Coburg, Ore.-based Monaco Coach Corp. said it is is essentially circling the wagons after filing for Chapter 11 bankruptcy Thursday (March 5) as it looks to divest its assets while also pursuing potential buyers for the company.
“The reason that we filed was to give us time to have an orderly process so we can get the most value for our assets,” said Craig Wanichek, director of corporate communications, in an interview with RVBusiness. “We believe we have a tremendous amount of value in our assets – significantly greater than our liabilities. By filing we can now pursue selling those assets in an organized manner.”
At the same time, through Imperial Capital LLC, Wanichek said Monaco is actively courting buyers for the company.
“Imperial Capital is looking at a number of potential inquiries and has been in discussions with a small number of companies regarding a transaction,” he said. “Negotiating a deal for a company to buy Monaco is certainly on the table right now.”
Monaco is also working with Avondale Partners LLC with regard to sale of its Bison and Roadmaster specialty trailer subsidiaries in Indiana along with the Bank of Montreal for divestiture of its motorhome resorts segment.
During this period, Monaco is negotiating with its lenders to obtain “debtor-in-possession” financing that will allow the company to continue operating.
“Basically, this will fund operations of the company through a specific time period,” Wanichek said. “It’s a working capital loan, and the budget is approved by the banks and the courts. It allows us to keep running – although we won’t be producing units – so we can work with dealers and our customers.”
Thursday’s filing was the culmination of a 20-month restructuring process as Monaco worked to reduce costs and streamline its operations.
“I think one result that’s not really seen is that we drastically reduced our break-even,” Wanichek said. “We shed a tremendous amount of costs. But the wholesale market continued to deteriorate. We reached a point where we were having liquidity issues.”
Monaco initiated several layoffs over the past year while also closing down plants corporatewide. Last July, it shuttered the majority of its Indiana facilities, impacting 1,400 workers. In December, it shut down production in Coburg and at it R-Vision Inc. subsidiary in Warsaw, Ind. A joint chassis venture with Navistar International Inc. in Elkhart, Ind., has continued to operate and wasn’t affected by the Chapter 11 filing.
Wanichek cited the laundry list of “macroeconomic” issues that stalled sales, including gas prices and record-low consumer confidence. Specific to the industry, a tightened credit environment has limited floorplan financing for dealers.
“There have been banks that have left the industry altogether and those that remain have tightened lending to a point where dealers can’t replace the product they sell,” Wanichek said. “We did get a new banking arrangement in November, but when floorplan financing continued to deteriorate, we couldn’t get a bridge loan.”
Wanichek said the bankruptcy filing was the best way to try to save the “Monaco enterprise.”
“We are hoping that the end result will be the Monaco brand continues,” he said.