Possible new life for Country Coach

[lloyd&pamela]

http://www.registerguard.com/csp/cms/sites/web/updates/10168785-55/story.csp

[Will Garner]

Lloyd,

Here we go again. Let's see if I understand what was stated in the article. $11.5 million to build up to 43 coaches in the next 11 months. Oh yeah, that $11.5 million includes the $8.5 million debt CC already owes to Wells Fargo, my bank since the Wachovia "buyout." That leaves $3 million to build up to 43 coaches. Humm $3 million/43 coaches equals $69767.44 cost per coach. Looks like we are talking "plastic" at best, certainly no Prevosts. Now some of that $69767.44 has to be personnel costs so we are talking about "coaches" built with less than $50,000 in materials. I don't think I want one of those. Oh and we have to "rush" this deal through the courts since it is soooo time critical!

I'd like to see the court document include a requirement that CC coach build records be made available to current and future owners over the internet.

One last shot across the bow. My experiences with trying to get information out of CC while I was IN Junction City and with Jay Howard remaining as the CEO do not give me a warm fuzzy feeling about CC's future. When you treat your current CC owners like crap, then crap is what you should expect to receive back.

[ajhaig]

Quality issues aside, is there currently a demand for new Country Coaches?

Thanks Lloyd.

[Petervs]

There has been quite some discussion about Country Coach on the other thread, "Orphan Coaches". I have been saying all along, if there are no customers willing to part with a pile of cash , or banks where they can get cash, it does no good to build more units.

People have seen their nest eggs ( 401k) erode away enough that they are hoarding the remaining amount. They can no longer go get a juicy second mortgage to provide cash for a coach. Plus, with used coaches available for microscopic prices, why buy new?

There will not be a viable business without customers who buy. They certainly will not make a profit on warranty or service work.

I still believe they are trying to resurrect the company just so they can finish building what is on the assembly line or what they have parts on hand for, try to convert that into cash, liquidate the rest. It is better for the major shareholder ( Wells Fargo) to do that than to have a court ordered frenzy of dumping everything. There is probably a very small market for a few new coaches but the idea of a new Country Coach that looks anything like the old one is just a dream.

[flyu2there]

Just one question Peter..

Do you have something personally against Country Coach or are you referring to nearly every other business as well, save possibly medical care, food and the mortician?

Nobody in business, and I mean nobody, is doing as well as they were 24 months ago save possibly the aforementioned....they too may soon be hit.

[garyde]

The article actually says they expect to spend 18 mil for operations, and collect 23 mil over the next 42 weeks of which 2.3 mil will be for Bankruptcy costs. The line of credit is revolving, which means basically it will fluctuate depending on their cash flow. So, of the 7 or 8 models they will produce, hopefullythey will sale at a margin which pays down the line of credit, and supports on going operations. Selling 42 or 43 Coaches is a modest goal and if they can do this, hey have a chance to pay down their debts and wait out the recession. Fingers crossed.

[Coloradobus]

When we bought our Affinity in 2000, CC only produced around 5-7 coaches a week, total for the entire fleet. They had 4 lines of plastic, Allure, Intrigue, Magna, Affinity. A bus-like hybrid, the Concept, and a bus. Our coach had exceptional quality and customer service was absolutely a 180 from what recent Pogger's have experienced over the last several years. At that time, with Star Wood and Don Fultz and Bob Lee running the show, it was our opinion, the company was an A-1, First Class outfit. Hopefully, they can re-gain all that they had "sans" the Jay Howard Clan and Mark Anderson.

[Petervs]

Hey FlyU There,

I have nothing whatever against Country Coach, I almost bought a new one before I discovered Prevost conversions. My comments concern the business climate in general. Trying to stay in business these days is really hard, especially with a large debt load.

[rahangman]

I should think everyone would be glad to see CC make a go of it. Why not? My particular wish is to be able to reconnect to Service to try and get as much info on my 1990 CC Prevost as I can , just in case of a mishap. Good Luck

[flyu2there]

Got a call from Country Coach, seems they are now back up and running...starting to produce 2010 models, including the Prevost Conversions.

Looks like they did away with all of their dealers and all sales/warranty will be factory direct....interesting concept. They have a handful of coaches on their web site that are for sale at deep discounts (still a pile of $$$), gather they came back from dealers.....

Looks like they are finally getting back to customer service....least that's what they explained to me and shows on thier site.

John

[rfoster]

I passed Buddy Greggs place this week in Knoxville (didn't stop) easy to see from I-75/I-40, looks like he is still plenty stocked up on plastic .

Wonder what is up with him since CC is selling direct?

There may have been two XLIIs in the second row.

[garyde]

Buddy Gregg probably owns those RV's and Coaches or Country Coach owed Buddy Gregg , so they took inventory in trade.

[0533]

What is wrong with this picture, unless Riley dumps some serious $$ into CC I do not see the light, unless these coaches cost much less to build than I think? If you read this, what do you think the chances of success are on a scale of 1-10 based on the numbers. if you were Riley, would you want to inject more cash to above the available $3M available to operate the place for one year. Good exercise, keeps the mind alive, lets get feedback, will they make it?


Here is what the article said: Abbreviated version:

News Updates: Story
Wells Fargo Bank has agreed to loan Country Coach up to $11.5 million so it can build up to 43 coaches during the next 10 months.

The new loan includes the $8.5 million that Country Coach already owes to Wells Fargo,

The company has no significant operating funds, no ability to borrow under any other terms, and faces the prospect of Wells Fargo pressing its effort to liquidate the company’s assets if the deal is not approved.

It’s complicated because the agreement involves not just Country Coach and Wells Fargo, but also Riley Investment Management, a company controlled by Los Angeles investment banker Bryant Riley. Riley is the majority owner of Country Coach but he’s also a creditor: Country Coach owes his firm about $15 million, according to court documents

Howard said the company has 15 unfinished coaches on the production line, and another 15 chassis ready to be built.

So it appears they have 30 unfinished and shells of the projected 43 units they need to sell

Country Coach plans to start selling coaches starting next week at a rate of one to two per week, for a total of 43 coaches by the first week of January.



Wonder who came up with this number, a salesman I guess, wishful thinking, I am sure there are lots of willing customers who want to purchase a coach that has been sitting half finished on the floor for months, and pay full price for the privilege, I would love to see these projections

The budget calls for Country Coach to spend $20.3 million over the 42 weeks, of which $18 million will be for operations and $2.3 million will be for bankruptcy expenses. During that time, the company expects to collect $23.5 million.

So Riley is willing to place another $17.3M out of his pocket???

The company also plans to eliminate obsolete floor plans and streamline its existing model line. Country Coach now offers eight different models, ranging in price from $300,000 to $1.8 million.

This is an interesting business plan for sure.

[sawdust_128]

Bruce:

Shame on you. Who do you think you are applying finite math and common sense to this? :rolleyes:

Good break out on this. I agree that this presents a picture of a strange business plan. I also don't consider most reporters to be capable of understanding and accurately reporting the contents of a business plan or a balance sheet.

[ajhaig]

Bruce,

I'd say that their chances are close to zero.

Their underlying business model is contingent on credit availability to the consumer. 20 year financing on an product that depreciates so quickly combined with the fact that these units really don't have a 20 year life... It's right up there with the "liar loan."

The Fed has loosened credit as much as they can, but the capital markets are still very tight.

AJ

[Jon Wehrenberg]

I think they will fail for even more fundamental reasons. There is absolutely nothing that has changed from when they went in the toilet in the first place.

Every bankrupt business I ever took over had glaring problems that Stevie Wonder could see. Make those problems go away and run the core business efficiently and the losses turn to profits.

With CC I never see anywhere that someone is addressing the problems that got them in financial distress in the first place.

In today's environment I don't think even pricing a product of that type below cost will increase sales. People that were buyers have watched their investments suffer huge loses, people that are borrowers have all of a sudden started exercising some common sense along with those that lend money on depreciating products, and a lot of dealers are likely having second thoughts about loading up on inventory.

Why would the folks that control CC all of a sudden think they can make it survive?

[rahangman]

Jon, you are hitting the nail on the head. How does CC expect to perform now with so many other variables in the toilet since last year? Does this sound like our fabled Auto Industry and their retention of the same Management Class that has driven them to our Free For All loans. How can we expect those who fostered and put into play the Bad the last several years, to now all of a sudden be able to do the Good? Should they not have been doing that to begin with? Just my humble thinking.

[Jon Wehrenberg]

I think the current CC conversion owners should take full advantage of this situation and get every single piece of information about their coaches that is available.

They should find sources for the proprietary stuff, they should get the schematics, even if they have to convince the management to sell it to them. I know in the past the CC owners have held out hope that the company refurbishing CC coaches in Oregon will pick up the slack, but I think that is wishful thinking. And when CC finally dies (and it will) and assets start getting sold the information which will help them retain coach value will literally be gone forever.

I have had the responsibility of liquidating two companies. The hard assets are sold. The intellectual properties that are patent protected and have some value are sold. Other information such as purchasing records, vendor lists, most engineering documents, specialized inventory work in process are all scrapped. That is the valuable stuff and CC owners right now should be working to secure that information. If it is not saved future repairs are going to be a bitch.

[Joe Cannarozzi]

Jon I had a dream last night that you bought and were camping a CC. You and Rodger snuck around the campground removing bling from the Libertys:rolleyes:

[rfoster]

That is no dream, that would be a nightmare for Jon.

Besides he was out hunting Easter Eggs.

[flyu2there]

I certainly do not claim to be a pundit on this issue but I am curious as to how anyone, save maybe a few of the insiders at CC including Bryant Riley, has full and complete knowledge of this entire bankruptcy issue and their business plan for emergence. A newspaper reporters take on the matter is certainly less than sage!

Jon you stated that nothing has changed since they went into the toilet, well what was is that put them into the can? The product, customer service, labor costs, raw materials costs, debt service, weak consumer market and demand, lack of available credit both on the wholesale and retail level, perhaps high fuel prices? Those are the exact issues that are impacting far too many businesses in the country! To this I give you Monoco Coach, a number of smaller RV builders, numerous Prevost Convertors and yes, even our beloved Prevost, owned by Volvo which is in turn controlled by Ford....many are now gone, the rest are all in jeopardy.

Now, as to why I suggest that Country Coach will survive has much to do with the "parting out" of Monoco, the largest employer in the area. The Central Oregon economy, Eugene/Junction City being pivotal to this, is in a shambles. The past couple of decades has made the area the West Coast equivalent to Indiana, home to many RV Manufacturing facilities, vendors and suppliers. The unemployment rate is amongst the highest in the country, housing prices have been devastated. I do believe that the State of Oregon is assisting or will soon be providing help to CC through tax incentives, labor incentives. Wells Fargo probably holds the first deeds of trust on more than just a few homes in the area, making their investment in CC minor in the grand scheme of things.

[0533]

The underlying issues in my opinion is that the consumer said that enough is enough. Overpriced plastic coaches that did not match up to their selling prices in quality, performance, and service.

Monaco drove me to Prevost. (Two of my favorite shop tools came as an unintended courtesy from Monaco, I had a rattle under my shower, found a wonderful 8lb. hammer and really nice chisel and enough tile pieces of tile to fill a waste basket) I almost purchased a 2008 CC before I decided on a Prevost, but just could not warm up to the same old same old with the construction quality, the dealer network, the service and especially the ride, maybe CC is better at all of this, but the way plastic coach prices were climbing was nuts in my opinion, at the end of the day each was a package of plastic, wood and a pile of rusty screws waiting to come apart.
The consumers will not put up with this and will turn away, and have done so, it is not just the economy (big factor) it is poor quality for such a high priced depreciating asset that drove these companies down.

Yes, poor management is at the heart, pushing the crap downstream and force feeding it to the public, never looking inside the plant for the problem, blaming dealers, consumers and the economy for their problems.

Nobody wants to say they are at fault, especially at the top, but the folks in Coburg were always looking at Marathon as the benchmark for their success and had forgotten the quality aspect in their plan.

One of the best motorhomes that I ever owned was a 1986 36' Beaver. I ordered it new and picked it up at the factory, the best overall experience I ever had with motorhome ownership. That 1986 Beaver never ever gave me one day of headaches, nothing, it drove nicely, well constructed, the skin was nicely made, smooth, the cabinets were all solid wood, really nice coach. I miss that one. Now they are part of the past.

[flyu2there]

Bruce,

Agreed on the pricing/quality issue. I will add that in early 1999 I purchased a new Intrigue from CC, with all of the whistles and bells for a shade more than 170 thousand by contrast, today, a new, like Intrigue retails at a bit under 600k. Same coach, couple of more holes and a few more "trick" gadgets but basically the same! I realize we have a a bit of inflation but absolutely nothing when compared to the rampant price increases on these vehicles.

Until the Monoco debacle I didn't see much hope for CC however, they appear to be the last man standing and as such I expect to see a substantial amount of assistance from both public and private sources; no its not because they are a good group of managers and build a spectacular product rather the impact that another failure would have on an already very ill Oregon economy.

John

[garyde]

All across the economy there is a de-leverging of credit (ie; cut off) on going. Basically, its screwing everyone in housing, and this in turn the entire country.
There was a large over inflation in home prices which in turn ratchet up equity and equity loans. This fueled consumers and their purchasing power.
Th RV industry grew and flourished because of easy credit and an aging boomer generation.
Now, they will have to develop a new strategy going forward.

[Jon Wehrenberg]

John,

CC was in trouble before the crunch. They had stopped producing conversions for a while. It had changed hands.

Everytime a business changes hands, especially if the new owners are "money men" as opposed to manufacturers it takes a small hit in the shorts.

It is possible for CC to survive if the creditors walk away from what they are entitled to. It will not be the first time a business has gone deep into debt and then bullied the creditors, both secured and unsecured into accepting a few cents on the dollar. If a business can do that and end up with assets that can be fully utilized for production, but at very little cost the cash flow should be excellent and the future very rosy indeed.

Today debt service is likely killing businesses, especially those that failed to recognize that following the good times (when managements get fat and spend money like they have it) are usually bad times. I am not privy to the CC numbers so I have no idea how lean and mean their production was, how well they controlled overhead, and how efficient they were as a company, but given the fact that the customers who were buying their product are in as much a world of hurt as the companies that produce the product I cannot see a turnaround soon enough to infuse the company with the new cash flow it so desperately requires.

Add to that the uncertainty almost all of us feel about the tax climate in years to come I suspect those companies that do survive this mess are going to be such strong competitors that only the best of the best companies will survive. I won't even spend the money to repaint the chipped nose bowl on my plane, that's how tough times are. I sure cannot afford a plastic shield for my bus, much less another bus.