Tuesday, December 04, 2007



Steve Bibler
RV Business
Monday, December 3, 2007

The inability to raise additional cash to finance operations was the final blow that led to National RV Holding Inc.’s decision last week to file for Chapter 11 bankruptcy.

“We did get out of debt but we couldn’t stop the burning of cash,” said Dave Humphreys, acting CEO, in an interview with RVBusiness. He said company officials during last week’s National RV show in Louisville “were having crisis calls every day to try to figure out how to get to a point of getting some income for our shareholders.”

The Perris, Calif.-based company, parent to Class A motorhome builder National RV Inc., is mired in a five-year decline during which it lost some $80 million. The company ranked No. 7 in gas-powered Class A motorhomes sales in September, according to Statistical Surveys Inc. of Grand Rapids, Mich., but its retail sales were off 31% for the year through September and its market share had fallen from 5.5% a year ago to 4.7%.

But despite an encouraging response from its dealers to some of its new products, the company was forced to file for Chapter 11 bankruptcy, which it did on Friday (Nov. 30) in federal court in Riverside, Calif. The action will free the company from the threat of its creditors’ lawsuits while it reorganizes its finances. Unless the court rules otherwise, National RV remains in control of the business and its assets.

Approximately 600 employees were informed on Friday that the company was closing. Letters to the idled workers said in part, “This layoff is expected to be permanent and the entire site will be closing.”

In a press release announcing its Chapter 11 filing, Humphreys stated, “We are saddened to let go our excellent employees, especially so close to the holidays, and even more so because National's motorhomes have never been better than they are today. After evaluating our options, however, we ultimately determined that seeking protection in bankruptcy was in the best interests of creditors and shareholders.”

The company introduced two new entry-level Class A motorhomes at Louisville: the gas-powered Rip Tide featuring two slideouts retailing for $85,000, and the diesel-powered Nautica featuring a full-wall slideout retailing for $140,000. Humphreys called these offerings “spectacular products.”

He said dealers “really loved the diesel” but didn’t like the floorplan for the gas-powered unit. “Our guys said that would be easy to adjust,” Humphreys said.

Both new products employed newly developed, patent-pending “Dura-Hull” construction, utilizing interlocking aluminum extrusions and lightweight framework. Both also feature integrated water management channels designed to route water across the length of the coach into hidden drains, thus eliminating streaking.

Humphreys said the impression he got from talking with other manufacturers at the show was that “the low end and high end (Class A motorhomes) are very strong but the middle is ‘mushy’ and we had a lot of products in the middle.”

Humphreys said “one of the tragic things is they had orders for 200 motorhomes before the show. We just couldn’t get the capital to build them.”

In the company’s most recent quarter ending in August, sales were down 42% while losses topped $8 million.

“We thought we had a realistic plan to return to profitability,” Humphreys said. He said he is confident the liquidation of the company will yield enough revenue to pay off all the company’s creditors.

“There are a lot of parts to this company that are very valuable in the liquidation,” he said. “The question is whether someone will buy the whole company or parts of it.”

Humphreys said that he and other key management officials will stay on and see through liquidation of the company as well as a lawsuit the company has against Channahon, Ill.-based Crane Composites Inc. and its parent, Crane Co., over faulty sidewalls.

The sidewall issue was a major blow to National RV’s recovery, Humphreys maintains. National RV began 2006 by showing significant progress in its turnaround efforts, with continued market share gains and reduced losses, but the defective fiberglass issue resulted in substantial unexpected costs and created a liquidity strain. That was compounded by a continued decline in the Class A industry, the company said in an earlier statement.

“This created an environment of severe uncertainty that began to significantly adversely affect the company, its employees, suppliers, customers and dealers,” the company added.

Humphreys also defended the sale at the start of the year of Country Coach, National’s only profitable segment, to a group led by the manufacturer’s largest shareholder for $38.75 million. The move was part of a continuing attempt to turn around the financially struggling company. The deal left National RV debt-free but without its only profitable asset.

“It was a very good move,” Humphreys said. “There were a number of things going on and we couldn’t help Country Coach with what it needed. I don’t think the synergism was what it should be. Country Coach deserved to do their own thing.”

Ironically, on the day National RV filed for bankruptcy, Country Coach announced it would lay off a portion of its work force in Junction City, Ore.

National’s closing follows a year of turmoil. In April, the company sold its 607,000-square-foot complex and land and began to lease back the buildings for 10 years. Four months later, the company's chief executive, Brad Albrechtsen, who led the company for six years, stepped down. Humphreys, the company’s recently appointed chairman, was named CEO.

In October, the company’s stock was delisted from the New York Stock Exchange after its share price for a month fell below $1.

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