Tuesday, February 10, 2009
MONACO MAKES A DEAL WITH IT'S LENDERS TO PRESERVE CASH
RV Business
Tuesday, February 10, 2009
Monaco Coach Corp. entered into a forbearance agreement Feb. 4 with Bank of America, N.A., and GE Commercial Distribution Finance Corp. regarding “repurchase obligations” with dealers, according to a filing with the Securities and Exchange Commission (SEC).
Monaco stated: “As is typical in the recreational vehicle industry, many of the independent retail dealers that carry the company’s products utilize wholesale floorplan financing arrangements with third party lending institutions to finance their purchases of the company’s products. Under the terms of these floorplan arrangements, lenders customarily require the recreational vehicle manufacturer to agree to repurchase unsold units if the dealer defaults on its credit facility from the lender, subject to certain inventory aging limits.
“Due to the deterioration in the market for recreational vehicles generally and resulting defaults by the dealers under their credit lines with the flooring lenders, repurchase demands on the company by the flooring lenders have increased substantially above historical levels.”
In the filing Monaco said the increase in repurchase demands has also affected borrowing availability under the company’s loan and security agreement entered into with Bank of America Nov. 6, 2008, and other revolving credit lenders, including GE Commercial.
“Under the loan agreement, the company is able to borrow amounts according to an accounts receivable and inventory borrowing base formula that is subject to the imposition of reserves in certain circumstances,” Monaco stated. “The increasing repurchase demands by the flooring lenders have had the effect of increasing the borrowing base reserves under the loan agreement and reducing the company’s borrowing availability.”
As a result, Monaco said it has entered into a forbearance agreement under which the “flooring lenders agreed, with certain material exceptions, to withdraw certain existing repurchase demands and forbear from making additional repurchase demands through April 6, 2009.”
In addition, Monaco said the flooring lenders agreed that during the forbearance period they would not exercise their “rights of set-off against amounts payable by the flooring lenders to the company.”
Monaco added that it will continue to pursue a variety of strategic and financial alternatives given “continued uncertainty in the company’s core markets and concerning the sufficiency of the company’s capital resources.”
Tuesday, February 10, 2009
Monaco Coach Corp. entered into a forbearance agreement Feb. 4 with Bank of America, N.A., and GE Commercial Distribution Finance Corp. regarding “repurchase obligations” with dealers, according to a filing with the Securities and Exchange Commission (SEC).
Monaco stated: “As is typical in the recreational vehicle industry, many of the independent retail dealers that carry the company’s products utilize wholesale floorplan financing arrangements with third party lending institutions to finance their purchases of the company’s products. Under the terms of these floorplan arrangements, lenders customarily require the recreational vehicle manufacturer to agree to repurchase unsold units if the dealer defaults on its credit facility from the lender, subject to certain inventory aging limits.
“Due to the deterioration in the market for recreational vehicles generally and resulting defaults by the dealers under their credit lines with the flooring lenders, repurchase demands on the company by the flooring lenders have increased substantially above historical levels.”
In the filing Monaco said the increase in repurchase demands has also affected borrowing availability under the company’s loan and security agreement entered into with Bank of America Nov. 6, 2008, and other revolving credit lenders, including GE Commercial.
“Under the loan agreement, the company is able to borrow amounts according to an accounts receivable and inventory borrowing base formula that is subject to the imposition of reserves in certain circumstances,” Monaco stated. “The increasing repurchase demands by the flooring lenders have had the effect of increasing the borrowing base reserves under the loan agreement and reducing the company’s borrowing availability.”
As a result, Monaco said it has entered into a forbearance agreement under which the “flooring lenders agreed, with certain material exceptions, to withdraw certain existing repurchase demands and forbear from making additional repurchase demands through April 6, 2009.”
In addition, Monaco said the flooring lenders agreed that during the forbearance period they would not exercise their “rights of set-off against amounts payable by the flooring lenders to the company.”
Monaco added that it will continue to pursue a variety of strategic and financial alternatives given “continued uncertainty in the company’s core markets and concerning the sufficiency of the company’s capital resources.”
