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Credit Revision Boosts Fleetwood Stock

Improved terms for the maker of recreational vehicles, manufactured homes include an increase of $20 million.

March 27, 2003|Roger Vincent | Times Staff Writer

Shares of Fleetwood Enterprises Inc. jumped 18% Wednesday after the Riverside-based company said it renegotiated more favorable terms of its credit agreements, including a $20-million expansion.

Fleetwood, one of the nation's largest makers of manufactured housing and recreational vehicles, said a syndicate of lenders agreed to restate terms of the agreement relating to earnings before interest, taxes, depreciation and amortization. Company officials declined to elaborate on the terms of the agreement in advance of a regulatory filing, which they expect to occur in a few days.

This month, Fleetwood acknowledged deeper losses in its fiscal third quarter ended Jan. 26 and warned of a loss for the normally strong fourth quarter and the full year. The red ink would have put the manufacturer in violation of loan agreements with its major lenders. Fleetwood now expects to meet the loan requirements.

"There were some real liquidity concerns, and this eases them," said Banc of America Securities analyst William Gibson in San Francisco, who rates Fleetwood "neutral" and doesn't own any shares. The previous requirement was based on a trailing measurement of earnings for four quarters, he said.

Fleetwood reported a third-quarter loss of $18.4 million March 6, compared with a loss of $17.3 million a year earlier. Revenue fell 6% to $493.2 million.

Fleetwood said Wednesday that the maximum amount of its revolving line of credit, which is provided by a syndicate of banks led by Bank of America Corp., has been increased to $130 million from $110 million, reflecting the return of a lender, CIT Group Inc., to the syndicate.

As of Jan. 26, the company had borrowed $24.7 million on the credit line.

Sales of recreational vehicles are typically at their highest levels in spring and summer, when the weather is also more conducive to manufactured home sales.

Manufactured-home sales at Fleetwood and other companies have been on the decline for nearly three years after the failure and withdrawal of several key lenders. In addition, the sale of large numbers of repossessed homes has depressed demand for new units, according to analysts.

Shares of Fleetwood closed up 57 cents at $3.75 on the New York Stock Exchange.

Bloomberg News was used in compiling this report.

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