Cavco, through it's Fleetwood division, officially bought the assets of Palm Harbor Homes on Friday for $50,000,000. There is no mention of Fleetwood assuming any of Palm Harbor's huge debt load.
If this is correct, here we go again. It seems that whenever a big modular or manufactured housing company runs up debt and can't go on any longer, a big investment firm moves in and buys the assets of the company and sticks it to the vendors and others hoping to get paid. In PHH's case, it's Third Avenue Value Fund as a 50% investor along with Cavco, who will oversee ownership through its' Fleetwood Homes management.
Now this brings to mind a very interesting question. IF Fleetwood does not pay any of the debts and leaves it up to the bankruptcy court to dole out the $50M to the creditors at pennies on the dollar, then why would these same vendors break down doors trying to get back in with the same people that just cost them a fortune?
I know, it's a craps game. Vendors are just hoping that maybe, just maybe, this time will be different and they will get paid for their supplies and services which will help stave off their own bankruptcy. I may not be an MBA but I do know that if I've been raked over the coals more than once by the same company, I'm gone. Don't even look for the tire tracks. Maybe they teach how to make a profit out of losing money at MBA school.
The other thing I find interesting is that Fleetwood's management with some help from Cavco and Third Avenue will take over day to day operations of Palm Harbor and Nationwide Modular Homes. You remember Fleetwood; the mobile home company that went bankrupt and was bought by Cavco. This will be interesting.
I'm sure that the management at Nationwide Homes was told that they would see little change in their operation; that the new owners liked what they've done there. You don't spend $50M and not change things! I would love to have been a fly on the wall when this deal was discussed in the boardrooms of Cavco and Third Avenue. I'm sure they said "Let's not change a thing at Nationwide Homes. They really have their act together."
Nationwide Homes needs to weather this housing crisis intact. It's not their fault the economy sucks and mortgages are harder to get. Help them continue to build good modular homes until the clouds dissipate and the sun shines again.
And we wonder why people get confused about the differences between HUD homes and modular homes!!!