Friday, March 06, 2009
COUNTRY COACH NOW IN BANKRUPTCY
Friday, March 6, 2009
A federal judge ordered Country Coach LLC into Chapter 11 bankruptcy protection on Thursday (March 5), one month after the Junction City, Ore., RV maker’s majority owner filed a petition to put the company into involuntary bankruptcy.
Under court rules, Country Coach had until Wednesday to contest the involuntary filing, but it did not respond. In fact, nothing in the record indicates it retained a bankruptcy attorney.
So U.S. Bankruptcy Judge Albert Rad cliffe granted the request by Bryant Riley to put the company into bankruptcy. A Chapter 11 filing puts the company under the protection of the bankruptcy court while attempting to reorganize its finances.
The judge gave Country Coach three days to provide a list of its 20 largest secured creditors.
Riley, a Los Angeles investment banker, led a group of investors that bought Country Coach in 2007 for $38 million. But one of his companies, Riley Investment Management, also is a creditor of Country Coach’s, and it was in his role as a creditor that he filed the involuntary bankruptcy petition.
Those dual roles — creditor and owner — drew sharp criticism last month by a lawyer for another creditor, Wells Fargo, who said it represented a clear conflict of interest.
Wells Fargo is among Country Coach’s largest creditors. The bank sued Country Coach in January in U.S. District Court in an effort to recover about $8.5 million, but that suit was put on hold after the involuntary bankruptcy filing.
Neither Riley nor his Portland attorney returned phone messages and e-mails seeking comment Thursday. Country Coach officials also did not respond to a request for comment.
Earlier, Radcliffe granted a motion filed by Wells Fargo attorneys to require Riley and top Country Coach executives to submit to questioning by the bank’s lawyers later this month. Topics to be covered include how many finished coaches, works in progress and raw materials are in the company’s inventory, and other questions about Country Coach’s finances.
Country Coach’s factory in Junction City has been shut down since early December, putting about 500 employees out of work. On New Year’s Eve, CEO Jay Howard notified employees that company could close for good by the end of February unless it was able to obtain new financing.
Though a lawyer for Riley said in court last month that a Los Angeles private equity firm was interested in buying and operating Country Coach, no deal has emerged.
Last week, Howard issued a statement saying that company officials were continuing to “work diligently towards a go forward solution” and that he expected to provide “an answer” on the company’s future this week.
MONACO FILES FOR BANKRUPTCY
Friday, March 6, 2009
Recreational vehicle maker Monaco Coach Corp., which has seen sales plunge amid the recession, said Thursday (March 5) it has filed for Chapter 11 bankruptcy protection.
The Associated Press reported that the company said it plans to continue operating as it prepares to sell off parts or all of its business.
The RV maker, which sent termination notices to nearly all its remaining employees earlier this week after an unsuccessful 20-month turnaround effort, said it owes between $100 million and $500 million and has assets in the same range.
The Coburg, Ore.-based company estimated it has between 25,000 and 50,000 creditors.
"We understand how difficult the events of the past several months have been on everyone at the company, and we recognize the changes personally affect many people," Monaco Coach Chairman and CEO Kay Toolson said in a statement. "Further, we understand and deeply regret the effect of the action taken today on vendors and others with whom we have business relationships."
Monaco Coach has been hammered by the continued downturn in demand for its RVs. The company's products, which include the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names along with several motorhome resorts, are tied closely to consumer confidence, which has hit historical lows amid the recession and rising unemployment.
The company said the filing affects all its subsidiaries, including Bison and Roadmaster specialty trailer operations in Milford and Goshen, Ind., respectively.
Custom Chassis Products LLC, the company's chassis manufacturing joint venture with Navistar Inc. based in Elkhart, Ind., is not a party to the bankruptcy proceeding.
Earlier this year, the company said it hired Imperial Capital LLC to explore strategic alternatives, including a possible joint venture or merger.
Monaco Coach said Thursday it is continuing to work with Imperial Capital.
ONE COMPANY IN OREGON IS STILL BUILDING RV'S
Friday, March 6, 2009
Marathon Coach Corp. is the smallest of the RV manufacturers in Oregon’s Lane County, building high-end conversions for the luxury motorhome market, according to a report in the Register-Guard.
But, unlike its two larger rivals – Monaco Coach Corp. and Country Coach LLC – Marathon is still producing coaches, although it’s “just a handful” right now, said Steve Schoellhorn, president and COO of the privately held company.
“We’ve been on a real limited production schedule – really limited right now,” he said Thursday. “We’ll run that way at least through the end of March and evaluate from there.”
About 120 employees are working at Marathon right now, he said, down from about 350 last year.
While Marathon has seen a slight uptick in demand, the market for RVs, even for buyers who are used to spending $2 million on a coach, is “really challenging,” Schoellhorn said.
“Obviously, the RV industry is probably at its lowest point ever,” he said. “Marathon has done well historically, even in challenging times, but this is way deeper than anyone has ever seen.”
The Register-Guard reported that Marathon has carved out a small but lucrative niche in the RV world. It buys bus shells from Prevost Car of Canada and converts them into high-end luxury motorcoaches that range in price from about $1.7 million to $2.2 million. Customers include NASCAR drivers such as Jeff Gordon, Kurt and Kyle Busch and Kevin Harvick, as well as entertainers and retired business owners.
But even the very wealthy are feeling the effects of the recession gripping the nation.
Many prospective Marathon customers fall into two general categories, Schoellhorn said: People who have lost so much money in the stock or housing markets that they can’t or won’t spend money for a new coach, and people who still are “super wealthy” but who are scared to spend money because of the state of the economy.
Marathon has been able to survive so far because it builds far fewer coaches than the larger companies, Schoellhorn said. “We may not boom as much when times are good, but when times are tough, we don’t need to sell that many coaches to stay viable.”
Asked if Marathon has enough cash to weather the recession, Schoellhorn said, “We believe we do,” but they still need customers to buy their product. “No business can survive forever without selling coaches,” he said.
Marathon slowed production and furloughed some of its employees last October, then began bringing some workers back in January.
REXHALL KEEPS ON BUILDING
Friday, March 6, 2009
William Rex, president and CEO Lancaster, Calif.-based motorhome builder Rexhall Industries Inc., blamed extenuating circumstances unrelated to the current downturn in the industry for his recent decision to file for bankruptcy protection.
“We believe it (bankruptcy filing) should have no effect on our customers and will help us to weather this storm we are all facing,” Rex told RVBusiness.
The publicly-traded company’s petition lists $5.1 million in assets and $4.9 million in debts.
He said he has talked with most vendors and they have agreed to extend his firm credit or put him on COD.
“In the midst of all this, we have expanded our factory-direct sales effort by opening up a new dealership on the 14 Freeway in Lancaster,” Rex noted.
In court documents the company explained that it began selling its products factory-direct instead of through dealers because of too much exposure to costs under lender re-purchase agreements.
Rex projects sales will move upward again by 2010.
Rex owns 55% of the shares in the company whose stock is traded on the “pink sheets” under the symbol REXL.
The company gained attention at the 2003 National RV Trade Show in Louisville, Ky., with the debut of the T-Rex that featured opposing full-wall sliderooms. The slideouts were interlocked with the coach’s welded uni-body, steel-frame construction.
The company currently builds gas and diesel Class A motorhomes under the Aerbus, RexAir and RoseAir brand names in a 120,000-square-foot factory in Lancaster.
The units retail for between $130,000 and $280,000. Sales totaled about $5 million last year, down about 45% from the year earlier. Rex once employed upward of 400 employees but was down to 46, according to the court filing.
Wednesday, March 04, 2009
IT'S NOT ALL BAD NEWS!
We have been reading about some RV companies that have gone out of business. We realize that Monaco and Country Coach may not make it (both have been closed since December). There have been lay-offs and cut-backs at many factories. Winnebago's salaried employees took pay cuts so the hourly employees could stay on the job.
But there are still 55,000 people working in RV Industry related businesses in the RV Capitol of the World: Elkhart, Indiana.
There are many RV companies that are doing OK. Jayco took over Travel Supreme and renamed it Integra. Forest River bought Coachman. Thor Industries (makers of AirStream, Four Winds, Damon, Mandalay, Komfort, Dutchman, Keystone) loaned it's largest dealer network 20 million dollars last month.
So most of the RV companies are going to survive these tough economic times. While sales are down now, the demand for RV's will never go away. Consumers are just waiting. In fact, as soon as people start to get some confidence in the ecomomy and loans become available again, RV sales will be on the way up.
Monday, March 02, 2009
MONACO LEFT WITH 140 EMPLOYEES AT THE MOMENT
Monaco Coach Corp., the 41-year-old recreational vehicle and trailer manufacturer based in Coburg, started handing out pink slips Monday to 2,000 workers -- a majority furloughed since mid-December -- and warned the company could close entirely.
With its motto "Driving your dream" still posted atop its flashy Web site, Monaco alerted the state in a required filing Monday that if it doesn't secure new ownership or financing over the next 14 days, layoffs at plants in Coburg, Harrisburg and Hines could be followed by more job cuts.
Craig Wanichek, director of investor relations, said Monday's action affects jobs in Oregon and Indiana and leaves the company with 140 employees.
He would not say at which point the company would decide to permanently close.
"We have been working to find a solution," he said, "and we will continue to work on that."
In Monday's filing to the state Department of Community Colleges and Workforce Development, Monaco said, "Unforeseen business circumstances precluded our ability to give 60 days' notice of the forgoing circumstances."
In letters to furloughed employees, the company said it didn't alert them to the situation earlier for fear that would have "undermined its efforts to sell or otherwise attract financing to preserve the business."
Monaco is one of three Oregon luxury motor coach companies -- along with Country Coach of Junction City and Marathon Coach of Coburg -- that at one point, represented salvation for some of Lane County's struggling timber towns. At its peak in 2005, the state's RV industry, which produces some rigs with $1 million price tags, employed close to 5,000 workers.
Yet high gas prices and the tightening credit market have put the brakes on the manufacturing industry that had begun to slow in 2007.
Wells Fargo & Co. recently filed a lawsuit against Country Coach, seeking to collect payment on an $8 million loan. On Feb. 10, Bryant Riley, a Los Angeles-based investment banker representing a group of investors, filed for Chapter 11 bankruptcy protection in an attempt to fend off Wells Fargo's move.
As with Monaco, Country Coach idled its factory in December, along with 500 workers.
With its stock below $1 for more than 30 days, the New York Stock Exchange notified Monaco in mid-January that it risked delisting. The company's shares, still trading on NYSE, closed down 40 cents, to 6 cents, Monday after the company announced layoffs.
In late October, Monaco reported third-quarter sales of $166.3 million, compared with $322.4 million during the same period a year earlier. For the quarter ended Sept. 27, the company reported an operating loss of $90.6 million, which included restructuring and impairment charges of $68.5 million, versus operating income of $6.5 million in the third quarter of 2007.
YOUR NEW FLEETWOOD COACH WILL NOT BE UNDER WARRANTY UNLESS YOU BUY IT FROM A FLEETWOOD AUTHORIZED DEALER
RIVERSIDE, Calif. -- Fleetwood RV announced late last week that it was modifying the terms of its limited warranty. It's a change that pleases some dealers, while irritating others who don't normally carry the Fleetwood brand, RV Industry News has learned.
In a Service Bulletin jointly issued Feb. 27 by Craig Biazo, director of travel trailer parts and service, and Chuck James, director of motorhome parts and service, the change takes affect immediately and impacts all Fleetwood motorhomes and travel trailers in stock at authorized Fleetwood dealerships.
"The Fleetwood limited warranty will no longer cover units that are not originally sold by an authorized Fleetwood dealership, ie: sold at auction, repossessed, salvaged, or sold in an otherwise distressed condition," the bulletin read.
The change does not impact motorhomes and travel trailers sold by authorized Fleetwood dealerships.
Biazo and James said the company will provide Fleetwood dealers with a list of all units in their inventory, and adhesive labels to be placed over the existing page of the Fleetwood owner's manual to reflect the change.
"Fleetwood is implementing the change to protect and distinguish sales of units through our valued Fleetwood authorized selling dealerships from sales through unauthorized channels and/or sales of units in distressed condition," the bulletin read.
One non-Fleetwood dealer contacting RV Industry News expressed concern that his company would not authorize repairs to brand new units purchased at auction sites as inventory from bankrupt dealers is liquidated. He said the move would create more orphaned owners because the buyers may not be able to get service at an authorized location without driving a considerable distance from their home.
For example, if the local Fleetwood dealer goes out of business and a competitor down the street acquires the existing inventory on the lot, the change in policy appears to prevent the competitive dealer from providing warranty service on the unit -- even if the closest authorized Fleetwood service center may be hundreds of miles away.
Yet, another Fleetwood dealer praised the company for making the move. He feels Fleetwood is stepping out to help their dealer network by ensuring that more business is directed to them. "That means dealers looking to pick up bargains won't be able to offer a warranty," he said in an e-mail to RV Industry News. "That's good news for me. I hope other manufacturers pick up on this because it helps me sell my stuff."
"We want the work performed by an authorized Fleetwood dealer," said Heather Everett, Fleetwood public relations director. "In addition, we want to protect the value of our authorized dealers Dealer Sales and Service Agreements by protecting their interests in the event they are forced to compete against a non-authorized dealer selling the same brands, and we need to ensure that our products and warranty is not misrepresented in communications to customers by a non-authorized dealer."
MONACO HAS SENT TERMINATION NOTICES TO IT'S EMPLOYEES
Monday, March 2, 2009
Coburg, Ore.-based Monaco Coach Corp. announced today (March 2) it has provided termination notices to the majority of its remaining work force while it continues to seek additional financing or capital or a corporate transaction.
Most of the separated employees had already been on furlough since mid-December 2008.
In its notice to employees, the company noted that without consummation of a sale or obtaining additional financing or capital, it may ultimately be forced to shut down operations.