Fleetwood Reports Corporate Developments and Transactions
April 29 2008 - 8:30AM
PR Newswire (US)
-- Company announces asset sales and plans affecting capital
structure -- RIVERSIDE, Calif., April 29 /PRNewswire-FirstCall/ --
Fleetwood Enterprises, Inc. (NYSE:FLE) disclosed today several
corporate developments and transactions. The announcements include
developments related to the anticipated retirement of $100 million
aggregate principal amount of the Company's 5% convertible senior
subordinated debentures, which holders may put to the Company on
December 15, 2008. As previously disclosed, Fleetwood said it is
exploring a range of transactions to generate additional funds for
retiring the debentures, strengthening its balance sheet and
maximizing shareholder value. These transactions include the sale
of excess or idle properties, the divestiture of non-core
businesses, real estate financing on facilities that are not part
of the Company's existing bank arrangements, and the possible
issuance of additional common stock. REAL ESTATE ASSET SALES
Fleetwood announced that on April 10, 2008, it completed the sale
of its 42.7-acre corporate campus in Riverside, California, for a
price of $23.5 million, net of expenses. The sale generated a gain
of approximately $22 million, of which $15 million will be
recognized in the fourth quarter. The Company has become a tenant
and will lease about 20 percent of the complex. The location will
continue to serve as the Company's corporate headquarters, as well
as the headquarters for the RV and Housing Groups' operations.
"Following several significant decentralization actions and
organization changes, we were not using and simply did not need as
much space as we had," said Elden L. Smith, Fleetwood's president
and CEO. "We are, however, reaffirming our commitment to our
associates, the City of Riverside, and the Inland Empire region of
Southern California that this will continue to be home to our
corporate personnel." Fleetwood also announced that it has recently
closed its two California- based supply manufacturing facilities
and consolidated the remaining Supply Group businesses into its
operating units. One facility was sold last week, generating almost
$10 million in proceeds, while the other is being offered for sale.
The Company had previously indicated that it expected to generate
proceeds of approximately $40 - $70 million from the sale of excess
or idle real estate between the beginning of the third quarter of
fiscal 2008 and December 15, 2008. Including the sale of the campus
and the idle supply facility, Smith said expectations remain well
within this range. CAPITAL STRUCTURE Potential for issuance of
common stock The Company has the ability under an existing shelf
registration statement to raise approximately $50 million from the
issuance of common stock and expects to utilize at least $30
million of this availability. There are a variety of possible
scenarios under which equity could be issued either for cash or in
possible exchange transactions with holders of the 5% debentures.
Any common shares issued will add to the Company's basic share
count, but there are currently 8.5 million shares included in its
fully diluted share amount because of the conversion feature of the
5% debentures, so incremental dilution will be mitigated. Deferral
of dividends on 6% convertible debentures The Company is deferring
future payment of dividends on its 6% convertible subordinated
debentures, which, according to the terms of the indenture
governing these securities, it may do for up to 20 quarters. The
deferral will begin with the payment that would otherwise be due on
May 15, 2008. "We believe deferring the interest on the trust
preferred securities is prudent under the current circumstances and
will help minimize the use of more expensive sources of capital as
we prepare to retire $100 million of debt from our balance sheet,"
Smith said. "We previously deferred interest on these securities
and paid the deferred amount in total at a later date, all in an
orderly manner in accordance with the terms of the indenture. This
is what we intend to do again at the appropriate time." Credit
facility amendments The Company also announced that the lending
syndicate for its revolving line of credit and term loan, led by
Bank of America as agent, has amended the credit agreement to give
Fleetwood added flexibility to execute the strategies necessary to
reduce debt and improve liquidity. "We appreciate the
accommodations our banks have given us to expedite the sale of idle
and excess real estate, prepay or exchange the 5% debentures if
attractive transactions can be consummated prior to December, and
generally continue to proactively take action consistent with our
strategy," Smith said. ANTICIPATED DIVESTITURE OF FOLDING TRAILER
SUBSIDIARY Fleetwood further announced that it has signed a
definitive agreement for the sale of Fleetwood Folding Trailers,
Inc., located in Somerset, Pa. The sale is subject to customary
closing conditions including bank approval, with a substantial part
of the proceeds expected to be used to partially pay down the
existing real estate term loan. The Company emphasized that no
further disclosure will be provided until either the sale closes or
the transaction is terminated. "The folding trailer division has
not proven to be particularly synergistic with the rest of our RV
businesses," Smith said. "Going forward, we intend to direct our
focus to the remaining higher-volume RV and Housing businesses,
with a particular emphasis on completing the turnaround of our
travel trailer division. The successful closure of the folding
trailer transaction will contribute significantly to our goal of
focusing on core businesses and adjusting to changing markets."
COMMITMENT TO CORE BUSINESSES AND PROFITABLE GROWTH "We remain
fully committed to our core RV (motor home and travel trailer) and
housing businesses," Smith said. "We will continue to cut expenses,
control overheads, and adjust the size of our businesses to reflect
changes in these markets. We intend to strengthen all of our
operations to improve their competitiveness by making appropriate
investments in people and initiatives to optimize product design
and development, manufacturing processes, quality, marketing,
supply chain management, and pricing. We will continue to
decentralize product development, manufacturing, sales, and service
so that those functions are quick to respond to the market and are
as close to our customers as possible. "As soon as we have fully
addressed the retirement of the debentures, we intend to
aggressively pursue a strategy that will allow us to diversify and
invest more in new markets and growth businesses, such as our
military housing initiatives," Smith said. "All of the moves we are
announcing today are in keeping with our strategy to make Fleetwood
consistently profitable, to grow our businesses, to continue to
manufacture products that our dealers are proud to sell and our
retail customers are proud to own, to meet our obligations to our
debt holders, and to regularly generate the returns our loyal
shareholders deserve." ABOUT FLEETWOOD Fleetwood Enterprises, Inc.,
through its subsidiaries, is a leading producer of recreational
vehicles and manufactured homes. This Fortune 1000 company,
headquartered in Riverside, Calif., is dedicated to providing
quality, innovative products that offer exceptional value to its
customers. Fleetwood operates facilities strategically located
throughout the nation, including recreational vehicle,
factory-built housing, and supply subsidiary plants. For more
information, visit the Company's website at
http://www.fleetwood.com/. This press release contains certain
forward-looking statements and information based on the beliefs of
Fleetwood's management as well as assumptions made by, and
information currently available to, Fleetwood's management. Such
statements, including those regarding stated strategies for
redeeming the 5% convertible debentures, expectations for the
fourth quarter results, the possible sale of Fleetwood Folding
Trailers, the issuance of equity, and the intentions to strengthen
and grow the Company, reflect the current views of Fleetwood with
respect to future events and are subject to certain risks,
uncertainties, and assumptions, including risk factors identified
in Fleetwood's 10-K and other SEC filings. These risks and
uncertainties include, without limitation, the lack of assurance
that we will regain sustainable profitability in the foreseeable
future; the effect of ongoing weakness in both the manufactured
housing and recreational vehicle markets; the effect of a decline
in home equity values, volatile fuel prices and interest rates,
global tensions, employment trends, stock market performance,
availability of financing generally, and other factors that can
have a negative impact on consumer confidence, which in turn may
reduce demand for our products, particularly recreational vehicles;
the availability and cost of wholesale and retail financing for
both manufactured housing and recreational vehicles; our ability to
comply with financial tests and covenants on existing debt
obligations; our ability to obtain, on reasonable terms if at all,
the financing we will need in the future to execute our business
strategies and to meet the repayment terms of our outstanding
convertible debt instruments, including the $100 million 5%
convertible senior subordinated debentures, some or all of which
the Company may be obligated to repurchase in December 2008;
potential dilution associated with future equity financings we may
undertake to raise additional capital and the risk that the equity
pricing may not be favorable; the potential that the Company may
not be able to sell the folding trailer division at a favorable
price or at all; the cyclical and seasonal nature of both the
manufactured housing and recreational vehicle industries; expenses
and uncertainties associated with the entry into new business
segments or the manufacturing, development, and introduction of new
products; the potential for excessive retail inventory levels in
the manufactured housing and recreational vehicle industries; the
volatility of our stock price; repurchase agreements with floorplan
lenders, which could result in increased costs; potential increases
in the frequency of product liability, wrongful death, class
action, and other legal actions; and the highly competitive nature
of our industries. Contact: Lyle Larkin, Vice President - Treasurer
(951) 351-3535 Kathy A. Munson, Director - Investor Relations (951)
351-3650 DATASOURCE: Fleetwood Enterprises, Inc. CONTACT: Lyle
Larkin, Vice President - Treasurer, +1-951-351-3535, or Kathy A.
Munson, Director - Investor Relations, +1-951-351-3650, both of
Fleetwood Enterprises, Inc. Web site: http://www.fleetwood.com/
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