Fleetwood Enterprises attempting to placate investors

Fleetwood, maker of RVs and manufactured homes, is making a desperate attempt to forestall payment of $100 million in debt owed to holders of debentures due mid December. Fleetwood was recently booted off the New York Stock Exchange when it’s stock dropped below $2 a share.

In a climate where people are nervous about purchasing new RVs the industry is in panic mode. Fleetwood is attempting to persuade their investors to exchange their debentures for a mix of senior secured notes and common stock. So far there have been no takers.According to a Fleetwood press release, they filed paperwork with the Securities and Exchange Commission outlining the exchange offer. They are giving the debt holders until December 11, 2008 to sign up. “If holders tender their debentures pursuant to the company's repurchase obligation, they will receive only shares of common stock.” Everyone knows one share of Fleetwood common stock wouldn’t buy a cup of coffee, so this is an act of desperation.

Moves like this are a sure sign of a company trying to hold it’s head above water. I would not be surprised to see Fleetwood file for bankruptcy protection in the very near future. RV manufacturers are attempting to downsize, reorganize and restructure their debt in order to buy time. They're hoping the market will turn around in 2009 and they’ll become profitable again.

I would love to see a turnaround in the RV industry next year but I fear more RV manufacturers will lose their grip on the life raft and slip into the icy waters of failed companies. Fleetwood’s chances for a successful recovery are looking smaller with each passing week. The market for manufactured homes is drying up with the rise of foreclosures bringing a glut of empty housing into a rapidly declining market. A rising unemployment rate combined with tight credit markets and dismal consumer confidence are decimating the retail RV industry.

I agree with Chuck Woodbury’s assessment that smaller, more fuel efficient RVs will emerge as the survivors in the future RV market. Families will still purchase RVs that provide basic necessities and serve as a platform for enjoying the great outdoors and they’ll be looking for value and fuel economy. In the meantime, the length and depth of our current economic crisis will shake out many more RV manufacturers and dealers unable to adapt. Frankly, I wouldn't be surprised if fewer than a handful of RV manufacturers survive this economic crisis.

Providing you with in-depth RV industry analysis and news - Jim Twamley, Professor of RVing