LINCOLNSHIRE, Ill. — Good Sam Enterprises, which as provided quarterly financial statements for decades, will not provide any further financial disclosures, RV Daily Report has learned.
The last financial disclosure filed by the company was the third quarter 2013 report, filed Nov. 12. Since then, no additional financial reports have been submitted to the Securities and Exchange Commission.
Good Sam Enterprises, and its predecessor, the Affinity Group, had been required to submit financial disclosures because the company had issued publicly traded notes, some of which was used to purchased existing RV dealerships to transform them into Camping World stores.
As of Sept. 30, the company’s long-term debt was shown as $311,385,000, and the company was incurring interest charges of $29.3 million per quarter. It’s net profit for the third quarter 2013 was shown as $22.2 million.
Then a Christmas miracle apparently occurred. The company came up with cash to pay off its debt.
The company announced Nov. 20 that approximately $213.6 million in notes were tendered for payment at a rate of $1,092.75 per $1,000 value, which included a $50 per thousand early tender payment.
Then, Dec. 20, the company called for redemption of all remaining notes. at a price of $1,086.25 per $1,000 of outstanding amount.
At the time, the company noted, “Prior to the completion of the redemption, the company will satisfy and discharge the indenture governing the notes by depositing the redemption price and accrued interest to, but not including, the redemption date in trust in accordance with the satisfaction and discharge provisions of the indenture. Following the redemption, no principal amount of notes will remain outstanding.”
In other words, the company was out of debt, at least publicly-traded debt.
RV Daily Report has been asking for the year-end financial report for several weeks. On Saturday, Marcus Lemonis, CEO of Camping World and Good Sam Enteprises, responded by saying, “We don’t release financial information anymore. Not required to.”
When pressed for what changed to eliminate the requirement, Lemonis replied, “Much different structure.”
When RV Daily Report asked where the company got the money to pay off the debt in December, Lemonis said credited a combination of earnings, cash on the company’s balance sheet and new bank debt.
“New bank debt was secured because of strong cash flow and deleveraging,” he explained. “It’s a much, much more attractive facility and LIBOR-based rates.”
The London Interbank Offered Rate (LIBOR) is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. How does that impact Camping World?
The notes the company paid off incurred an interest rate of 11.5 percent annually. The one-year LIBOR rate is currently 0.54 percent, and goes as low as 0.15 percent for the one-month rate. It is unlikely that Good Sam is paying that amount of interest, but the credit facility the company developed probably has an interest rate of X plus LIBOR. Although Lemonis won’t disclose what that amount is, it is likely significantly less than the 11.5 percent rate the firm was paying.
In fact, in November, Camping World announced a $525 million credit line had been established involving nine banks: Bank of America, JP Morgan, US Bank, SunTrust, Key Bank, M & T Bank, Bank of the West, Ally Bank and CIT.
While some people speculated at the time that the figure was much too large for the company to assume, Lemonis is confident that Camping World will continue to thrive.
“The company will do around $3 billion this year at just under 7 percent net,” he told RV Daily Report Sunday. That totals $210 million in net profit.
While the firm’s third quarter 2013 financial report showed net revenue of just under $420 million, that included only Camping World accessory stores and Good Sam membership-related income. It did not include RV sales through Good Sam RV Sales, a separate company that leased space at Camping World stores to sell RVs. Therefore, the sale of recreation vehicles were not included in the company’s public filings.