Friday, November 27, 2009
COUNTRY COACH NOW PART OF RV HISTORY
Country Coach Inc. CEO Jay Howard went to court Wednesday (Nov. 25) hoping to negotiate survival of his company. He ended up bargaining for access to his own office at the Junction City, Ore., plant.
It was a negotiation he lost.
Wells Fargo — seeking the return of $8.2 million in loans it made to the now-bankrupt company — has posted a security guard at the plant, although Howard may later be allowed a supervised visit to pick up his personal items, according to The Register-Guard, Eugene, Ore.
“After 37 years of Country Coach, I find it difficult to believe that it’s done,” Howard said after the hearing. “But we’ll see. We will see.”
U.S. Bankruptcy Judge Albert Radcliffe ordered immediate conversion of the RV maker’s Chapter 11 reorganization bankruptcy — begun in March — into a Chapter 7 liquidation, although a trustee may not be on the job until Monday because of the Thanksgiving holiday.
The company had 1,600 employees two years ago. In November 2008, it shut down and put 500 remaining employees out of work.
After gaining the protection of the bankruptcy court, the company missed repeated deadlines for submitting a reorganization plan — in August, in September and again in October.
The company’s assets include 10 luxury coaches completed and ready for sale, with a total value ranging from $5 million to $9 million, depending on whether they’re sold at auction or sold retail, Howard said recently. There are an additional 15 partially built coaches.
As late as Monday, Howard was hoping to bring in an investor to buy out Wells Fargo’s debt and to allow the company to resume production.
The judge gave the investor, a Washington state businessman named Roger McCombs, until Tuesday to prove he was seriously interested in a purchase by depositing $1 million in a Wells Fargo account. Howard said Tuesday that another investment group that included Bryant Riley, who is both an owner and creditor of Country Coach, had put up $1 million in earnest money by the deadline.
Country Coach attorney David Levant told the judge Wednesday that an investor made a deposit at Wells Fargo, although it wasn’t in a specified account. “Wells Fargo should be able to verify the funds,” Levant said.
Radcliffe left it up to Wells Fargo whether to continue to seek a deal with potential investors: “The ball is pretty much in Wells Fargo’s court,” he said.
But the bank was done with the game, attorney Wilson Muhlheim said. “We’re not interested.”
County Coach’s descent into Chapter 7 liquidation wasn’t surprising to Junction City residents. When the company tried to crank up production after the bankruptcy filing, it managed only a skeleton crew.
“Pretty much everybody’s been assuming that’s what’s going to happen, and (they’ve) been trying to move on with their lives,” Jim Krowka, an employee at B&I True Value Hardware said. “(Company purchases) haven’t been a big part of our business for a couple of years now.”
City Administrator David Clyne said Wednesday night, “I’m hoping that there will be a surviving venture … and that someone will put something back together out of that. Most of the jobs have been long gone, and that’s a shame. But hopefully something will rise out of the ashes.”
“They had a good long run here but, unfortunately, the RV industry was hit very hard by the recession,” Clyne said.
The city has been moving in a different direction economically for some time, he said.
“We’ve been focusing on the prison and the hospital that are shortly to be constructed. … I think there was a realization that the RV industry has kind of come and gone. We’re looking to move forward and succeed in a different direction. Nonetheless, we’d hoped (Country Coach) would be part of it. Now, it doesn’t look good for them.”The city will still receive some property taxes for the land and buildings, he said, although this would be significantly less than the taxes Country Coach was paying at its peak. “I don’t know what the revenue shortfall will be. It will have an impact on our direct services and budget.”
“I feel bad for the local business creditors as well,” Clyne said. “They’ve extended credit, done what they could to keep the company afloat. I’m sure most of their assets are gone.”
As for the people who worked at Country Coach, he said, “They were friends, family, members of the community. I certainly feel for them.”
The company stopped building coaches in September and just recently laid off its remaining employees. Only Howard and Chief Financial Officer CFO Mark Anderson remained on the job.
Levant petitioned the judge to allow Howard and Andersen to stay in their offices and use company computers over the Thanksgiving weekend, continuing to look for investors to rescue the company.
Howard said Wednesday that he doesn’t want to give up. Most managers in the flailing industry are long since gone, he said, “We’ve fought a relatively valiant fight with a lot of people helping.”
But Wells Fargo objected to Howard and Andersen staying on at the plant. “It’s problematic,” Muhlheim said. “We don’t know what might or might not happen.”
David Wade, attorney for Lee Joint Ventures, which owns the land where Country Coach is located, said the company no longer had a lease as of Monday. “Technically there is no right of possession for (Country Coach),” he said.
Radcliffe ruled that Howard and Andersen would be barred from the property, at least until next week when a trustee takes control of the property.
The pair “can take a few days off for want of a better way of putting it,” the judge said.
Afterward, Howard admitted that the fate of Country Coach was no longer in his hands, although he added that he’s still optimistic that something positive for “jobs and the community” will happen.
In the meantime, Howard said he would spend a lot of time over the holiday with his 81-year-old mother, who’s recuperating from knee replacement surgery.
Tuesday, November 24, 2009
COUNTRY COACH'S LAST GASP
Junction City, Ore., RV maker Country Coach is heading for liquidation unless a last-gasp bid by an outside investor to settle the company’s debts and bring it out of bankruptcy comes to fruition in short order, according to The Register-Guard, Eugene, Ore.
In U.S. Bankruptcy Court on Monday (Nov. 23), lawyers for the company and its main creditor, Wells Fargo Bank, said Country Coach is out of money and out of options, unless a Washington businessman named Roger McCombs can secure a stay of execution. If McCombs deposits $1 million in earnest money in a Wells Fargo escrow account by this afternoon, he’ll have 10 days to negotiate a deal to pay off the debt to the bank and attempt to breathe new life into the company.
Privately held Country Coach, founded in 1968, has been in Chapter 11 bankruptcy since March, providing it with some breathing room from creditors while it sought to reorganize its finances and business model. But even operating with a vastly smaller work force, the company has been steadily losing money. The company has posted losses of $8.8 million since April, company officials testified.
Wilson Muhlheim, the Eugene attorney for Wells Fargo, said Country Coach has consistently been in default on the terms of its loan agreement. Company officials said they have a negative balance of $450,000 on their line of credit with the bank.
“Now we’re at the end of the road,” Muhlheim said. “There is no deal on the table.”
But Country Coach CEO Jay Howard said there could be a deal. He testified that he’s been talking with McCombs since July, that McCombs toured the Country Coach plant in October, and that he’s serious about making a bid.
McCombs is founder and board chairman of Composite Power Corp. and the patent holder of the company’s composite energy delivery system, according to the company’s website. The company, based in Richland, Wash., with an office in Las Vegas, makes utility poles made from composite materials that are lighter, stronger and cheaper than wooden utility poles, and which don’t have to be treated with carcinogenic chemicals, like wood poles, according to the financial website The Hot Pinks, which follows companies whose stocks are traded over the counter.
“He’s an amazing entrepreneur,” Howard said outside court.
In addition to building motorcoaches at the Country Coach plant, McCombs is interested in building mobile medical coaches, using Country Coach’s chassis, and in utilizing magnetic-levitation technology, or maglev, an area in which he holds a patent, Howard said.
“By Dec. 3 we’ll know if McCombs is in or out,” Howard said. “If not, we have no other sponsor.”
Howard said an earlier proposed deal, involving a Texas company called Recreation Live and other investors, appears dead.
If the McCombs deal doesn’t come together, Country Coach’s Chapter 11 case will be converted to Chapter 7 for the purpose of liquidating the company’s assets, Rad cliffe ruled.
Howard said the company has 10 coaches completed and ready for sale, with a total value ranging from $5 million to $9 million, depending on whether they’re sold at auction or sold retail. The company has another 15 coaches that are in progress.
Howard said the company stopped building coaches in September and just recently laid off the remaining staff. Only Howard and CFO Mark Andersen remain on the job, he said.
Even if McCombs is able to strike a deal with Wells Fargo, he’ll also have to come to terms with Country Coach’s landlord, Lee Joint Venture.
David Wade, the landlord’s attorney, said the Lee group was prepared to begin eviction proceedings unless someone makes good on $160,000 owed in property taxes and $263,000 to repair the roofs of the factory buildings.