By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
MIDDLEBURY -- To obtain the Coachmen name and recreational vehicle manufacturing operation, Forest River will pay less than a $1 million for every year the company has been building units.
Announcing on Nov. 21 an agreement to sell the RV Group to Elkhart-based Forest River, Coachmen unveiled terms of the sale on Tuesday in a letter to shareholders and in filings with the U.S. Securities and Exchange Commission.
Writing to shareholders, Richard Lavers, president and chief executive officer at Coachmen, stressed "the senior management unanimously recommends" the sale of the RV business.
"While Coachmen has a 44-year legacy as an RV company," Lavers wrote, "our future lies in housing and specialty vehicles."
According to the letter, Forest River will purchase Coachmen RV Group for about $42.2 million. The estimated value of the individual components comprising the Group is as follows:
* $10.6 million for the real estate, fixed assets and equipment used in the RV facility located at Coachmen's main Middlebury manufacturing complex, the Viking manufacturing facility in Centreville, Mich. and the Michiana Easy Livin' Country RV dealership on Cassopolis Street in Elkhart.
* $27 million for the Group's finished goods, work in process and raw material inventory.
* $4.4 million for the Group's accounts receivable.
In addition, the Coachmen name will be carried by both companies after the acquisition. Forest River will keep the Coachmen name, model names and logos (including the Dalmatian dog) for the motorhomes and towable units. At the same time, the housing and specialty vehicles divisions will continue to operate under the moniker Coachmen Industries, Inc.
Moreover, Coachmen Industries will be prohibited from making or selling recreational vehicles for five years after the purchase is completed and can never use the name Coachmen on any RVs it may build in the future.
Coachmen Industries will still be traded on the New York Stock Exchange under the symbol COA.
Employees were also part of the agreement. The terms maintain that all hourly manufacturing and production employees in the RV Group will be offered employment by Forest River. Also, Forest River is agreeing to consider offering jobs to all Coachmen sales staff.
"That was really part of the goal in the whole transaction was to keep the jobs here," Thomas Gehl, director of investor relations for Coachmen, said Tuesday afternoon.
In fact, Gehl foresees jobs being created as administrative staff shift to Forest River and create openings at Coachmen Industries.
Michael Terlep, president of the RV Group, will be hired by Forest River for a six-month period after the agreement is finalized. Afterward, Forest River can offer further employment.
On Monday, Coachmen executives will discuss the terms of the agreement in a conference call with analysts. Then all the shareholders as of Nov. 25 will have the opportunity to vote on whether to accept or reject the agreement. Gehl said the voting and tabulating of the results will be finished before the end of December.