In an effort to work with its lenders, Lazydays RV Center Inc. said it elected not to make the interest payment due and payable today (Nov. 17) to holders of its senior notes. The Seffner, Fla.-based RV retailer made the announcement in its quarterly report for the period ended Sept. 30.
“It is now the appropriate time to go to our bondholders and request a change to the terms of our long-term financing that will help to maintain our company’s long-term viability through the duration of the recession that is currently taking place in our industry and the overall economy,” CFO Randy Lay told RV Business.
“Under the governing indenture for these notes,” said Lay in the release, “Lazydays has a 30-day grace period before the failure to pay interest becomes an event of default. During this grace period, the company intends to engage in discussions with holders of its senior notes to restructure its long-term debt to improve its liquidity or modify its requirements for liquidity while respecting the interests of all parties.”
Lay said the negative trends in this market have been exacerbated by a significant reduction in the extension of credit to consumers for the purchase of recreational vehicles, and the uncertainties associated with those factors. The company, he added, is currently in compliance with all covenants associated with its lenders. “Lazydays’ floorplan lenders have been apprised of this course of action and have agreed to continue to honor their credit agreements with the company,” Lay explained.
This year, the company’s release notes, Lazydays has implemented a number of initiatives across all of its business segments to significantly reduce its operating costs in response to the persistent downturn in the RV industry and the overall economy. These measures included reducing employee headcount by 200 people, or 30%, eliminating all non-essential spending, and implementing efficient purchasing processes across all segments of the business. While these measures have had a very positive impact on the company’s cash flow, the release states, they did not address its fixed interest costs.
Nevertheless, the company maintains, those cuts in operating expenses have not hampered customer service. At the same time, Lazydays, the nation’s largest single-site dealership, has grown its national and Florida market share in all four of the RV product categories in which it does business, the company reports.
“I do not anticipate that our efforts to restructure our long-term debt will have any impact on our company’s ability to take great care of our customers as we have done for the past 32 years,” states Lazydays CEO John Horton, whose 126-acre complex outside Tampa includes an 86,600 square-foot main building, 273 service bays, 300 RV campsites and more than 1,200 RVs on display.