Wednesday, August 29, 2007
ARE SHAREHOLDERS GOING TO FORCE FLEETWOOD TO BE SOLD?
NEW YORK (AP) -- A major shareholder of Fleetwood Enterprises Inc. asked the board to consider selling the company to rival RV and manufactured housing maker Champion Enterprises Inc., according to a regulatory filing Monday
SLS Management LLC said in a letter to Fleetwood's board Monday that a sale to Champion is the company's best available alternative to maximize shareholder value. The investor said Chief Executive Elden Smith has taken some steps to improve value since replacing Ed Caudill in 2005, but the company remains unprofitable and hasn't reduced its cost structure enough.
In the Securities and Exchange Commission filing, SLS Management reported owning 7.6 million shares, representing an 11.8 percent stake in the Riverside, Calif.-based company.
SLS Managing Member Scott L. Swid argued that a combination with Champion could benefit from the "ideal overlap" of their manufacturing facilities by allowing the closure of at least 11 plants without exiting any market.
"We believe a strategic combination between Fleetwood and Champion Enterprise would create more than $600 million in value for shareholders of both companies," Swid wrote. "We think the value creation for Fleetwood shareholders alone would be approximately $3 per share, a more than 30 percent increase from where the stock is trading today."
Swid also urged the company to do more to reduce its cost structure at its Folding Trailers and Travel Trailers units.
Fleetwood shares fell 20 cents, ro 2.2 percent, to $9.07 in afternoon trading.
SLS Management LLC said in a letter to Fleetwood's board Monday that a sale to Champion is the company's best available alternative to maximize shareholder value. The investor said Chief Executive Elden Smith has taken some steps to improve value since replacing Ed Caudill in 2005, but the company remains unprofitable and hasn't reduced its cost structure enough.
In the Securities and Exchange Commission filing, SLS Management reported owning 7.6 million shares, representing an 11.8 percent stake in the Riverside, Calif.-based company.
SLS Managing Member Scott L. Swid argued that a combination with Champion could benefit from the "ideal overlap" of their manufacturing facilities by allowing the closure of at least 11 plants without exiting any market.
"We believe a strategic combination between Fleetwood and Champion Enterprise would create more than $600 million in value for shareholders of both companies," Swid wrote. "We think the value creation for Fleetwood shareholders alone would be approximately $3 per share, a more than 30 percent increase from where the stock is trading today."
Swid also urged the company to do more to reduce its cost structure at its Folding Trailers and Travel Trailers units.
Fleetwood shares fell 20 cents, ro 2.2 percent, to $9.07 in afternoon trading.
