Custom Chassis Assets Go to Auction Sept. 17-19

September 10, 2009 by · Leave a Comment 

Auction announcement flyer

Auction announcement flyer

Bartel & Co. Auctioneers and FM Stone Commercial announced that they will conduct auctions in Elkhart, Ind., Sept. 17-19  of the former assets of Custom Chassis Products LLC.

Custom Chassis Products LLC manufactured and assembled motorhome chassis and was a joint venture between bankrupt Monaco Coach Corp. and International Truck and Engine Investments Corp.

Assets to be sold include approximately 1,500 skids of new parts, new diesel engines, transmissions, wire, tires, axles, tools, crane systems, welders, paint booths, raw steel and office furniture.

 The auctions will begin at 9 a.m. each day and will be held at 2700 S. Nappanee St. in Elkhart.

The auctions are by order of the U.S. Bankruptcy Court, Joseph Bradley trustee.

The auction firm will be operating three auction rings Sept. 17-18 and two auction rings on Sept. 19. To be sold on Thursday (day one) will be the new parts, inventory, engines, transmissions, tires and axles. Selling on Friday (day two) will be the tools, paint booths, welders, office furniture and other machines. Saturday (day three) will be dedicated to selling raw steel, chassis rails, and other steel components.

Open house inspection dates are scheduled for Sept. 15 and 16 from 9 a.m .to 5 p.m.

“We are expecting a good turnout of bidders and have had inquiries from all over the United States, Canada and Overseas,” said Brad Hooley, chief auctioneer for the Middlebury, Ind.-based firm that has overseen similar auctions of former RV firm assets in recent years.

Ross Miller, broker with FM Stone Commercial, Elkhart, said, based on the level of interest and volume of items to be sold, this auction will be one of the largest industrial auctions ever conducted in Elkhart County.

For more information go to  or call Bartel & Company at (800) 860-8118.

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Navistar Cites Monaco Acquisition in Q3 Report

September 10, 2009 by · Leave a Comment 

Confronted by hard economic conditions and the worst truck market since 1962, Navistar International Corp. on Wednesday (Sept. 9) reiterated the company will be profitable for its fiscal year ending Oct. 31, despite reporting a loss for the third quarter ended July 31.

“While we are lowering our guidance, we still expect to be strongly profitable at $4.95 to $5.25 per share and I am encouraged by the results of the company and our commitment to generate positive results for our shareholders during these challenging economic times,” said Daniel C. Ustian, Navistar chairman, president and CEO, in a news release. “The third quarter is traditionally our most challenging quarter, but we remain focused on the long-term success of the company. Therefore, we elected not to implement drastic short-term cost cutting actions that would have impacted our ability to deliver long-term results.”

Manufacturing segment profit was $110 million and $604 million, including the impacts of the Ford settlement, net of related charges, for the third quarter and first nine months of 2009, respectively, compared with $473 million and $881 million in the year-ago periods. 

Navistar reported a net loss for the current third quarter of $12 million on $2.51 billion in revenues, compared with net income of $331 million on $3.95 billion in revenues in the third quarter a year ago.

Included in the results is the impact of the asset acquisition of certain assets of Monaco Coach Corp., which resulted in an extraordinary gain of $23 million in the third quarter. The gain is a result of the company being able to acquire the RV inventories out of bankruptcy and the effects of purchase accounting with the fair value of the acquired assets.

For the nine months ended July 31, 2009, the company demonstrated solid progress in its business strategy by delivering net income of $234 million on revenues of $8.28 billion, including the impact of the Ford settlement and related charges, compared with net income of $477 million on revenues of $10.85 billion in the same period a year ago.


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Elkhart’s RV Rebound May Indicate Recession’s Exit

September 8, 2009 by · 2 Comments 

George Graber was unemployed for three months this year after the shutdown of an RV plant in Elkhart County, Ind. Now, he’s building $15,000 travel trailers at startup Heritage One RV Inc.

His job-hunting luck reflects a rebound in RV demand that may signal the end of the worst U.S. recession since World War II. In the last four domestic cycles, Winnebago Industries Inc. and other RV makers foreshadowed the economy’s decline and heralded its recovery, government and trade-group data show, according to

“The RV industry is always the first in and the first out, and there’s already been a noticeable beginning of it coming out of the current recession,” said Dave Hoefer, 66, an adviser to Earthbound Recreational Vehicles, which was founded this year on the site of another bankrupt maker in Middlebury, Ind.

Elkhart County builds more than half the RVs sold in the U.S., making it the center of a $14 billion domestic market. Evidence of a turnaround is showing up in new companies like Heritage One sprouting from the remains of failed manufacturers, and in no-vacancy signs at a motel favored by RV-hauling truckers.

Analysts watch RV sales because motorhomes and travel trailers are discretionary purchases that consumers defer in an economic slump. Industrywide deliveries may rise in 2010 to end a three-year decline, said Richard Curtin, director of consumer surveys at the University of Michigan.

Sales in July, the latest available, ran at the strongest annual rate since October, according to the Recreation Vehicle Industry Association (RVIA). By year’s end, those shipments should show their first monthly gain since October 2007, predating the onset of the recession in December of that year, said Curtin, who analyzes data for the Reston, Va.-based trade group.

Rise and Fall
Wholesale deliveries to dealers averaged 355,000 over a six-year period that ended in 2007, then tumbled to 237,000 last year as the recession took hold, according to RVIA data.

Showroom visits and consumer-loan approvals now are rising for the first time in more than a year, said Steve Smith, a Heritage One partner who recently drove 5,000 miles through the Midwest and South as part of a company sales call.

“Customers’ interest is obviously rising, which is making the dealers feel better,” Smith, 47, said from the 30,000-square-foot building in Nappanee, Indiana, where Graber and about a dozen other workers were assembling so-called “stick and tin” trailers of metal sheets over wooden frames.

Three Obama Visits

Elkhart County needs that kind of news. Located along the Michigan border and home to about 200,000 people, the county has a jobless rate of about 17%, the worst in Indiana. President Barack Obama has visited the area three times to talk about economic hardship.

Ron Muhlenkamp, whose Muhlenkamp & Co. in Wexford, Pa., has invested in RV makers coming out of past recessions, said he isn’t yet buying the stocks in this cycle.

“We think the consumer might be slower to return this time,” he said. U.S. joblessness reached a 26-year high of 9.7% in August, the Labor Department said on Sept. 4. The so-called underemployment rate, which includes part-timers who would prefer full-time work and job seekers who have stopped looking, rose to a record 16.8%.

Before coming to Heritage One, Smith worked at Travel Supreme Inc., a maker of $160,000 trailers that shut its plants in January after another company bought out the operations. Nearby sit two vacant buildings owned by motorhome maker Monaco Coach Corp., which went bankrupt in March.

Betting on Recovery

Earthbound, the company advised by Hoefer, is on the site of Pilgrim International Inc., which went out of business in September 2008. Earthbound has been working on $42,000 lightweight trailers since January and is betting on a recovery in time for a sales push in early 2010. Heavier trailers cut fuel economy for their tow vehicles.

“We feel the industry has a strong future,” said Bill Hughes, 58, an Earthbound investor who was a Pilgrim vice president of service and parts. In the past year, 15 new RV makers have begun operations, according to the RVIA.

Another sign of recovery is bookings at the Red Roof Inn in Elkhart, said General Manager Beth Ronzone, a 24-year employee. The motel is filled again on some nights with truck drivers who move RVs, a reminder of the industry heyday two years ago when rooms were sold out five or six times a week.

‘Seeing a Pickup’
“We started seeing a pickup in late April,” Ronzone, 57, said Aug. 24. By that evening, most of the parking lot was occupied.

Hiring is starting to pick up, too, said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County

Keystone RV Co., a Goshen-based unit of Thor Industries Inc., the largest U.S. RV maker, announced last month it will add 200 workers to expand travel-trailer output, Heiden-Guss said. Jayco, in nearby Middlebury, is also recruiting, she said.

Among the investors betting on the industry is Warren Buffett’s Berkshire Hathaway Inc. Berkshire’s Forest River Inc. RV unit paid about $42 million for the RV business of Elkhart- based Coachmen Industries Inc. American Industrial Partners bought the motorhome unit of bankrupt Fleetwood Enterprises Inc. of Riverside, Calif., in June for $53 million.

Winnebago and Jackson Center, Ohio-based Thor are the only large, publicly traded RV makers still in the business and not in court protection.

Shares of Forest City, Iowa-based Winnebago and Thor have almost doubled this year. Since the recession began, Winnebago has tumbled 45% and Thor has fallen 26%, compared with a 31% decline in the Standard & Poor’s 500 Index. Coachmen still operates its bus and manufactured-home business.

Horses, Humans

At Sierra Motor Corp., a 22-year-old maker of interiors for horse trailers, 2008’s record-high fuel prices helped spur expansion into human transport.

The Bristol, Ind.-based company added a line of travel trailers weighing less than 1,750 pounds. They include amenities such as toilets, which aren’t common on models that small, President Michael Greene said.

That move also meant that Sierra Motor, which has about 45 workers, could keep about a dozen employees who would have been laid off as orders for equine vehicles flagged, Greene said. The labor force has exceeded 100 in busier times, he said.

“They are like family, you hate to have to let people go,” said Greene, 52, who was one of the company founders.

For Graber, 45, who had to sell his pickup for a cheaper model and take other belt-tightening steps after losing his purchasing job at Travel Supreme, the Elkhart recovery can’t come fast enough.

“People I know personally, a couple of them will get back every week now,” he said. “Three months ago, everyone was just down and they weren’t even taking applications.”

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Monaco RV Worker Proud to Introduce the President

August 7, 2009 by · Leave a Comment 


Herm Wiley introducing President Obama on Wednesday.

Herm Wiley introducing President Obama on Wednesday.

Nerves took hold of Herman Wiley minutes before he was to take the stage in front of hundreds of co-workers, politicians and members of the national media on Wednesday (Aug. 5) in Wakarusa, Ind.

But then President Barack Obama took Wiley under his wing and helped calm those nerves, according to the South Bend Tribune.

“He took me backstage and told me everything would be all right,” Wiley said. “I took a deep breath and went out there.”

In a confident voice, Wiley told his story to those gathered in front of him – about how he worked in the recreational vehicle business for 32 years at the former Monaco Coach Corp., was recently laid off temporarily while trying to support his two children, and then how he was rehired in June at Monaco RV. 

“I have great faith the economy will turn around,” he told the crowd.

He then introduced the president and shook his hand as Obama made his entrance Wednesday at Monaco RV to thunderous applause from the nearly 200 Monaco employees there.

After the news conference, Wiley spoke about his once-in-a-lifetime experience.

“It felt really good,” said Wiley, 54, of Elkhart. “I was proud to do this. It was beyond anything you could imagine.”

Wiley’s story is not unique. 

In fact, just about every Monaco employee there had two things in common: They are currently employed but had recently been laid off. Most of them lost their jobs sometime between July 2008 – when 1,400 workers were cut – and March.

Some 400 employees have been brought back since Navistar International Corp. bought the company out of bankruptcy and renamed it Monaco RV.

The news that Navistar would receive $39 million in grants to develop batteries and electric vehicles was a sign their company may be on the right track to stability. The money will be spent to build electric trucks with the ability to go 100 miles.

“Hopefully, we can get going and get back the money we were making a few years ago,” said Laura Collins, who makes the commute to Wakarusa from Logansport.

Collins said she took a $5 or $6 an hour pay cut when she returned but said the work is worth it. 

“It’s an industry that once you start working, it’s hard to stop,” she added.

Randy Trotter, of Bristol, Brandon Boisvart, of North Manchester, and Jeff Compton, of Warsaw, stood shoulder to shoulder as they talked about what the grant will do. They, too, were all temporarily laid off when the Monaco plant in Warsaw closed but now are happy to report to Wakarusa daily.

They say the stimulus money is helping them get back to work and secure their jobs.

“It was a struggle, struggle, struggle before we got called back,” Trotter said.

“Yeah, this really got us back to work,” Compton added. 

“And hopefully will keep us there,” Boisvart said.

Rich Esterlie, of Elkhart, was laid off a year and a half ago and struggled to find a job before he was called back.

“There already is a hybrid, now we’re getting involved with an electric line of trucks,” he said. “I definitely think this will help the business.”

Henry Kaiser was more skeptical, adding he hopes more jobs are added, but he said he’s not certain the money will help.

Josh Walters was riding around Wakarusa on his Harley-Davidson shortly after the news conference when he stopped to talk about the grant. 

“I think it’s a great thing as long as (Obama) sticks to what he says,” Walters said. “What’s iffy is having the electric vehicles go for 100 miles. They’ll have to improve on that, but it’s a starting point.”

Walters said he worked as a repo man after he was cut from Monaco.

“That’s when I got to see the other side of the economy,” he said. “I understand what people go through.”

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Stimulus Comes None Too Soon for Strapped Hoosiers

August 5, 2009 by · Leave a Comment 

President  Obama returns to Elkhart County, Ind., today (Aug. 5) at a moment when the county — so hammered by recession that Obama made it a symbol of the need for his stimulus plan — is finally getting some good news, according to

Obama will announce Energy Department grants for electric-car development during a speech at a Monaco RV factory in Wakarusa, about 10 miles south of Elkhart.

That will follow Tuesday’s announcement by Sweden’s Dometic International AB that it plans to hire 241 people to make refrigerators for recreational vehicles in Elkhart, a city of 53,000 about 100 miles east of Chicago.

“There are signs that it is getting better,” said Wakarusa Town Manager Tom Roeder, 61.

Preparing for the president’s second appearance in six months, Elkhart County, with almost 200,000 residents, has become a symbol of Obama’s assurances that the economy, still facing tough challenges, is beginning to improve.

At the same time, indications that the economy in northern Indiana is coming out of its free fall are tentative, and balanced by signs that many people are still struggling.

Unemployment in the Elkhart-Goshen metropolitan area rocketed to 18.9% in March from 4.8% at the end of 2007. The jobless rate has eased for three straight months to 16.8% in June. Manufacturing employment, which hit an 18- year low of 44,900 jobs in March, inched up to 45,300 in June.

“Retail merchants tell me spending is up, there’s some slight improvement in housing starts and a few more vehicles are selling,” said Elkhart Mayor Dick Moore, 75, a Democrat who shared a stage with Obama on Feb. 9 when the president came to promote the stimulus.

Housing Market ‘Awful’

Still, in the automotive and housing industries, the economy around Elkhart hasn’t provided many encouraging signs.

The Elkhart area, which calls itself the RV capital of the U.S., lost more than 15,000 jobs in the past year as sales slumped at local RV and manufactured-housing companies.

“The housing markets are still just awful,” said Rick Lavers, president and CEO of Coachmen Industries Inc., which makes modular homes and sold its RV business last year to Forest River Inc. and Warren Buffett’s Berkshire Hathaway Inc.

Housing won’t recover until banks are more willing to make loans, Lavers said. “The cash has to get moving in this economy,” he said.

Since April 9, Coachmen’s shares have jumped to $1.32 from 25 cents.

Job Worries

Robert Wilson, president and chief operating officer of Supreme Industries Inc., a maker of specialized truck bodies and shuttle buses in nearby Goshen, said demand for trucks isn’t picking up yet.

“People are still worried about their employment, whether they’re going to find a job or keep their job,” Wilson said. “Until that changes, I don’t see the truck business getting any better.”

Obama is traveling to Indiana two days before the scheduled Aug. 7 release of unemployment figures for July. The national unemployment rate is projected to rise to 9.6%, according to the median estimate of economists surveyed by Bloomberg, from a 26-year high of 9.5%in June.

Touching Bottom

Other measures suggest the national economy may be touching bottom. Gross domestic product shrank at a 1% annual rate from April through June, after contracting at a 6.4% annual pace in the first quarter. The Standard & Poor’s 500 Index has risen almost 25% since Obama took office.

The Obama administration has prodded manufacturers to develop more efficient vehicles through a $2.4 billion grant program for development of batteries and related technologies that was included in the $787 billion economic stimulus legislation.

In addition to Obama’s trip, Vice President Joe Biden and Energy Secretary Steven Chu will travel today for events at other battery-technology developers in Detroit and Charlotte, N.C.

The factory where Obama will speak, formerly operated by bankrupt recreational-vehicle manufacturer Monaco Coach Corp., was purchased by Navistar in June. 

Electric Vehicles

Wakarusa-based Electric Motors Corp. will use a plant for a partnership with Nappanee, Indiana-based Gulf Stream Coach Inc. to develop an electric vehicle, Electric Motors CEO Wil Cashen said.

The company has applied for stimulus funds and would be “ecstatic” to get federal help, Cashen said.

If a local company gets an energy grant it “could be huge for our town,” said Wakarusa Chamber of Commerce President Nadine Lengacher, who owns J&N Stone, a family-run stone-veneer manufacturing company.

In Elkhart, projects funded by the stimulus, including sewer improvements and a $4.2 million airport-paving project, may have saved or created between 400 and 500 jobs, Moore said.

“We can see a light at the end of the tunnel,” said Bill Stevens, 41, vice president of Brooks Construction Co., of Fort Wayne, Ind., which rehired about 10 or 15 laid-off employees to work on a $10 million stimulus-funded construction contract on part of U.S. Highway 33 in Elkhart County. “It’s a matter of riding out the storm.”

While Lengacher sees some signs of recovery, she credits the “determination of the people who live in this county” and not Obama’s economic-recovery plan. “It’s a community that’s not one to sit back and cry because things are so bad.”

Counseling Patience

In Wakarusa today, Obama will counsel patience, said chief spokesman Robert Gibbs.

“It is going to take some time to move our economy from where we are, to get our economy back on track,” Gibbs said Tuesday. “The president will not be satisfied until we’re creating jobs.”

Coachmen CEO Lavers said many of his neighbors are getting tired of waiting.

“We’re eight months into 2009 and there’s no real perceptible turn on Main Street,” Lavers said. “I think people’s patience is about done.”

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Obama to Speak at Navistar Facility in Wakarusa, Ind.

August 3, 2009 by · 1 Comment 

President Obama has chosen a former Monaco Coach Corp. facility in Wakarusa, ind., now owned by Navistar International Corp., to deliver remarks on the economy on Wednesday, the White House announced today (Aug. 3).

Obama will discuss the immediate steps the federal government has taken to rescue the economy and the long-term investments the government is making to rebuild for the future, according to the White House release.

He will discuss how to build a new economic foundation strong enough to withstand future economic storms and support lasting prosperity, and how the U.S. can recapture the spirit of innovation that has always moved America forward.

The event will be by invititation only but open to the press. The arrival and departure of Air Force One will be open to the press but closed to the public.

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NYU Business Prof Sees Bankruptcy Pace to ‘Quicken’

July 9, 2009 by · Leave a Comment 

Editor’s Note: Robert Salomon, associate professor of management at New York University, filed this blog last week providing updated numbers on the rate of bankruptcy filings in the U.S. The listing of  156 “major” filings includes RV makers Monaco Coach Corp. and Fleetwood Enterprises Inc.

In January I predicted (see Notable Bankruptcies of 2009: Q1) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009.

According to, there have been 156 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 312 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q1 to Q2, as there were 90 bankruptcies in the first quarter but only 66 in the second.

That stylized fact begs the question: Is that a “green shoot” dip in bankruptcy filings, or is this simply a seasonal fluctuation?

Although I cannot be certain, the latter makes more sense for several reasons. First, bankruptcies are a lagging economic indicator. As with employment, bankruptcies typically peak well after the economic trough. For example, although the dotcom bubble burst in March of 2000, bankruptcies did not peak until 2001, and were elevated into 2002. So even if you believe that the economy has bottomed out (which is not entirely clear yet), we should still expect to see bankruptcies rise. Second, according to bankruptcy statistics from the U.S. Courts website, the pace of bankruptcy filings generally increases in the second half of the year.

For these reasons, I expect the filing pace to quicken as the year goes on, and I believe that we will ultimately challenge the 383 mark from 2001.

Go to to see an updated list of what the writer sees as the “noteworthy” bankruptcies of 2009, as reported by

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RVDA of Canada Releases 2008 Dealer Survey Results

June 29, 2009 by · Leave a Comment 

The Recreation Vehicle Dealers Association of Canada (RVDA of Canada) has released the results of its 2008 Warranty and Parts Survey.

The trade group had 97 dealers, nationally, respond to the survey, which examined warranty and labor rates, warranty parts and handling as well as rated manufacturers in terms of their overall support, according to the association’s current newsletter.

In the manufacturer ratings, KZ RV LP, Shipshewana, Ind., got the top score, 82.4, out of 100. Jayco Inc., Middlebury, Ind., was second with a rating of 78.8, while Carriage Inc. of Millersburg, Ind., was third with 76.9.

Rounding out the top 10 were Crossroads RV, Topeka, Ind.; Pleasure-Way Industries Ltd., Saskatoon, Saskatchewan; Monaco Coach Corp., Coburg, Ore.; Cruiser RV LLC, Howe, Ind.;  Coachmen Industries Inc., Middlebury, Ind.; Fleetwood Folding Trailers, Somerset, Pa.;  and General Coach West, Oliver, British Columbia.

KZ, Pleasure-Way and General Coach West were the only three firms to rank among the top 10 in all four recent survey years (2008, 2006, 2005 and 2003).

Among the other findings:

  • The average hourly warranty labor rate varied  from $45 to $135 with the national average at $90.16.
  • The average retail shop rate was $92.50 per hour with a range between $45 and $130.
  • Warranty parts and handling allowances ranged from 0% to 100% with the national average at 17.2%.
  • The average parts margin nationally was 37.4%, with a range of 0% to 75%.
  • The number of technicians varied from one to 16 with the average of five per shop.

Most manufacturers give a handling allowance or mark-up for warranty parts. The majority of manufacturers gave allowances ranging between 10% and 40%.

Dealers also were asked to rate (with 100 tops) the following categories:

  • Ease of completing the claims, 64%.
  • Approval of warranty claims, 67%.
  • Flat rate time allowances, 56%.
  • Parts availability and supply, 64%.
  • Overall support, 69%.
  • Promptness of payment, 65%.

The recent survey had an overall satisfaction of 64.1%, which is higher than the 2006 survey, which received a satisfaction rating of 63.3%.

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Monaco Coach Expiring as Monaco RV LLC Debuts

June 24, 2009 by · Leave a Comment 

Monaco Coach Corp., which not so long ago was a major employer in Junction City, Ore., and in Indiana and a national power in the RV industry, has been reduced to a handful of properties that will be sold or be subject to foreclosure by creditors, according to the Register-Guard, Eugene, Ore.

On Tuesday (June 23), a judge agreed to the company’s request to convert its Chapter 11 bankruptcy filing, which gives it the protection of the court while it deals with financial matters, to a Chapter 7 case so it can liquidate its remaining assets: seven pieces of real estate in Oregon, Indiana and Florida.

The Oregon real estate is all that’s left after Monaco Coach sold its major assets – factories, inventory, brands and intellectual property – to Navistar International Corp. earlier this month for $47 million, and RV resort properties in California, Nevada, Florida and Michigan to assorted buyers for about $16 million.

Navistar intends to revive the brand as Monaco RV LLC and resume production at its Coburg factory, but it has not yet said when that will happen or how many people it will employ.

“It’s a work in progress,” Navistar spokesman Roy Wiley said Tuesday. “It takes time.” And, given current market conditions, he said, “there’s no sense to rush.”

At a brief hearing Tuesday in U.S. Bankruptcy Court in Delaware, Monaco Coach attorney Timothy Cairns said the company was unable to come to terms with its major secured creditors, Bank of America and Ableco Finance, to obtain a continuing line of credit that would enable it to sell off its remaining properties.

The lenders were willing to let Monaco continue in Chapter 11 so it could sell off those properties. But the parties couldn’t agree on how much money would be left over for other creditors, or on a budget that enabled Monaco Coach to take the necessary steps to sell the properties, said Rob Orgel, one of Monaco’s bankruptcy attorneys.

Judge Kevin Carey agreed to sign an order converting the case to Chapter 7, effective June 30.

Once Monaco’s case is converted to Chapter 7, a U.S. trustee will be appointed to oversee selling off the remaining assets and convert them to cash, Orgel said.

If the trustee determines he doesn’t have the cash to properly sell off the properties, they may be abandoned, and the creditors will have to foreclose to get their money, he said.

“The likely result is the trustee will talk to the lenders and work out a deal we couldn’t work out,” he said. “They’ll work out a deal or the trustee will tell them to go to foreclosure and get your money that way.”

Orgel said it’s not clear what the seven properties are worth, but he estimated between $5 and $15 million – nowhere near enough to pay off unsecured creditors, who are owed somewhere between $50 million and $100 million.

A conversion to a Chapter 7 case effectively spells the end of Monaco Coach Corp., said Andrea Coles-Bjerre, an assistant law professor at the University of Oregon and a former bankruptcy lawyer in New York.

Once the remaining assets are liquidated under Chapter 7, “the entity ceases to exist,” she said.

Monaco Coach was founded in 1968 in Junction City as Caribou Coach Co. It changed its name to Monaco in the 1970s and became a publicly traded company in 1993.

Monaco ceased production last December after a brutal 2008. It filed for Chapter 11 bankruptcy protection in March and terminated 2,000 workers who had been idle since December.

About 100 employees remain on the job at the Coburg plant.

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RV Legend OEMs Among 79 M&As So Far in 2009

June 15, 2009 by · Leave a Comment 

It’s been nearly six months since The Deal magazine reported that more and more corporate acquirers were eying the distressed market for potential targets. So, did they arrive? 

If we narrow the definition of distressed deals to transactions involving a bankrupt seller, the answer is yes. According to The Deal Pipeline’s bankruptcy M&A database, 79 corporations have acquired or been approved to buy assets from a bankrupt seller so far this year. That compares to 51 similar transactions in the same period last year, and 102 total in 2008.  

Looking more closely at this year’s numbers, it’s no surprise the automotive industry has seen the most action from corporate buyers of distressed assets. There have been 12 bankruptcy M&A deals involving a strategic buyer since Jan. 1. Highlights include:

  • Hertz Global Holdings Inc.’s acquisition of Advantage Rent A Car Inc. 
  • Seffner, Fla.-based Lazydays RV Center Inc.’s acquisition of 154 Fleetwood Enterprises Inc. trailer units.  
  • Penske Automotive Group Inc.’s acquisition of General Motor Corp.’s Saturn brand. 
  • Navistar International Corp.’s Workhorse International Holding Co.’s acquisition of certain Monaco Coach Corp.’s recreational vehicle assets.

Retail was the next most active industry for corporate buyers, with nine transactions, including:

  • Winter Sky Retail Ltd.’s acquisition of Madhouse Ltd.
  • Aurora Fashions Ltd.’s acquisition of Mosaic Fashion Ltd.
  • Sleepy’s Inc.’s acquisition of Dial-A-Mattress Operating Corp.

Strategic acquirers were also active in the media and energy industries, with six and seven transactions, respectively.

For corporate acquires that have yet to dive into the deepening pool of bankrupt assets, be aware that the learning curve is steep. As Sullivan & Cromwell LLP partner Frank Aquila said, even prenegotiated terms will likely be revisited in a bankruptcy sale. Still, as the data above indicates, the opportunities available may be too good to keep many strategics sidelined for long.

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Navistar Names Interim Principal Financial Officer

June 8, 2009 by · Leave a Comment 

On June 3, the board of Navistar International Corp. appointed A.J. Cederoth to serve as the interim principal financial officer of the company, replacing William A. Caton who previously served in that capacity during the medical leave of absence taken by the company’s then-current CFO, Terry M. Endsley.

On April 15, the company announced that Endsley had passed away after a brief but difficult battle with cancer and that Cederoth would be handling the day-to-day financial and accounting responsibilities. The appointment of Cederoth as interim principal financial officer coordinates the accounting and financial functions under his leadership pending the search for a new CFO, according to a news release.

Cederoth, 44, previously served as vice president and CFO of the Engine Division of Navistar Inc. and vice president and treasurer of Navistar Financial Corp., the company’s captive finance subsidiary.

Navistar acquired certain assets of Monaco Coach Corp. last week for approximately $47 million.

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Navistar Completes Purchase of Monaco Assets

June 4, 2009 by · 2 Comments 

Navistar International Corp. announced today (June 4) that it has completed the purchase of certain assets of Monaco Coach Corp. for approximately $47 million.

The new company, named Monaco RV LLC, will be a wholly owned affiliate of Warrenville, Ill.-based Navistar Inc., Navistar’s principal operating company, and will be headquartered in Coburg, Ore.

“Navistar’s entry into the RV business through the purchase of certain Monaco Coach assets fits into our strategy of leveraging our assets to expand our diesel business, serve the end customer through robust parts and service and will complement our Workhorse chassis business,” said Jack Allen, president of Navistar’s North American Truck Group. “The Monaco brand is a market leader with a strong reputation and Navistar is pleased to add it to our portfolio of leading brands and businesses.”

“Providing the RV market with the right vehicles at the right time will be Monaco RV’s first order of business,” Allen continued. “Our management teams will spend these first few weeks ramping up the business at a pace commensurate with demand.”

Monaco RV LLC will be much leaner than the old Monaco Coach Corp., which was also based in Coburg.  The new company will reportedly hit the ground running by making a number of key moves in the coming days, according to Monaco RV spokesmen:

The new business is under the direction of former Chairman and CEO Kay Toolson, who will report to Allen. Among the other returning Monaco executives is Mike Snell, now senior vice president of sales and product development, Charlie Kimball, now senior vice president of operations, and Richard Bond, senior vice president and general counsel. Pat Carroll, (product development),  John Healey (purchasing), Garth Herring, (parts and service) and April Klein (customer service) are also part of the Monaco RV team, as is Marty Garriott, who will return to run the Oregon operations, and Irv Yoder, who’s back to oversee Indiana operations.

Former Monaco President John Nepute and former CFO Marty Daley will join Navistar in other corporate roles, but will not be a part of Monaco RV.  

“We are going to produce models and brands that are in the most demand by our dealer body, but fewer than before,” Snell said. “Our plan is to begin producing at a low rate at all of our facilities based on a smaller group of dealers and the business model we are adapting to.”

Monaco spokesmen have also confirmed the following:

  •  Snell and his sales staff will begin visiting key dealers in coming weeks.
  • Towable operations will be ramped up more quickly than motorized to take advantage of the key June-to-September buying season.
  • The former towable-building R-Vision plants in Warsaw, Ind., about a half hour south of Wakarusa, will be leased for approximately 90 days or until work-in-process units can be completed there. Then, those operations will be moved up to Wakarusa in Elkhart County.
  • Navistar reports that it has also acquired Monaco’s Bison equine trailer operation in Milford in the purchase.
  • Slated for sale by Monaco Coach Corp. in its Chapter 11 case are idled facilities that were not acquired by Navistar, including a fiberglass plant in Hines, Ore.; a chassis plant in Harrisburg, Ore.; the Nappanee Wood Products plant in Nappanee, Ind.; two buildings at the former Hively Avenue operations in Elkhart; a towable manufacturing plant on Mishawaka Road in Elkhart; the R-Vision complex in Warsaw; and the Roadmaster cargo trailer business in Goshen. The proceeds of those sales go to satisfy creditors of Monaco Coach, although it is presently unknown what percentage of these proceeds will be available to satisfy Monaco Coach Corp.’s general unsecured creditors, including dealers, vendors and customers who submitted unpaid warranty claims. Meanwhile, Monaco’s resorts were auctioned off late last month, and the $16.3 million in proceeds was also applied to the debts owed to creditors.

Kay Toolson, CEO for Monaco RV, said, “The last few months have been very difficult, with many hurdles to overcome to complete the sale to Navistar. This result is the best possible outcome for our communities, employees, dealers, customers, suppliers and the entire RV industry. We are pleased and excited to be a part of Navistar.”

Plans call for Monaco RV LLC to have a significant presence at this winter’s National RV Trade Show in Louisville, Ky. However, again, Monaco’s new business model clearly calls for a leaner operation in terms of physical plant capacity, employment and dealer rosters, Snell maintained. “The challenge we will have is, a lot of dealers and people on the outside will see this as the same Monaco, and it’s not,” said Snell.

Snell said that under Navistar’s plan, Monaco RV is expected to be a self-sustaining and profitable business under Navistar’s ownership. 

Although the new company is not liable for any product sold by Monaco Coach Corp. prior to the purchase by Navistar, Snell indicates that customer service representatives will be available to aid RV owners in obtaining service and support for their vehicles.  Owners with questions should call (877) 4MONACO for assistance.

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Monaco Coach Sale to Navistar Inc. Delayed

June 3, 2009 by · Leave a Comment 

The sale of Monaco Coach Corp. to Navistar International Inc. did not close as scheduled on Tuesday (June 2), a Navistar spokesman said.

The  deal, approved May 22 by a bankruptcy judge in Delaware, was to have closed Tuesday, but Navistar spokesman Roy Wiley said he had no news to report, according to The Register-Guard, Eugene, Ore. There could be news on deal later in the week, he said.

Coburg, Ore.-based Monaco is in Chapter 11 bankruptcy. Navistar, an Illinois-based truck and engine manufacturer, was the sole bidder for Monaco’s main assets, including its factories in Oregon and Indiana.

Navistar hasn’t yet said what its plans are for Monaco plants.

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Canadian Dealer Laments Supply Chain Problems

May 26, 2009 by · Leave a Comment 

Canada’s largest recreational vehicle dealer may have missed out on becoming an RV manufacturer last week, but British Columbia-based Arbutus RV and Marine Sales continues to look at options to gain more control over the supply chain, according to the Times Colonist, Victoria, B.C.

Arbutus lost out on a chance to pick up a La Grande, Ore., travel trailer manufacturing plant being sold by Fleetwood Enterprises Inc., which filed for bankruptcy protection in March.

Arbutus originally bid $1.8 million for the plant, but Northwood Manufacturing, also of La Grande, came up with a competing bid and forced a courtroom auction in California. Northwood won out with a bid of $2.05 million.

“Another manufacturer just down the street didn’t want to see us come in and be a competitor,” said Arbutus owner Craig Little. “I guess somebody else figured they needed it more than we did.”

Northwood, which also makes travel trailers, has said it intends to continue using the plant for that purpose.

According to court documents, Fleetwood will continue to pursue buyers for its major businesses.

Little said his company bid on the plant as a means of maintaining a consistent supply of product and to have some quality control over the products it sells.

That’s becoming more important as the industry feels the pinch of tough economic times in the U.S.

“With the U.S. economy being so challenged it has been a tough time for RV manufacturers with that soft market,” said Little, who was quick to note his company is having a record year.

But that isn’t the case for a number of RV manufacturers that have been forced to take drastic action.

Industry leaders Fleetwood and Monaco Coach Corp. have both filed for bankruptcy protection, while earlier this year, Winnebago Industries reported a loss of $10.4 million in its second quarter — the third quarterly loss in a row.

Little said he would have loved to have some control of the manufacturing side of the business, but he is not concerned about supply. Indeed, he has been meeting with other manufacturers to discuss partnerships.

“We’re in discussions to either get involved on the manufacturing side or be in a position, because of the volume we do, to being hands-on in the product mix to ensure the quality is there for us,” he said, adding there may be a chance for Arbutus to dictate some private labelling of products for its marketplace.

“Whether we partner with manufacturers, it will be a closer-than-ever relationship that we move forward with, and we look forward to added value we can share with our client base,” he said.

Little said his 21-year-old company continues to thrive through tough economic times because of its track record and Vancouver Island’s unique makeup.

“The Island economy has a lot of retired money, so that’s not quite as susceptible to some of the challenges out there, and our banking system has been great,” he said of record low interest rates that make borrowing appealing.

But the big reason RV sales have remained strong, he said, is it remains an inexpensive way to get away.

“It’s still the most cost-effective holidaying you can do,” he said.

“You can pick anywhere you live on Vancouver Island and I’ll bet within five to 15 minutes you can be somewhere RVing.”

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Despite Ruling, Still No Hints on Monaco Future

May 26, 2009 by · Leave a Comment 

Despite a bankruptcy court judge’s ruling late Friday (May 22) approving the sale of Monaco Coach Corp. to a unit of Navistar International Inc.,  it remains unclear whether Navistar will resume production at any of  the plants in Oregon or Indiana or rehire any of the 2,000 employees laid off just before the company filed bankruptcy.

U.S. Bankruptcy Judge Kevin Carey approved the $50 million sale after learning there were no other bidders for the assets of the RV manufacturing company, which has major manufacturing plants in Coburg, Ore., and northern Indiana, according to The Register-Guard, Eugene, Ore.

“We don’t have any answers either – no tangible answers,” said Mike Johnson, a middle manager at Monaco’s Coburg plant until he was laid off in March. “It’s just a big question mark.”

During Friday’s court hearing, Monaco attorney Malhar Pagay told the judge an “ancillary benefit” of the sale could be some rehiring.

“(Monaco’s) former employees may be called upon by Navistar to restart some of the plants that were shuttered,” Pangay said. “I also note that the debtor’s former dealers will enjoy a revitalization of the Monaco brand, and depending upon Navistar’s determination, may have a relationship with Navistar.”

The sale is scheduled to close June 2.

Roy Wiley, spokesman for the $14 billion truck and engine builder, declined comment on the fate of the Coburg plant. Navistar has 17,000 employees at plants in Ohio, Alabama, Arkansas, Oklahoma and Canada.

“It’s not done until it’s done. It’s a step in the process,” Wiley said. “Ask me after June 2, and I’ll probably be able to tell you more.”

Options for Navistar might include restarting some of the factory production now, keeping everything idle until the economy improves substantially, or shifting Monaco production to some of Navistar’s existing facilities.

Navistar’s $52 million purchase price would not be enough to repay Monaco’s secured creditors, including the $38.2 million owed to lender Bank of America and $37.4 million claimed by lender Ableco.

The sale dims the chances that unsecured creditors will recover any of the money Monaco owed to them.

Unsecured creditors – those who have no legal hold on a company’s physical assets – typically are paid only after secured creditors have been satisfied.

The sale might eventually benefit local suppliers, though, if Navistar restarts RV production.

Because Friday’s ruling carried no definitive answers about whether the Coburg plant would reopen, workers and community members reacted to the news with muted optimism.

“We look at all of this as potentially good news. That’s how I view it,” said Coburg Mayor Judy Volta.

Kevin Penn, a former team leader at Monaco, has been working part time in landscaping and has signed up for some summer classes, but he said he’d be ready to go back to the plant.

“It would be really good if they could get the company going again. I’ve seen a lot of people from the company who still don’t have jobs,” he said.

Former Monaco supervisor Sandy Kadash has been looking for work.

“Nothing has come up so far,” she said. “We made a pretty good living there and it’s kind of hard to think about taking a step backwards.”

Kadash said she keeps in contact with Monaco’s human resources department.

“It sounds like they’re getting stuff ready, but I’m not sure anybody knows for sure what that means yet,” she said. “From everything that I’ve been told, it’s a good thing.”

During the bankruptcy proceedings, Monaco has kept an administrative and sales staff at the headquarters.

It would be nice, Kadash said, if the sale meant the end of limbo for Monaco employees, who were put on unpaid leave for months before their official layoff.

Kevin Gallagher, who fabricated doors for the motorhomes, said he doubts Navistar would hire anything close to the whole Monaco crew back.

“I still think the market is terrible for motorcoaches,” he said. The market won’t rebound until the national housing crisis has passed and RV buyers can again tap into their home equity for cash. “I’m not going to get overly whoop-de-do about it,” he said.




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