Cavco Industries Announces Credit Facility And Asset Purchase Agreement With Palm Harbor Homes
PHOENIX, Nov. 29, 2010 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (Nasdaq:CVCO) today announced that Fleetwood Homes, Inc., a subsidiary owned 50% by Cavco and 50% by Third Avenue Value Fund (TAVFX), has entered into an agreement with Palm Harbor Homes, Inc. (Nasdaq:PHHM) to provide debtor-in-possession (DIP) financing to Palm Harbor and certain of its subsidiaries during the reorganization of Palm Harbor and such subsidiaries under chapter 11 of the U.S. Bankruptcy Code.
Palm Harbor is a manufacturer and marketer of factory-built housing and a provider of related financing and insurance. Palm Harbor and certain of its subsidiaries filed for chapter 11 bankruptcy protection on November 29, 2010. In conjunction with Palm Harbor's filing, Fleetwood Homes committed $50 million, which may increase to $55 million if certain conditions are met, for a debtor-in-possession (DIP) credit facility. Subject to bankruptcy court approval, the credit facility will be used by Palm Harbor to extinguish its existing Textron Financial Corporation facility and to fund post-petition operations, commitments to customers, and employee obligations.
Additionally, through a newly formed subsidiary of Fleetwood Homes, Inc., Cavco and Third Avenue have entered into an agreement with Palm Harbor and certain of its subsidiaries to purchase substantially all of Palm Harbor's assets comprising its manufactured and modular housing construction and retail businesses and all of the outstanding stock of its insurance and finance subsidiaries, and to assume certain liabilities of Palm Harbor. The asset purchase transaction is expected to be conducted pursuant to a sale process under section 363 of the U.S. Bankruptcy Code. Cavco and Third Avenue's joint $57.5 million "stalking horse" bid is subject to customary conditions to closing, certain post-closing adjustments, and bankruptcy court approval and includes manufactured housing factories, retail locations, equipment, accounts receivable, inventory, intellectual property, and certain warranty and other liabilities. Palm Harbor's insurance and finance subsidiaries, including Standard Casualty Company, Standard Insurance Agency, CountryPlace Acceptance Corp., and CountryPlace Mortgage, Ltd. are not parties to the Palm Harbor bankruptcy filing, but the shares of these companies are included in the assets to be acquired by Fleetwood Homes.
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