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.
Keystone RV Co., Goshen, Ind., has introduced a rear outdoor “Camp Kitchen” in the Keystone Laredo fifth-wheel and Laredo Super Lite travel trailer (shown here) lines. The outdoor kitchen is equipped with a two-burner gas range, 4-cu. ft. refrigerator, sink with hot and cold running water, a storage drawer and four overhead cabinets. With a single slideout, the 33-foot Laredo 291TG travel trailer features a front queen bedroom, rear bunk beds and a convertible air-mattress sofa to sleep nine people, and is equipped with a 26-inch LCD TV, U-shaped dinette and electric awning. “Since so much RV camping time is spent out of doors, we focused on creating a fully equipped outdoor kitchen as the centerpiece of this new floorplan,” says Ryan Juday, Laredo product manager. “Dealers loved the product when we first showed it at Lousiville and it’s been a big hit at retail shows. Sales of our two outdoor camp kitchen models, a Laredo travel trailer and fifth-wheel, are greatly exceeding expectations.” MSRP: $26,900.
A bidding war of sorts Wednesday (May 13) in U.S. Bankruptcy Court in Riverside, Calif., netted Riverside-based Fleetwood Enterprises Inc. a slight premium for its defunct travel trailer plant in La Grande, Ore.
Judge Meredith Jury approved the sale of Fleetwood’s plant to Northwood Manufacturing, a 15-year-old company based in La Grande that has 400 employees. Northwood paid $2.05 million for the plant.
Arbutus RV and Marine Sales Ltd., a British Columbia-based retailer, had initially offered $1.8 million for the facility. Arbutus, a Fleetwood retailer that would have had to find someone to run the manufacturing operation, raised its offer to $2 million, but the judge ruled Northwood the winner, according to the Riverside Press-Enterprise.
Fleetwood, which filed for Chapter 11 bankruptcy protection in March, is selling off some of its assets to raise enough money to help it continue to operate without accepting an $80 million debtor-in-possession financing plan from Bank of America. Fleetwood hopes a buyer for the entire company can be found while it continues to operate, according to the newspaper.
The judge also approved the sale of equipment in Fleetwood’s Mexicali, Mexico, travel trailer plant to Krystal Enterprises LLC of Brea, Calif., for about $150,000. Krystal manufactures high-end Class B and C motorhomes,stretch limousines and midsize luxury buses.
Fleetwood opened the Mexicali plant, its first foreign operation, in 2007. Craig Millet, Fleetwood’s bankruptcy attorney, told the court he offered to show others the factory but there were no takers.
“The market is extremely thin for this equipment,” Millet said.
Bank of America must still agree to Fleetwood’s financing plan, but approval of that was continued until May 26.
Since Fleetwood Enterprises Inc. filed for Chapter 11 bankruptcy on March 10, the Riverside, Calif.-based RV maker indicated that securing financing was vital to its survival.
On Wednesday (April 29), three hours before Fleetwood was scheduled to ask the judge in its Chapter 11 bankruptcy case to sign off on a final $80 million debtor-in-possession financing plan with Bank of America, the company told the court it didn’t need it, according to The Press-Enterprise, Riverside.
Instead, Fleetwood officials say they’ll be better off using cash collateral they had access to originally, allowing them to focus on operations while trying to find a buyer for the entire company, or its RV or manufactured housing divisions.
Company officials wouldn’t say how long they expect the cash collateral to fund their operations. In the court filing, they estimated they have at least $156 million worth of raw materials, finished but unsold goods, real estate and current work that can either be sold or used to get loans.
In court filings, Fleetwood said the financing plan with Bank of America, which took weeks to craft before the judge approved it temporarily, included “unrealistic” financial and time constraints and cost too much to implement. The filing mentioned a $2.4 million fee that it has already paid Bank of America for crafting the plan.
Fleetwood has cut costs, and sales have been slightly better than they expected, leaving the company with more cash than anticipated, according to Fleetwood’s Wednesday court filings.
The company continues to close plants, like its manufactured housing operation in Glendale, Ariz., which will be shuttered and consolidated with its Riverside plant. The company hopes to sell its La Grande, Ore., travel trailer plant for $1.8 million.
At the Wednesday afternoon hearing held at the U.S. Bankruptcy Court in Riverside, Bank of America lawyer Gregory Lunt bristled at the indication that the $2.4 million fee could be refunded and told the judge the first he had heard of Fleetwood’s proposal was that morning. An assistant had read the new proposal to him over the phone while he drove from Los Angeles to Riverside, he said.
“We have not had a chance to really look through these things,” he said.
To give Bank of America more time to respond, Judge Meredith Jury continued the hearing until May 13 at 1:30 p.m.
Lawyers representing unsecured creditors and Deutsche Bank, the trustee for bonds that were issued by Fleetwood in December, were pleased with Fleetwood’s decision to rely on cash collateral instead.
Dutchmen Manufacturing Inc. has introduced the Denali SuperLite travel trailer and mid-profile fifth-wheel series, a lightweight version of its popular Denali towable line designed for towing behind mid-sized pickup trucks. Six of eight Denali SuperLite floorplans feature dry weights of 7,500 pounds or less, according to the company. The Goshen, Ind., Thor subsidiary was able to shave 800 pounds off of comparable units by employing a six-way welded aluminum cage superstructure with lightweight laminated floors and walls. An aerodynamic front profile also is intended to promote enhanced fuel economy. “The weight saving makes Denali SuperLite towable by most half-ton and one-ton trucks,” said Brent Stevens, vice president of marketing and sales. Four 26- to 31-foot travel trailer floorplans are equipped with up to two slideouts, while 26- and 27-foot fifth-wheels feature single living room slides. Solid wood cabinets, enclosed and heated underbellies and flat screen HD TVs are standard. MSRPs start at $21,500.
January towable retail sales declined 49.2%, according to the latest report from Statistical Surveys Inc.
The results came on top of December’s survey that showed towables declined 39.9%.
According to the Grand Rapids, Mich.-based firm, in January:
- Travel trailer retail sales decreased 48.1% to 3,496 units.
- Fifth-wheel trailers fell 50.2% to 1,947 units.
- Folding camping trailer sales fell 49.3% to 285 units.
- Recreational park trailer sales fell 60.4% to 111 units.
January was the eighth straight month that retail sales have outpaced wholesale shipments, indicating that RV dealers continue to lower inventories aggressively.
Thor Industries Inc. continued to maintain its market position with 28.2% of the travel trailer market and 40.2% of the fifth-wheel market share. FTCA Inc.’s Coleman Camping Trailers brand held 38.9% of the folding camping trailer market. Chariot Eagle Inc. gained the top spot in recreational trailers with a 15.3% market share.
The Dow may be dropping and the unemployment rate rising, but Saturday at the 39th Annual RV and Camping Show in Syracuse, N.Y., dealers and vendors reported steady traffic and an upbeat mood among buyers.
“I’m happy, and it takes a lot to make me happy,” said Kevin Bostrom, regional vice president of Camping World.
“If I had a tail, I’d be wagging it,” added Jim Kring, show director.
The Post Register, Syracuse, reported that even with the economy in the dumps, people were turning out in droves at the camping show. Kring said the crowds were “fantastic,” with attendance up on Thursday and Friday. “Saturday is beyond my wildest dreams,” Kring said. The show, held at the Americraft Center of Progress Building, concluded Sunday.
Dealers reported that the heavy traffic also generated sales.
“Just look at the sold signs,” Bostrom said, pointing down a row of motorhomes and travel trailers with bright green “Sold” signs on them.
Anne Wrench, of Bainbridge in Chenango County, was one of many buying or close to buying a travel trailer Saturday. She didn’t believe the doom and gloom of economic forecasts.
“Apparently, people want to buy,” she said. “Look at all the people here.”
Those selling the fifth-wheels, trailers and motorhomes said camping is attractive because it’s an affordable way to vacation.
“Camping is cheap – it’s less expensive than flying and paying for a motel,” said Jerry Fitzpatrick, of Great RV Outdoors Superstore in Fulton. “You can get a nice trailer for $150 a month.”
Fitzpatrick said his store sold three times as many units in February as in previous years. “After six months of winter, people want to get out camping,” he said.
There were plenty of bargains as some units were marked down by thousands of dollars for the show.
Mike Brennan was browsing the show looking for a replacement trailer. He has taken his current camper all the way to Alaska twice and was checking out the current models.
“The economy doesn’t bother me,” Brennan said. “I’m retired.”
Riverside, Calif.-based Fleetwood Enterprises Inc. will be exiting the travel trailer market to “focus on its motorhome and manufactured housing business.”
In a letter to dealers, RV Group President Paul Eskritt explained that the company’s trailer division had incurred significant losses the past several years.
“Fleetwood’s travel trailer division sustained losses of $65.3 million in 2007 and $16.8 million in 2008,” he said. “In recent years, this division has lost market share due to aggressive competition from industry peers. Fleetwood has responded by improving its product lineup, but current market conditions are too severe to permit timely recovery.”
Eskritt went on to say that the move would terminate existing dealer agreements. The rest of the letter stated:
“Because of the decision to withdraw from the travel trailer business, which has resulted in the discontinuance of all travel trailer product lines, the applicable Fleetwood travel trailer manufacturers hereby terminate the travel trailer dealer agreement and/or any other contractual or non-contractual agreements with the dealer relating to the supply of travel trailer products, effective as the date of this letter.
“Law applicable to dealers in some states requires us to inform you that the law in your state may provide you with a right to protest this notice or to take other action.
“To the extent possible, given existing inventory and work in progress, the Fleetwood travel trailer manufacturers will honor and fulfill orders submitted by your dealership for travel trailer products prior to the date of this letter. However, the Fleetwood travel trailer manufacturers will accept no further orders for travel trailers on or after the date of this letter.
“Further information regarding the handling of warranty issues as to travel trailer products will be provided at a later date.
“To the extent that any or all of your previous business arrangements with Fleetwood in connection with travel trailer products ceased or were terminated prior to the date of this letter, this letter will serve only as a general notice to you of Fleetwood’s current status and not as an acknowledgement of any ongoing business relationships.
“Fleetwood intends to concentrate its efforts on its motorhome and manufactured housing business. Our decision to exit the travel trailer business and this letter terminating your travel trailer dealer agreement, does not terminate or otherwise, in any way, affect dealer agreements or other arrangements concerning Fleetwood’s manufactured housing and motor homes business, its products and support of those products.”