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Fleetwood Extends Bid Deadline for Sale of MH Ops

August 3, 2009 by · Leave a Comment 

Fleetwood Enterprises Inc. has extended until Saturday (Aug. 8) the bid deadline on the sale of its manufactured housing unit.

The auction, should it be required in the case of competing bids, will be delayed similarly to Aug. 10, at 2 p.m. The final hearing to approve the sale will remain as scheduled on Aug. 12.

cavco-logoAs of Friday, Cavco Industries Inc., a manufactured housing and recreational park trailer manufacturer based in Phoenix, Ariz., and an investment partner, Third Avenue Trust Value Fund, have submitted the lone bid. The partners have offered $28.9 million for seven Fleetwood plants, trademarks and other assets.

Fleetwood filed for Chapter 11 bankruptcy protection on March 10. It has ceased travel trailer production and has already spun off most of its motorhome business to American Industrial Partners.

During an investors’ conference call last week, Cavco President and CEO Joe Stegmayer explained Cavco’s reasoning behind bringing in a partner to make the Fleetwood purchase. Each party would own 50% of the Fleetwood housing business. He called it “a prudent approach” and a way to conserve the company’s cash in these difficult times.

Despite recording a $1.5 million loss for the most recent quarter on sales of $13.6 million, Cavco is in “a strong financial condition” and has no long-term debt, he said.

“We want to preserve capital and have it available to inventory finance our distributors,” he said. “We have to be prepared for it (downturn) to continue for some time. This provides the opportunity to leave our balance sheet in a very pristine condition.”

All seven of the Fleetwood plants are operating but at a low level of utilization, he said. On average, each plant has the capacity to produce about 1,000 homes a year, he estimated. Cavco’s plants are operating at a 25% utilization rate, he added.

If successful, Cavco would take over the Fleetwood business “in a fairly short order” as it is Fleetwood’s intent to make a “fast transfer of assets,” Stegmayer during the onference call. The Fleetwood  name would be retained.

If the Cavco/Third Avenue bid fails, Cavco has other options, Stegmayer continued in answer to one investor’s question. “We don’t feel we need to do anything immediately, but we have looked at other projects,” he said.

When first announcing its offer on June 30, Stegmayer noted, “The Fleetwood brand is one of the strongest in the industry, and we are excited to have this opportunity to integrate Fleetwood’s strong family of product offerings with our own growing business.”

Third Avenue Management, the investment adviser to Third Avenue Value Fund, is a New York-based company with expertise in value and distressed investing. Third Avenue Management manages approximately $13 billion of assets for private and institutional clients. Most or all of Third Avenue’s proposed purchase will be made by Third Avenue Value Fund, the company’s flagship mutual fund.

Cavco and Third Avenue’s $28.9 million “stalking horse” bid is subject to execution of a definitive acquisition agreement (with customary conditions to closing) and bankruptcy court approval. The purchase price is subject to adjustment for the assumption of certain warranty liabilities and other customary post-closing adjustments.

The Fleetwood assets proposed for purchase include seven manufactured housing plants, one office building, all related equipment, accounts receivable, inventory, certain trademarks and trade names, intellectual property, and specified contracts and leases. The manufactured housing plants are located in Nampa, Idaho; Woodburn, Ore.; Riverside, Calif.; Waco, Texas; Lafayette, Tenn.; Douglas, Ga.; and Rocky Mount, Va.

The proposed purchase does not include the company’s operating plants in Alma, Ga., Elizabethtown, Pa. and Garrett, Ind. The facilities included in the proposed purchase currently employ more than 700 people in seven states.

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Bid for Fleetwood Segment Falls Short of Debt Load

May 19, 2009 by · Leave a Comment 

Last Friday’s offer by American Industrial Partners LP for a portion of the motorhome operations of Fleetwood Enterprises Inc. is “very preliminary” and “not a done deal,” a Fleetwood spokeswoman stressed on Monday (May 18).

First reported in the Dow Jones Daily Bankruptcy Review, New York-based private equity firm AIP has offered $53 million for most of the company’s motorhome business — including five plants in Decatur, Ind. and all of its motorhome brands, according to the Riverside Press-Enterprise.

What isn’t included in the deal is the company’s manufacturing location in Riverside or any of its closed travel trailer plants. Fleetwood has also been attempting to sell its manufactured housing division.

Fleetwood has asked the court to approve an auction that would set American Industrial’s offer as the minimum bid.

In the filings Friday (May 15), American Industrial’s bid was described by a Fleetwood investment consultant as a “reasonable purchase price.”

The equity firm doesn’t run the day-to-day operations of companies it buys, and focuses on buying mid-size industrial companies that it can streamline, according to information on its website.

But much remains to fall into place to make the sale happen, stressed Heather Everett, public relations manager for Fleetwood’s RV group. Fleetwood has not “inked a deal,” as the Dow Jones publication first stated in its headline, she told RVBusiness. And the proposed sale still has some hoops to jump through.

If Fleetwood’s auction proposal is approved by the court at 1:30 p.m. Thursday, initial bids would be accepted until June 18 and the auction would take place June 22, with American Industrial’s bid the one to beat.

Fleetwood started trying to sell its RV and manufactured housing businesses Feb. 6, before it filed for bankruptcy March 10. Fleetwood contacted or heard from more than 75 companies since then. Of those, 10 met with management or visited Fleetwood’s operations.

Fleetwood Enterprises Inc. has $20.7 million in assets compared to at least $265.2 million worth of debts, according to recent financial filings the company has made in bankruptcy court. Of that, at least $183 million is money owed to unsecured creditors.

The RV and manufactured homebuilder filed for bankruptcy March 10 but hadn’t filed a comprehensive list of debts and assets until now.

Fleetwood remained the country’s largest manufacturer of Class A motorhomes in 2008, accounting for 18.6% of the market share, according to industry results from Statistical Surveys Inc. The company held a 20.4% market share the year prior.

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Hoosier Rep. Donnelly Tackling Credit Issues

April 27, 2009 by · Leave a Comment 

(Editor’s Note: Joe Donnelly represents Indiana’s 2nd Congressional district. The following is a Letter to the Editor he wrote to the South Bend Tribune. The letter was published on Sunday, April 26).


I am writing in response to Brent Bardo’s letter to the Voice of the People on March 16. I appreciate Bardo’s interest and support of the manufactured housing industry. I share his belief that this is a vitally important industry to our district and I share his concern that more needs to be done to help during this economic crisis.

During my tenure as representative of the 2nd Congressional District, I have had the privilege to represent the recreational vehicle and manufactured housing capital of the world. As our nation has fallen upon tough economic times, the RV and manufactured housing industries have been hit especially hard.

Manufactured homes house almost 20 million Americans, which translates to many jobs for hardworking Hoosiers back home.
An issue that plagues most businesses – particularly small businesses – is the lack of available credit in the system. Both RV and manufactured housing manufacturers have suffered from the lack of credit to purchase inventory for their floorplans. This has had a ripple effect on manufacturers and suppliers. At the same time, the lack of consumer financing has hindered the ability of families to purchase these products. 

One of the ways that I have tried to alleviate some of the pain in both industries is by ensuring that RV and manufactured housing loans are eligible for Term Asset-Backed Lending Facility – TALF – loans. This is a new program designed to revitalize secondary loan markets and intended to jump-start primary lending markets. Originally, this program only included student, credit card, small business and auto loans as eligible forms of collateral. After working with several of my colleagues and the Federal Reserve, the scope of the program was changed to include RVs as part of the definition of an automobile and opened this form of financing up to all floorplan loans. Manufactured housing and RV manufacturer floorplan loans will be able to be securitized and purchased with TALF funds, which will hopefully loosen up credit.

Another way that I have advocated for the manufactured housing industry is the area of consumer lending. Typically, loans that are offered to families hoping to purchase a manufactured home on leased land have been significantly higher than other home loans. One way to obtain a lower loan rate is to purchase loan insurance. The Federal Housing Administration Title I loan program guarantees loans for manufactured homes that are placed on leased land, which enables lenders to provide a more affordable loan to consumers. Unfortunately, these loan guarantee limits have not been raised since 1992 and not kept pace with rising housing costs. That is why I introduced legislation to raise home-only loan limits from the current $48,600 to $69,678, enabling more families to purchase a home that fits their needs. I was pleased that this was signed into law last July.

It has been my privilege as a member of Congress to work on ways to help these important industries to thrive and get them back on track to regain their competitive edge.

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