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Glendale Unions Surprised by Firm’s Bankruptcy

January 20, 2010 by · Leave a Comment 

Unions representing workers at RV manufacturer Glendale International Corp. were surprised when the Canadian RV manufactuer announced Tuesday (Jan. 19) that it had filed for voluntary bankruptcy protection, according to the Toronto Star. The Oakville, Ont.-based company said it has spent the past few months undertaking an “extensive” internal review, looking at strategies to rebuild its recreational vehicle division.

However, high gasoline prices, a rising Canadian dollar and the lingering effects of recession have taken a toll on Glendale International, forcing the company into bankruptcy, chief executive Edward Hanna said.

Hanna said there does not appear to be a significant rebound in store for the Canadian RV industry.

“The board of directors determined that a voluntary assignment in bankruptcy was in the best interests of the corporation’s stakeholders,” he said in a statement.

The company said all of the Glendale directors have resigned, but didn’t provide details on how the bankruptcy affects its employees or customers.

Calls to Glendale’s head office were not immediately returned.

About 110 hourly workers were temporarily laid off from the Glendale plant in Strathroy when it shut down in November. Colin Cherry of the International Association of Machinists and Aerospace Workers, which represented the workers, said the laid-off employees expected to be recalled in February.

“We were going into a program to improve the workplace, getting new technology — that was in a couple of weeks’ time,” Cherry said.

“The union and the company were going into a partnership agreement, which is quite disappointing because it’s never going to materialize now.”

In Alberta, the United Steelworkers represented about 60 Glendale workers who worked at a plant in Red Deer, manufacturing Travelaire-brand RVs.

The news of Glendale’s bankruptcy came as a surprise to Nick Stewart, president of United Steelworkers Local 1-207.

“I was under the impression that Glendale was actually in a pretty good financial position,” Stewart said. “They’ve got a rather substantial cash position as well. They haven’t exactly been running on credit. It’s a bit surprising.”

However, he acknowledged Travelaire had been struggling in recent years and tried to diversify into mobile homes and other products beyond its traditional base of recreational trailers and motorhomes.

“I’m not sure how successful that’s been,” Stewart said.

The Glendale RV division had just under $9 million in sales for the first nine months of 2009 – down from about $16.6 million in the same period of 2008. Sales at the Travelaire division totalled $6 million, down from $6.7 million in the first nine months of 2008.

Glendale said in October it was debt-free and had $2.4 million in cash as of Aug. 28.

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Canadian RV Builder Glendale Files Bankruptcy

January 19, 2010 by · 3 Comments 

Recreation vehicle manufacturer Glendale International Corp., Oakville, Ontario, reported today (Jan. 19) that it has voluntarily filed for bankruptcy under Canadian bankruptcy laws, according to a news release.

All corporate directors have resigned and the company expects Ernst & Young Inc. to be appointed as trustee of the estate of the corporation.

“The recent economic downturn, the rising Canadian dollar and higher gas prices have had a devastating effect on the recreational vehicle industry in North America,” said Edward Hanna, chairman and CEO. “Over the past few months the corporation has undertaken an extensive internal review as well as engaged outside consultants to assist it in reviewing all available options and strategies which it could pursue to rebuild the recreational vehicle division, its primary business. However, given that there does not appear to be a significant rebound of the Canadian RV industry and the commercial structure business for the energy sector in the near term, the board of directors determined that a voluntary assignment in bankruptcy was in the best interests of the corporation’s stakeholders.”

The Canadian Press reported that Glendale has manufacturing plants in Strathroy, in southwestern Ontario, and Red Deer, in central Alberta.

According the most recent financial report issued by the company in October, the Glendale RV division had just under $9 million in sales for the first nine months of 2009 — down from about $16.6 million in the same period of 2008.

Sales at the Travelaire division were more resilient, falling to $6 million from $6.7 million in the first nine months of 2008.

In addition, Glendale is part owner of Firan Technology Group Corp., which makes printed circuit boards for the aerospace and defense industry.

Marketer of the Titanium and Travelaire RV brands among others, Glendale was founded in 1971 and at one point held a 40% share of the Canadian RV market. The company’s parent, Firan Corp., was a factor in the U.S. market in the 1990s, operating two Elkhart, Ind.-area companies — Firan Motor Coach Inc. in Elkhart and Fireside RV Inc. in Bristol.

The Toronto Stock Exchange said it has begun an expedited review to delist the company’s shares from the key stock market.

Telephone calls by RVBUSINESS.com to the company went unanswered.

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Country Coach Recovery Has ‘Reasonable Chance’

October 23, 2009 by · 1 Comment 

A judge decided Thursday to give Country Coach Holdings LLC a little more time to re­organize its business plan after concluding that the company has “at least a reasonable chance” to emerge from bankruptcy as a going concern.

“If this debtor can be saved, it’s in everybody’s interest,” U.S. Bankruptcy Judge Albert Radcliffe said near the end of a daylong hearing, according to the Register-Guard, Eugene, Ore.  

Country Coach, a privately held maker of luxury motorhomes, closed its Junction City factory in November, putting about 500 employees out of work. The company filed for bankruptcy in March to re­organize its finances while getting breathing room from creditors.

The company resumed production in April, bringing back about 120 employees, with plans to turn out one coach per week. But the company has not met sales or production goals, and has been losing money at a rate of about $1 million a month, according to court testimony and documents.

The plant shut down briefly in July, and the assembly line has been shut down since the week of Sept. 11, Chief Financial Officer Mark Andersen testified. 

Radcliffe rejected arguments from Rebecca Kamitsuka, attorney for U.S. Trustee Robert Miller, that the case should be dismissed. Doing so would allow creditors to move to liquidate the company’s assets “at fire-sale prices,” Radcliffe said.

“I fail to see who benefits from the dismissal of the case,” he said. “Its loss would be devastating to Junction City.” 

Radcliffe set another hearing for next month and said he hopes to schedule a hearing to confirm the company’s reorganization plan by late January or early February.

Wells Fargo, the company’s main creditor, has agreed to extend financing through Feb. 15, said David Kurzweil, an attorney for the bank.

Kamitsuka had argued that the case should be dismissed because Country Coach had missed court-imposed deadlines for filing a reorganization plan and other documents, and because the company has lost $7.6 million since it resumed production in April and has just $1,000 left on its line of credit.

The company has no reasonable chance to recover, and its assets will continue to diminish in value, she said. 

“Everybody wants jobs, but this company is going further and further in the hole,” Kamitsuka said. “This case has cratered.”

Under questioning from David Lavant, one of the company’s bankruptcy attorneys, CFO Andersen said he was not alarmed by the $7.6 million in losses because that number “is a measure of accounting activity.”

What the company needs to do to survive is create cash flow by selling coaches, even at deeply discounted prices, he said. The company is trying to sell coaches for more than their liquidation value, he said.  

At the start of the hearing, Radcliffe heard a series of statements from Junction City civic leaders, Country Coach employees and vendors on how important the company is to the community.

“This is an important business in Junction City,” said Rick Kissock, executive director of the Junction City-Harrisburg Chamber of Commerce. “We need jobs. We don’t need empty buildings.” 

Country Coach, which has been in Junction City since its founding in the 1970s, is “an integral part of the community” and a contributor to local causes and organizations, Junction City Administrator David Clyne said.

The company accounts for 10 % of the city’s property tax base, which helps the city pay for services such as police and parks.

Dave Swenson of API Inc., a Eugene auto paint maker, said Country Coach helped his company grow to 25 employees and $14 million in annual revenue. Since Country Coach fell on hard times, API is down to $4 million in revenue and 12 employees, he said.  

Eugene lawyer Douglas Schultz, representing a committee of unsecured creditors, also urged Radcliffe to allow Country Coach to continue its reorganization efforts.

Unsecured creditors include suppliers, dealers and other parties who are owed money but will get paid only after the secured creditors get paid.Schultz said the company has struggled and not sold as many coaches as it intended. But he pointed to “one glaring fact”: Nearly all of Country Coach’s assets are encumbered by Wells Fargo Bank and investor Bryant Riley.

If the case were dismissed, Wells Fargo would foreclose to get back what it is owed, and Riley would get the rest, he said. 

“The unsecured creditors would end up holding an empty bag,” he said. 

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GM Bankruptcy May Provide ‘New Lease on Life’

May 28, 2009 by · Leave a Comment 

General Motors Corp., the world’s largest automaker until its 77-year reign ended in 2008, plans to file for bankruptcy protection on June 1 and sell most of its assets to a new company, people familiar with the matter told Bloomberg.com.

The U.S. Treasury will provide financing while the asset sale is arranged to a company formed by the government, GM said in a regulatory filing. GM’s path will be smoothed by an agreement today with some of its biggest bondholders on terms for an equity stake in the reorganized automaker.

GM, which would follow Chrysler LLC into bankruptcy, plans to build its new business around assets such as the Cadillac and Chevrolet brands. The 100-year-old automaker, battered by tumbling sales, fell short in a bid to cut debt by $44 billion by the U.S.-set June 1 deadline to restructure outside court.

“By freeing GM of tens of billions of dollars in debt, bankruptcy will give it a new lease on life,” Lynn LoPucki, a law professor at the University of California, Los Angeles, said before the news of Detroit-based GM’s strategy.

The people familiar with GM’s plans didn’t specify where the automaker might execute its Chapter 11 filing.
 
Steve Harris, vice president of communications for GM, declined comment.

GM’s bankruptcy will be the third biggest in U.S. history after Lehman Brothers Holdings Inc. and WorldCom Inc., based on GM’s reported global assets of $91 billion and total liabilities of $176.4 billion as of Dec. 31. Chrysler, which sought court protection on April 30, listed assets of $39 billion.

The filing would end the suspense for GM, which said it expected to declare bankruptcy after failing to get enough support for a debt-for-equity exchange on $27.2 billion in unsecured bonds.

Only 15 % of bondholders reportedly approved the offer to trade their debt for a 10 % stake in the new company. GM sweetened the plan today to promise warrants good for buying 15% more of the new enterprise, which would have an improved balance sheet based on a U.S. plan to trade bailout loans for equity.

Another 20 % of bondholders now supports the swap, according to a statement from the investors today.

Bondholders would lose some or all of the warrants and their 10 % stake in the new GM entity unless the company wins sufficient bondholder support to satisfy the Treasury by 5 p.m. New York time on May 30, according to a GM regulatory filing today.

A plan in the filing shows the U.S. Treasury owning 72.5% of equity in the new GM, a union health-care trust with 17.5% and 10% going to the old GM to hand to creditors in the bankruptcy process.

The plan calls for debt to be carried by the new GM that would consist of $8 billion in new loans from the Treasury, $2.5 billion owed to the United Auto Workers fund and $6.5 billion in dividend-paying preferred stock. Treasury will get $2.5 billion in preferred shares that pay a 9% annual dividend, bringing the issuance to $9 billion in preferred stock.

GM’s revised offer “represents the best alternative for bondholders in the current difficult and dire situation,” the investors said.

The accord with bondholders marks “another important step” in GM’s restructuring, an Obama administration official said in Washington.

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Monaco Set To Auction `Major Assets’

May 2, 2009 by · Leave a Comment 

Monaco Coach Corp. got the green light Friday (May 1)  to put its major assets up for auction later this month, but only after intensive negotiations that delayed the start of a hearing in U.S. Bankruptcy Court in Delaware.The Press-Enterprise, Eugene, Ore., reported that Robert Orgel, one of Monaco’s attorneys, told Judge Kevin Carey that Monaco was fortunate the hearing was scheduled late in the day because the extra time enabled the parties to resolve all the objections to Monaco’s auction plan.

“I couldn’t have told you that 45 seconds ago,” he said.

Monaco, a Coburg, Ore., RV maker, terminated about 2,000 employees and filed for Chapter 11 bankruptcy protection in early March, seeking to reorganize its finances while getting breathing room from creditors.

Before Friday’s hearing, lawyers for Monaco’s two main secured creditors, Bank of America and Ableco Finance, as well as for unsecured creditors and for the U.S. Trustee, had filed objections to Monaco’s plan to put its major assets up for auction, as well as its request to continue using cash from the main creditors.

Ableco had registered the most vociferous objections in a brief filed Thursday. Its lawyers argued that the proposed $52 million sales price would not come close to covering the $75 million that Monaco owes Ableco and Bank of America. Good faith negotiations to resolve issues had failed, they said, arguing that the company’s operations should be shut down and its assets liquidated.

The Press-Enterprise reported that after talks that apparently went on for most of the day Friday, the objections were resolved.

A subsidiary of Navistar International Corp. has agreed to buy Monaco’s assets for $52 million, but other parties will have a chance to submit bids at hearing scheduled for May 21.

Navistar is a massive Illinois corporation that builds diesel engines, school buses, heavy trucks and military vehicles.

Earlier this month, Monaco signed an asset purchase agreement in which a Navistar subsidiary called Workhorse International Holding Co. would buy Monaco’s major assets for $52 million.

Under such a deal, Navistar would acquire all of Monaco’s RV brand names, its closed factories in Coburg and Indiana, plus equipment and intellectual property. Navistar hasn’t disclosed its plans for the Coburg headquarters, but a Monaco official said in March that the new owner would restart the plant.

Monaco and Navistar have a long-running business relationship. In 2007, the two companies formed a joint venture to build rear-engine diesel chassis in Elkhart, Ind. And Navistar’s president and CEO, Daniel Ustian, has been on Monaco’s board since 2003.

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