Fleetwood in Trouble

Don’t look, but Fleetwood (FLE) is tottering.  The company’s shares are trading for as low as 32 cents this morning.  Just one year ago, they were trading for $9.13.

In some ways, the credit crisis and energy costs are a perfect storm against a company like Fleetwood.  Remember that a good portion of their business comes from selling RVs.  RVs have a reputation as gas guzzlers.  They are, after all, mobile houses.  The classic RV vacation requires trips to the pump on any day of driving.  Even worse, most RVs are financed and a lot of that money comes out of home equity.  Its a logical way for an older couple to finance some fun during the golden years.  Refinance on a home that is largely paid off.  Unfortunately, home equity loans are getting to be harder and harder to come by.  Banks are nervous about taking a second position at a time when home values are shrinking.

A technical analysis says that Fleetwood has to pay off a large amount of debt by December 15th.  They are making an offer to exchange that debt through a refinance this week.  Their share prices have fallen off so much that they cannot tap new shares on their own. The new debt will be collateralized with real property, including their factories.

~ by samsondoggie on October 22, 2008.