Receives Commitment for New Credit Facility from Fleetwood Homes
Continues to Design, Engineer and Produce Homes and Buildings
Standard Casualty Entities and CountryPlace Mortgage Entities
Excluded from Filing
DALLAS, Nov 29, 2010 (BUSINESS WIRE) --
Palm Harbor Homes, Inc. (NASDAQ: PHHM) today announced that it
and five of its domestic subsidiaries, Palm Harbor Manufacturing L.P.,
Palm Harbor Albemarle L.L.C., Palm Harbor Real Estate L.L.C., Palm
Harbor GenPar L.L.C. and Nationwide Homes Inc. (collectively the
"Company"), filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code. The Company is taking this action to
provide liquidity and partner with Fleetwood Homes, Inc., a subsidiary
of Cavco Industries, Inc. (NASDAQ: CVCO) through a sale process pursuant
to Section 363 of the Bankruptcy Code in order to support ongoing
In conjunction with the filing, the Company has received a commitment of
$50 million, which may increase to $55 million if certain conditions are
met, for a debtor-in-possession (DIP) credit facility from Fleetwood
Homes that will be used to extinguish all obligations due on the
existing Textron Financial Corporation facility and fund post-petition
operations, commitments to customers, and employee obligations.
"Prolonged poor industry conditions have depleted the liquidity of Palm
Harbor Homes despite management's ongoing efforts to improve and scale
back operations as prudent and restructure our existing debt. Over the
last several months, we have a conducted a thorough process to identify
the best capital partner for our Company," said Larry H. Keener,
chairman, president and chief executive officer of Palm Harbor Homes.
"Management and the Board have decided that the Chapter 11 process is
the best alternative available for all stakeholders and provides us with
the most timely and orderly means to recapitalize our Company. In
support of this decision, we are pleased to announce our commitment for
Debtor-In-Possession financing with Fleetwood Homes to provide us the
liquidity runway to participate in a court approved 363 auction process
to seek the highest recovery for our various stakeholders," added Keener.
Fleetwood Homes, Inc. is owned by Cavco Industries, Inc. and Third
Avenue Value Fund (TAVFX). Third Avenue Management, the investment
advisor to TAVFX, is a New York-based company with expertise in value
and distressed investing. A subsidiary of Fleetwood Homes, Inc. will be
the stalking horse bidder for the assets and certain warranty and other
liabilities of the Company.
Palm Harbor Homes' affiliates, Standard Casualty Company, Standard
Insurance Agency, Palm Harbor Insurance Agency and CountryPlace
Acceptance Corp., were not included in and their operations will not be
impacted by the filing. These entities will, however, be included in the
merger that results from the auction process.
Joseph H. Stegmayer, chairman, president & chief executive officer of
Cavco Industries, Inc. added, "We are pleased to have this opportunity
to partner with Palm Harbor Homes and look forward to a successful
outcome of this process. Our mutual intention is to help Palm Harbor
continue its heritage of providing quality home building, retailing,
finance availability, competitive insurance products and outstanding
customer service. Our combined businesses will have a strengthened
foundation and market presence."
The Company emphasized that daily operations are expected to continue
uninterrupted throughout the restructuring. The Company filed
approximately 20 "first-day motions" covering the continuation of
employee programs and business operations, as well as its post-petition
DIP financing, the continuation of supplier payments, customer contract
and warranty programs, retailer rebate programs, and other case
administration matters. The Company anticipates that these first-day
motions will be heard this week. Pursuant to the relief requested in
those motions, homes will be sold, manufactured and delivered as normal,
employees will be paid and will continue to receive the same benefits as
before the filing and all customer contracts and warranties will be
"Despite the current challenges in our core markets, we still believe
there are considerable opportunities in the factory-built construction
industry in the future," said Keener. "We fully expect to proceed
through this restructuring swiftly and continue designing and
manufacturing high quality products for our retailers, builders and
The Company filed its voluntary petitions in the U.S. Bankruptcy Court
for the District of Delaware in Wilmington.
For further information please contact the Company's toll-free
information line at 1-888-220-3896 or visit the Company's restructuring
website at www.restructure.palmharbor.com.
The Company's legal advisor is Locke Lord Bissell & Liddell; its
financial advisor is Raymond James & Associates and its restructuring
advisor is Alvarez & Marsal.
The Company also announced today that it has appointed Brian Cejka of
Alvarez & Marsal as its Chief Restructuring Officer. Mr. Cejka will
report to the Company's Chief Executive Officer.
About Palm Harbor Homes, Inc.
Dallas, Texas-based Palm Harbor Homes is one of the nation's leading
manufacturers and marketers of factory-built homes. The Company markets
nationwide through vertically integrated operations, encompassing
manufacturing, marketing, financing and insurance. For more information,
please visit www.palmharborhomes.com.
This Press Release contains forward-looking statements that are subject
to certain risks and uncertainties that could cause actual results to
differ materially from those projected. The most significant among these
risks and uncertainties are: (i) the ability of the Company to continue
as a going concern; (ii) the Company's ability to obtain Bankruptcy
Court approval with respect to motions in the chapter 11 cases;
(iii) the ability of the Company and its subsidiaries to develop and
consummate one or more plans of reorganization with respect to the
chapter 11 cases; (iv) the effects of the Company's Bankruptcy Filing on
the Company and the interests of various creditors, equity holders and
other constituents; (v) Bankruptcy Court rulings in the chapter 11 cases
and the outcome of the cases in general; (vi) the length of time the
Company will operate under the chapter 11 cases; (vii) risks associated
with third party motions in the chapter 11 cases, which may interfere
with the Company's ability to develop and consummate one or more plans
of reorganization once such plans are developed; (viii) the potential
adverse effects of the chapter 11 proceedings on
the Company's liquidity or results of operations; (ix) the ability to
execute the Company's business and restructuring plan; (x) increased
legal and professional costs related to the Bankruptcy Filing and other
litigation; (xi) the Company's ability to maintain contracts that are
critical to its operation, to obtain and maintain normal terms with
customers, suppliers and service providers and to retain key executives,
managers and employees. The cautionary statements provided above are
being made pursuant to the provisions of the Private Securities
Litigation Reform Act of 1995 (the "Act") and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act for
any such forward-looking information. Additional risks that may affect
the Company's future performance are detailed in the Company's filings
with the Securities and Exchange Commission, including its most recent
Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
SOURCE: Palm Harbor Homes, Inc.
Palm Harbor Homes, Inc.
Brian Cejka, Chief Restructuring Officer, 1-888-220-3896