Within two months of securing a $39.3 million loan, Coburg, Ore.-based Monaco Coach Corp. was at risk of default after it violated some terms of the financing, the company said in a filing with the Securities and Exchange Commission (SEC).
The Register-Guard, Eugene reported that Monaco was able to come to terms with the lender to avoid default, according to a document the company filed Tuesday (Jan. 20) with the SEC.
“We’re pleased to have worked with our term loan lender to get a waiver for a potential default at the end of December,” Monaco spokesman Craig Wanichek said Wednesday. He declined further comment.
The filing states that Monaco violated the terms of the loan agreement when it failed to maintain the required minimum amount of cash for the month of December, and because it planned to sell a piece of property at a price contrary to the loan terms.
So on Jan. 13, the company entered into a “waiver and consent” agreement with lender Ableco Finance LLC, a New York company formed by the management of the New York-based hedge fund Cerberus Capital Management.
The document states that Ableco agreed to waive “any events of default” provided Monaco met certain terms.
For instance, a property that Monaco wants to sell in Elkhart, Ind., has to go for at least $270,510, and the proceeds of such a sale must be used to repay the loan. And Monaco was required to show availability of $5.8 million cash when it provided monthly information to its lender in December 2008.
According to the Register-Guard, other conditions of the deal require Monaco to: pay a fee of $200,000 to Ableco, though the agreement doesn’t say what the fee is for; and negotiate with contractors it owes money to in connection with construction and development of its RV resorts in Naples, Fla., and Bay Harbor, Mich.
One of the contractors, Tom Threlkeld, president of Nassau Pool Construction in Naples, said Wednesday that Monaco has almost caught up on its payments to his company.
“They found a little more money,” he said. “We’ve got a pay plan and they’re paying me and I’m moving along to get it done.”
Like other RV makers, Monaco struggled financially for most of 2008. In November, the company said it had obtained a 3½-year, $39.3 million fixed term loan from Ableco, and an $80 million revolving capital loan fund from several lenders and Bank of America.
At the time, analysts congratulated Monaco for securing the financing in a tight credit market.
Monaco said that proceeds from the term loan, and an initial draw on the revolving loan of $37.4 million, were used to pay off an existing line of credit and a term loan, as well as for “general corporate purposes.”
A representative of Ableco said the company has a policy against talking to reporters. On its website, the company said it invests in “leveraged buyouts and leveraged ‘roll-ups’, bridge loans, recapitalizations, refinancing, debt restructuring, acquisitions and Chapter 11 reorganizations, including debtor-in-possession and exit financing.”