espcially the RV business, without having morons on Wall Street and in the executive suites at PNC putting Amrican companies out of business, Americans out of work and then heading off to the country club to spend their multi-million dollar bonuses for doing absolutely NOTHING to get this country and our domestic business turned around and working again. This is despeicable.

  6. Alan M Fisher on October 21st, 2011 2:04 pm

    How much of this disaster can be attributed to the Dodd-Frank bill? —without a doubt one of the largest scams perpetrated on the American public. Look closely, friends, at the underlying government intervention and “semi-regulaton” of the banking industry and every other aspect of our lives!!!!!

  7. Terry Bryant on October 21st, 2011 2:24 pm

    PNC bank is just another example of corporate greed who cares nothing for the average person unless they have something for them. However they have a living to make as well or should I say a killing.

  8. mike on October 21st, 2011 3:26 pm

    The precident has already been set. Just follow the governments program for GM.
    File bankruptcy and reopen tomorrow debt free.

  9. Mark on October 21st, 2011 4:50 pm

    A lot of blame being ignorantly placed on PNC. PNC allowed this company to operate in DEFAULT for over two YEARS, before doing anything! This is obviously not a viable business. Get real folks.

  10. Dick Ackerman on October 21st, 2011 5:15 pm

    This is just one more instance of the lack of financial corporate social responsibility. Mr. Zangami’s comments regarding PNC salaries and perks are spot on – all these high-rollers care about is the funds to finance their next extravagant vacation.

    One of the major problems of today’s corporate board room environment is the CEO of one company sit on the board of another company and the progression follows. No board member is going to reduce the CEO’s remuneration package because the same could happen to him. This is one of the dirty little secrets of banking and Wall Street.

    For these folks to even consider the term “Social Responsibility” would be ludicrous.,

  11. Bobbi on October 21st, 2011 9:05 pm

    Maybe some investigation is required to see if certain parties that have tried to buy Carriage in the past have any connections to PNC? Just some thought.

  12. Bob from Ohio on October 21st, 2011 11:59 pm

    It’s sure looks to me like PNC has an ulterior motive! Why hire Mr Van Es to
    come up with a plan to save Carriage and then ignore his plan. Do you think
    PNC has a buyer for Carriage and want’s to put them into receivership? I would think that with a good lawyer & sympathetic Judge, Carriage woluld be able to put
    PNC in their place and let them survive.

  13. Dan on October 22nd, 2011 11:38 am

    If some one owed you FIVE million you would expect them to pay you the full amount when it was due wouldn’t you

  14. Earl Dennis on October 22nd, 2011 9:15 pm

    I understand very well the Carriage plight. I was 30 seconds late on a payment for my Freightliner Sport Chassis and they got it. They are totally heartless.

  15. Fottip on October 24th, 2011 1:02 pm

    I read a lot of the “Occupy Wall Street” and similar mentality here. That ain’t it, folks. Not by long shot. If the accounts posted elsewhere (http://www.rvbusiness.com/2011/10/pnc-bank-files-suit-against-faltering-carriage/) that Glenn Cushman has been in default on his obligations to PNC Bank since 2009, and now owes them $5 million, and can’t pay it, you want to fault the bank? Really? How many years of this kind of losing business relationship do you think PNC Bank ought to tolerate? Banks aren’t “not for profit” – they owe it to shareholders to turn a profit, and that ain’t happening here. I own a new Carriage Cameo, and this whole thing sickens me – it’s a pretty good product. But if Cushman run the business and stay solvent, it’s time for him to do something else.

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