Navistar International Corp., Warrenville, Ill., reported solid second-quarter results as reflected by improvements in the performance of its core business as the company continues to navigate the difficult economic climate, according to a news release.
“Our expectations are t Her Secrets – Seduction Secrets For Irresistible Women o be profitable across the business cycle,” said Daniel C. Ustian, Navistar chairman, president and CEO. “The plans we have put in place for our core businesses are on track through the second quarter. We are confident that the foundation is in place to continue to support our profitability and grow our business.”
Even though the industry is at a nearly 50-year low, net income attributable to Navistar International Corp. for the second quarter ended April 30, 2010, was $30 million, equal to $0.42 of diluted earnings per share. As previously reported, earnings for its fiscal year ending Oct. 31, 2010, are expected to be in the range of $2.75 to $3.25 per diluted share. Revenues for the second quarter totaled $2.7 billion.
“We remain confident for the remainder of the year about our ability to deliver fiscal 2010 results in the previously reported range,” said Ustian. “The orders we have received for our 2010-compliant products ensure that the business is well positioned for the rest of the year.”
Navistar is the parent company of Monaco RV LLC, Coburg, Ore., a manufacturer of towable and motorized recreation vehicles.
The company said it is prepared for a successful launch of its MaxxForce Advanced EGR (exhaust gas recirculation) engines as it continues on its path to meet the latest emissions requirements. During the quarter, key regulatory certifications were obtained for 2010 MaxxForce 13 and MaxxForce DT Advanced EGR big bore diesel and mid-range diesel engines.
Other significant milestones achieved in the quarter included improvements in Navistar’s cost structure, which were achieved through reductions in material costs and rationalization of its North American plants to create cost efficiencies in its Class 8 heavy truck and school bus production lines. The company also completed a retail funding alliance with GE Capital Corp. and GE Capital Commercial, Inc. in which GE will become the preferred source of retail customer financing for equipment offered by the company and its dealers in the United States to help it grow sales of trucks and school buses.
During the quarter, the company also began shipping a limited number of International®MaxxPro Dash Mine Resistant Ambush Protected (MRAP) vehicles that include the DXM independent suspension solution, which were part of an order Navistar received in January from the U.S. military.
At one of the plants where workers learned about two years ago that they would be laid off at Monaco Coach Corp. in Warsaw, Ind., Navistar Inc. unveiled its new electric truck Thursday (May 13).
And that truck could soon be delivering a FedEx package to your door, according to the South Bend Tribune.
The Navistar eStar runs solely on electric power and can go 100 miles on one charge. It has no tailpipe and can reach 50 mph. Batteries can be replaced in about 20 minutes but take six to eight hours to recharge.
A total of 40 employees will be involved in the initial production in Wakarusa. The plant is expected to produce 400 vehicles this year and several thousand per year in coming years.
Navistar acquired the factory during its 2009 acqusition of some of bankrupt Monaco Coach assets, and Monaco brands now are produced by Navistar subsidiary Monaco RV LLC.
Fresh off a congratulatory phone conversation with Vice President Joe Biden, Shane Terblanche, general manager and vice president of Navistar-Modec EV Alliance, beamed as he saluted his team.
The work that the operators have done getting the vehicles done, the work the engineers have done in preparing the vehicles for production, just absolutely tremendous stuff,” Terblanche said. “Many of you would recall an event we had back in August of last year where President Obama announced the $39.2 million grant. We have acted upon that with absolute diligence.
“Here we are today to launch our brand. We are going to talk about creating jobs. We are going to talk about transportation electrification. We are going to talk about partnerships.”
The government grant required a matching one by Navistar, which purchased Monaco assets out of bankruptcy.
The vehicles, which cost about $150,000 each, have no emissions, near zero noise pollution, a 36-foot turning radius and a payload of up to two tons.
Terblanche said the partnership demonstrates how the public and private sectors can work together to create jobs and “develop technologically advanced vehicles that are environmentally friendly.”
Terblanche said 700 employees would be added nationwide to the Navistar chain, including those working at suppliers to the truck.
“As we ramp up production, we will obviously be needing more operators on the production line,” he said. “I don’t know what those numbers are today.”
FedEx is the first company to purchase the trucks and has let drivers test drive them at stops along Route 66, en route to Los Angeles.
“It’s very smooth and very quiet,” Deborah Willig, of FedEx, said during an earlier teleconference. “Our team members love driving it.”
Besides Los Angeles, trucks are planned for delivery this year to dealers in Portland, Seattle, Chicago, Sacramento and possibly Indianapolis.
“This is what Elkhart County does,” said Phil Penn, president and CEO of the Greater Elkhart Chamber of Commerce. “We have been on our knees before. We have come back many times.
“We have been through a number of different morphs of industry.
“And here we are now, another opportunity for a new industry to start up and be the electric capital of the world for vehicles.
“If these vehicles take off, like I am convinced they will,” Penn said, “I think we have a great opportunity to add hundreds if not thousands of jobs down the road.”
When asked what the biggest difference is at her job since the onset of the recession, bartender Amy Picuda half-jokes, “Well, the tips suck.”
Picuda, 23, works at Mr. G’s, a bar and restaurant in Osceola, in the heart of the economically devastated area around Elkhart County, Ind., according to the Detroit Free Press.
“I think it really started about a year and a half ago,” she said. “We’re lucky we have our regulars, though. I know a lot of places that have closed down.”
Welcome to northern Indiana.
While Elkhart County’s plight is not unique, especially in a country enduring the hangover of the worst financial crisis since the Great Depression, this region has been hit especially hard. It has consistently had one of the worst unemployment rates in the country over the past year.
Elkhart County’s economy was bound tightly to the recreational vehicle industry and in 2008, with the recession already underway and gas prices topping $4 a gallon, the bottom fell out.
Monaco Coach Corp, a leading RV manufacturer with a plant in nearby Wakarusa took the hardest blow. The company, which employed 116,000 people at its peak, had slumped over the years to a work force of just 12,000. This included the shuttering of the Wakarusa plant, which cost the jobs of 1,400 workers. (These numbers are gross inaccuracies; at its peak, Monaco Coach employed about 6,000 with the current number employed by Monaco RV LLC being about 800 companywide — rvbusiness.com editor)
Ed Neufeldt was one of those employees. After 32 years working on the factory line at the Wakarusa plant, My boss walked in, and he was all choked up. We figured there were big layoffs coming, but he just says, “We’re shutting down.”
At 62 with only a high school education, Neufeldt found himself out of a job and with few options.
“It was bad. It still is bad,” said Phil Damico. “You have to keep in mind, at one point 60% of this region was manufacturing, with 50% of that [being] the RV business.”
Damico is the director of business growth for the nearby St. Joseph County Chamber of Commerce. He had a firsthand view of the collapse. Unemployment for Elkhart peaked at 18.9% in March, according to the U.S. Bureau of Labor Statistics, and Damico notes that the remaining jobs are low-paying, unskilled labor such as call-center work.
By contrast, the unemployment rate was just 4.6% in 2007.
Now Elkhart County and the surrounding towns have thrown their weight behind what many hope will be their best hope to revive the industry base: electric vehiciles.
In August, President Obama visited the region to announce grants from the U.S. Department of Energy for Navistar.
Navistar acquired Monaco in June and plans to begin using its Elkhart facilities to produce zero-emission battery-powered trucks.
Meanwhile, just south of Elkhart in Wakarusa, Wil Cashen, the CEO of the Electric Motor Corp., is building what he believes is his own electric vehicle. He hopes it will not only help reinvigorate the area’s economy but tempt Americans into embracing a cleaner automotive future.
Cashen, once an engineer for Lotus, grew up in Wakarusa. Although he also has a home in Malibu, Calif., he returned to his hometown with the idea to build an electric pickup truck based on the top-selling Ford F-150.
“It just makes sense to build it here. Everyone should be here,” said Cashen, referring to other electric-car companies. “It’s not just about bringing value to the community, but for economies of scale. Everything from wiring to the dealer networks, you have right here. It just makes sense.”
Cashen expects to be making the first deliveries of the trucks by June 2010.
According to Damico, EMC’s announcement that EMC would be building their trucks in the Elkhart area “got the ball rolling” in creating interest in electric-vehicle technology. “We needed something other than RVs, but now there are even two RV companies hiring people back — Dutchman and Keystone — and interestingly, they’re building toward more fuel efficiency.”
Damico says it will take a long time before all of those high-paying jobs are back, and any real recovery is still more than a year away.
“Can we get all those people who lost their jobs back to work?” asks Damico. “I don’t know the answer to that. I don’t know if electric vehicles are what’s going to do it either.”
But Neufeldt, who lost his job with Monaco Coach before becoming a spokesman for Green Jobs for America, said it’s worth a try.
“This country has got to do something,” he said. “And I do believe we can have a green revolution. People are so desperate for work around here I think they’re starting to believe it.”
The health of the northeast Indiana job market is on the mend after months of suffering more acutely than the rest of the country.
In the three months ended Sept. 30, employers in northeast Indiana and northwest Ohio announced plans to add 1,080 more workers than they planned to cut, according to a quarterly analysis by the Journal Gazette, Fort Wayne, Ind.
It’s the third such analysis this year and the first to suggest a net gain of jobs in the 15-county region.
As in the previous two quarters, manufacturing was the dominant sector in the most recent economic scorecard. Big announcements at two of the region’s manufacturing powerhouses accounted for 1,000 of the 1,670 jobs that employers promised to create.
General Motors Co. announced last month that with the closure of a truck plant in Pontiac, Mich., it would add a third shift at its Allen County assembly plant, bringing 700 jobs to the region by April.
And after a private-equity firm brought Fleetwood RV Inc. to decatur, Ind., it announced in August that it would add 300 jobs to its workforce of 630 by mid-November.
The analysis is based on announcements of which the newspaper was already aware, but it does provide a snapshot of the area economy. And John Stafford, director of the Community Research Center at Indiana University-Purdue University Fort Wayne, said the numbers jibe with statistics his agency is compiling.
“We’re just measuring audible sound,” he said, explaining that many smaller job decisions probably aren’t publicly announced.
Even so, the numbers reflect a tentative recovery in a regional manufacturing economy that fell further and faster than other sectors did.
In the first three months of 2009, companies announced 2,500 layoffs or cuts and 850 hires. In the second quarter, 4,560 layoffs and cuts were announced, compared with just 512 hires.
The region and the entire Midwest lost manufacturing jobs this year as companies cut production more quickly than sales plummeted, cutting deeply into inventories, said William A. Strauss, a senior economist at the Federal Reserve Bank of Chicago who compiles the Midwest Manufacturing Index.
“I think the financial crisis hit manufacturing more heavily than it did other parts of the economy,” Strauss said.
Car and truck sales, for example, fell 27 % in the first eight months of 2009 compared with the same period of 2008. But production was slashed by 46%, Strauss said.
The recession and tighter credit markets made it difficult for consumers and small manufacturers to get loans and do business. And it helped tip some huge companies – such as General Motors Corp. and Fleetwood Enterprises Inc. – into bankruptcy.
Auto sector’s shifts
The 2,600 workers at the Allen County truck plant were idled for 10 weeks starting in May as bankrupt GM struggled to reduce inventories. But after the new General Motors Co. emerged from bankruptcy court in July, inventories fell further than expected, thanks in part to the federal ”Cash for Clunkers” program.
In July, GM announced it would spend $46 million retooling the Allen County plant so it could make heavy-duty pickups. In August, GM said it was cranking up production in Allen County and at its Defiance, Ohio, foundry. Then in September, GM said it was adding a 700-employee third shift in Allen County.
Many of the new workers at the plant will come from the roughly 1,000 who lost jobs this month when GM closed its truck plant in Pontiac, but it still will be a boon to the regional economy.
Even though the biggest news in the regional job market for the quarter is the new auto industry jobs, the sector also accounted for the biggest losses.
GM announced in August that 175 workers – 115 in Allen County and 60 in Defiance – took advantage of a second round of buyouts offered this year to employees.
And in July, parts maker Meridian Automotive Systems Inc. closed its Grabill plant, putting 120 out of work.
For Fleetwood, orders have steadily grown since summer, said John Draheim, president of the new Fleetwood RV. The problem has been in getting parts.
“The supply chain has been fractured,” he said.
While most firms that directly supply Fleetwood made it through the downturn, some suppliers didn’t, causing disruptions.
“Occasionally we have to take some down days to let them catch up,” Draheim said.
Even so, Fleetwood’s staffing was “a little bit north of 850” last week and growing, Draheim said.
The third-quarter’s third-largest job addition also was in the RV industry. Sweden-based Dometic LLC announced it would move 116 jobs from Mexico to LaGrange, Ind., by 2012 to make retractable RV awnings.
Overall, the net additions to the regional workforce in the third quarter were modest compared with the losses announced earlier in the year. Fleetwood, for example, likely will finish 2009 with about 400 fewer workers in Decatur than it had in 2007.
And some huge losses might loom. Navistar Inc. is considering buying an office complex in Lisle, Ill. Navistar won’t say whether it’s thinking about moving more than 1,000 well-paying jobs there from Fort Wayne, but the company has told Lisle officials more than half the 3,500 office employees would come from out of state.
Other than Fort Wayne, the only city where Navistar has a sizable white-collar operation is Knoxville, Tenn., where it employs 89, according to the company website.
But as the Federal Reserve’s Strauss meets with business leaders throughout the Midwest, he said things are slowly getting better.
“There has been a very significant change in terms of business confidence,” he said.
Jeff Rohyans of New Haven also is more confident. In January, he was laid off from the Parker Hannifin plant in New Haven. He drew unemployment for six weeks before going back to Parker Hannifin on temporary status in April and then moving to a temporary job at steel fabricator Almet Inc. in June.
He took more than a $3 hourly pay cut from the $14 an hour he made at Parker Hannifin. But after commercial construction starts to recover, Rohyans, 35, expects to be made permanent at Almet and to get the insurance and other benefits that come with it.
Judging from the train traffic he’s seen through New Haven, Rohyans said he feels the economy is on the mend.
“I like to use the phrase ‘cautiously optimistic,’” he said.
As Navistar International Corp. completes its final testing stages and prepares for the upcoming launch of its 2010 MaxxForce engines, a new online entertainment channel – MaxxForce TV – is making its debut, according to a news release.
Starting this month, customers will be able to learn about the benefits of Navistar’s MaxxForce brand engines — used by several RV manufacturers — in a whole new way with the launch of MaxxForce TV, an online channel devoted entirely to trucks and engines. The inaugural series, “Maxx IQ,” is an entertaining and informative game show hosted by Joe Elmore, host of the television show “Horsepower TV” on the Spike Network.
In each fast-paced segment, Elmore tests the engine smarts of drivers at truckstops and other locations across the country for a chance to win cash and prizes. Online viewers are encouraged to play along to increase their own knowledge of MaxxForce products and hone their skills in case this traveling game show rolls into their town.
The face of Maxx IQ is Nashville’s own Joe Elmore, known to car and truck enthusiasts as the co-host of America’s longest-running performance car show, “Horsepower TV.” Every weekend on the show, he shares engine building tips and visits hot rod and automotive events around the country. Hero to millions of fellow “gearheads,” he’s the perfect fit for a game show that’s all about trucks and engines.
“Joe already has such a great knowledge of engines,” noted Mark Johnson, Navistar marketing communications manager. “We knew he was going to bring a great presence to Maxx IQ. Viewers are definitely going to enjoy seeing him in action — whether they’re watching on their computers, or lucky enough to become contestants.”
“Obviously, engines are one of my passions,” said Elmore. “So it was satisfying to give drivers a chance to win some money and educate them about MaxxForce engines at the same time. During the shoot, I got the opportunity to test-drive the engines myself and they have some real power. I was impressed.”
The first four episodes of Maxx IQ can be viewed on www.maxxforcetv.com. The next four episodes will be released later this month.
Hundreds of Navistar employees today (Aug. 5) welcomed President Barack Obama to its Wakarusa, Ind., manufacturing facility to celebrate the award of a $39 million federal grant to develop and build all-electric delivery vehicles and bring jobs to the Elkhart County, Ind., communities.
Through this U.S. Department of Energy grant, Navistar intends to build 400 all-electric vehicles in 2010 and expects that within a couple of years to be producing several thousand vehicles annually, according to a press release. Navistar anticipates hiring additional workers immediately as it ramps up production of the all-electric delivery vehicle. As volumes increase and the market grows, the company estimates opportunities for several hundred more people in the Elkhart area. The grant application calls for the creation of up to 700 jobs, which includes Navistar employees and suppliers.
“The all-electric delivery vehicle is a concrete example of what business and government can do when we work together,” said Dan Ustian, Navistar chairman, president and CEO. “The future is now with this electric vehicle. In fact, we already have interested customers, including some of the most respected names in the industry.”
Navistar is in the process of finalizing a joint venture with Modec Ltd. of the United Kingdom to produce and sell electric Class 2c-3 commercial vehicles in North, Central and South America. This zero emission all-electric delivery vehicle would primarily be used by drivers for local deliveries where stop and go driving would otherwise consume a large amount of fuel.
Navistar has three manufacturing facilities in the area: the Monaco RV facility in Wakarusa, Ind., another facility recently purchased from Monaco in Elkhart , Ind., and the Workhorse Custom Chassis facility in Union City, Ind.
“Navistar is keenly aware of our fiscal and social responsibilities as we stand here today in a facility that Navistar bought from a bankrupt entity,” said Ustian. “Navistar believes in its people and products, and that is why the company is investing in the Elkhart area. We have already added jobs since we bought some of the assets of Monaco out of bankruptcy.”
Earlier this year, Navistar purchased certain assets of the recreational vehicle (RV) manufacturing business of Monaco Coach Corporation, one of the nation’s leading recreational vehicle manufacturers.
Navistar’s commitment to innovation is embedded in its DNA. The company’s foundations were laid in 1831 when Cyrus McCormick invented the mechanical reaper, creating a new industry, modern agriculture, which allowed farmers to expand America westward. The company’s reputation for bringing new technologies to market has deep historical roots. The development of an all-electric commercial vehicle would be the latest in clean technologies for the truck and engine market that Navistar has been first to market with.
Hybrid School Bus and Truck and Military Vehicles on Display
Also on display for the president was the company’s hybrid electric plug-in school bus, its hybrid International DuraStar, the Mine Resistant Ambush Protected vehicle and the International( Husky Tactical Support Vehicle. Navistar was also the first to enter line production of commercial diesel hybrid trucks and school buses. In addition to hybrid-electric trucks and buses, the conventional line-up of International brand commercial trucks is among the most aerodynamic, fuel efficient in the industry.
Advancing Clean Diesel Technologies
For decades, Navistar has demonstrated a commitment to clean diesel technologies that benefit the environment and its customers. In 1989, Navistar was the first original equipment manufacturer to release the smokeless diesel engine and, in 2001, Navistar was the first engine manufacturer to gain certification from the U.S. Environmental Protection Agency (EPA) for meeting particulate and hydrocarbon emissions standards – six years ahead of schedule.
As Indiana Gov. Mitch Daniels joined executives from Electric Motors Corp. and Gulf Stream Coach Inc. at the podium today (May 14) to announce what amounts to sensational news for beleaguered Elkhart County - the possible creation of thousands of new jobs from a new hybrid electric engine initiative – some in the crowd wondered what all this means for the future of the RV industry.
Is Gulf Stream, in an understandable need to diversify, preparing to exit the RV sector altogether? Is the sun setting on the recreational vehicle business just as it appears that a rebound for RV manufacturers and suppliers is on the horizon?
The answer, in a word, is “no,” according to those in attendance at this morning’s press conference in a vacant Wakarusa, Ind., RV dealership – just down the street from an expansive closed Monaco Coach Corp. plant that some suspect may be about to reopen under Monaco’s new Navistar owners.
Indeed, those involved see nothing but good news for everyone involved with the new initiative, including several partner companies currently seeking funding through the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program, which should appreciably expedite job creation in Elkhart County.
However, they caution, the direct industry impact — other than diversification and insulation from the next economic downturn — won’t be as immediate as the jobs it might create. Officials expect to add as many as 1,100 to 1,500 jobs throughout the area’s whole supply chain by 2011-12. Long haul estimates range from 3,900 to 6,000 new hires.
“With all of the affiliated industry in the supply chain, we see that by 2012, if everything goes according to plan, (the addition of) up to 6,000 jobs (in the area),” says Mark Smith, vice president and chief information officer for Gulf Stream and project manager for the electric hybridization vehicle project for the Nappanee-based manufacturer.
Smith and others see the move toward electrification as a boon to the RV business in general over the next few years.
“Electrification in the recreational vehicle business would make a big difference because you’re increasing fuel efficiency and there will be emissions legislation coming down over the next decade that will encumber the industry if they don’t make changes,” says EMC President Brad Rinehart. “And this entire effort will definitely help out the industry in existing business and create new markets of opportunity within the RV business.”
And as technology develops, Rinehart explained, heavier-duty vehicles will be involved beyond the light-duty trucks into which Gulf Stream plans to begin installing parallel hybrid electric engines by 2010. “The first program we have is a light duty truck,” he noted. “Our plans are to produce about 40,000 vehicles over the next 48 months here in Elkhart County in partnership with Gulf Stream. We have several other projects that I’m not at liberty to talk about with other partners at this point, but our plans are to become a facilitator, an integrator of electrification products into the RV industry and into the light, medium-duty and heavy truck business.”
Of course, 40,000 vehicles is a stunning number for an area that has seen so much idle manufacturing capacity of late. “But,” adds, Rinehart, (EMC CEO) “Wil Cashen is a pretty stunning guy. He’s been able to bring together a collective group of people, some world class engineering companies and the resources needed to make something like this a reality.”
So don’t look to today’s announcement as a signal that Gulf Stream is looking to get out of the RV business by serving as a lead partner in what amounts to an unprecedented partnership in these parts. On the contrary, Gulf Stream is looking to get farther into the towable and motorized RV arena, according to Smith and Gulf Stream Motorized Division President Brian Shea.
“Absolutely,” said Smith. “Our vision, actually, is to bring back the RV industry in a way that may have taken many more years of this economic recovery.”
“What it means is job growth here again,” added Shea. “We’re (Gulf Stream) getting into a new technology, which we’re excited about. You know, we’ve always felt like we’ve been on the cutting edge in recreational vehicles. Now, this puts us on the cutting edge in technology as applied to vehicles.”
The Wall Street investment firm Robert W. Baird & Co. sees a silver lining in this week’s quarterly report from Thor Industries Inc.
Thor reported a 41% drop in sales for the third quarter, but topped expectations on share gains and rental orders. “Backlog fell, but improved sequentially hinting at a stronger summer than we had modeled,” the investment firm reported to its clients. “Bankrupt competitors may resurface, but Thor has cut costs and accumulated cash to emerge stronger in the next cycle. We raised our price target to $21 and are looking for an opportunity to get involved.”
Thor reported preliminary sales for the quarter of $415 million, down 41% but it topped Baird’s estimate of $274 million. RV sales fell 48% to $311 million, but “exceeded our pessimistic estimate.” Bus sales fell 3% to $104 million. RV fundamentals remain weak, but improved as the quarter unfolded. It was not as bad as feared, Baird concluded.
The backlog fell to $441 million, down 16% from $526 million last year, including a 9% drop in the RV backlog and 23% drop in the bus backlog. “Importantly, the backlog improved sequentially and implies better Q4 revenue than we had modeled – suggesting Thor will remain profitable in FY2009.,” Baird stated.
Thor improved its towable share to 31.3% year-to-date, up from 30% in 2008, the investment firm noted. “Meanwhile, Fleetwood and Monaco filed for Chapter 11 bankruptcy protection – leaving the door open to survivors like Thor. Together, Fleetwood and Monaco represented 7% of the towable market and 28% of the motorhome market in 2008. Recently, Navistar acquired assets from Monaco but has not indicated whether it plans to build RVs – so the share opportunity remains unclear.”
“We have begun to see faint signs of a bottom in the RV market,” Baird stated in its industry outlook. “Dealers remain reluctant to accumulate inventory, but consumer confidence has improved - hinting at a retail bottom. Meanwhile, Thor has cut costs and accumulated cash to position itself as a lean survivor with share-gain opportunities as the market recovers.”
Baird raised its earnings estimates for Thor based on this week’s report. It projects the company will earn 20 cents per share for the current fiscal year, up from its earlier estimate of a loss of 25 cents per share, and projects the company will earn 85 cents per share in FY 2010, up from 25 cents per share.
Thor reported $296 million in cash and equivalents at the end of the third quarter, a 19% increase over a year ago. This amount, Baird noted, will be sufficient to support acquisitions, internal growth initiatives, share buybacks and higher dividends.
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.