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Executives of Coachmen Industries Inc. today (Dec. 1) explained in a conference call to investors its decision to sell the RV Group to Forest River Inc. for $42 million and described the shape of the restructured company that will emerge after the sale.
Rick Lavers, president and CEO, said the decision to sell was unanimous among the management team and board of directors of the Middlebury, Ind.-based public company after considering all options in a difficult economic climate.
Lavers strongly urged Coachmen shareholders to approve the sale at a special shareholders meeting to be scheduled yet this month. The sale will net Coachmen approximately $20 million, which will help the company become financially sound, he said.
Management decided to spin off the RV Group after concluding that the red ink, which had reached $121 million in pre-tax losses during the last four years, would not stop in the foreseeable future, he said.
Coachmen built 55,000 RVs during that time period “but lost bucket loads of money,” he said. Coachmen was actually gaining market share on all its products in 2008, but in September the credit markets for both wholesale and retail purchases froze up, turning the economic storm into a “typhoon,” he said.
“We concluded it would be extremely difficult to make money in the next year if not longer,” he said.
According to Lavers, during the last 10 years Coachmen’s housing group contributed $72 million in net profits while the RV Group lost $32 million. It became a matter of focusing on what would yield the most money, and the sale became the best decision for Coachmen shareholders, he added.
The sale provides Coachmen with cash, keeps the company based in Indiana (it will likely move back to its former corporate headquarters in Elkhart, at least temporarily) and helps most of the factory workers keep their jobs under Forest River management, Lavers noted.
Coachmen will restructure its credit facility with its lead bank after the sale is approved.
He said the restructured company, which will produce factory-built housing and specialty vehicles, could be profitable in the first quarter of 2009 and pointed to more than $100 million in projects it’s bidding on.
Earlier in the day, Coachmen and ARBOC Mobility announced they have completed prototypes of a full line of low-floor ADA-accessible buses. These buses range from 21 to 28 feet in length, and are available in both gas and diesel engine configurations. The companies said the product line represents a value breakthrough in low-floor bus technology, providing premium accessibility features at prices significantly below any other low-floor buses available today.
All internal testing and development on the ARBOC bus line has been successfully completed, and a production sample of the bus is in process of completing certification testing at the Altoona Bus Research and Testing Center in Altoona, Pa.
Coachmen will begin to ship the buses in the first quarter and has budgeted to build 400 of the units in 2009, which would represent about $32 million in sales, Lavers said.
Meanwhile, about 30% of the housing projects out for bid are for military installations.