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By Greg Gerber
Editor, RV Daily Report
Jeff Hanemaayer, the former owner and chairman of Roadtrek and son of its founder, told RV Daily Report he would be surprised if someone did not step forward to buy the company.
In fact, he revealed he has already been in contact with another RV manufacturer since Erwin Hymer Group North America (EHGNA) was put into receivership Feb. 15.
He assured former employees that the Hymer family has a keen interest in finding a buyer.
“The Hymer family could have transferred control of the company to another firm that specialized in liquidation. They could have sold everything and used it to pay off creditors,” said Hanemaayer. “However, they opted to bring in a firm with a solid reputation for turning around bankrupt companies and making them viable enterprises.”
At first glance, the receivership option might not appear to work to the advantage of employees and suppliers, but bankruptcy will give Roadtrek a fresh start under new leadership.
“When a receiver is involved, the buyer has an advantage to cherry pick the best assets at a cost well below book value,” he explained.
If only one buyer emerges, it can truly acquire the company’s existing equipment, inventory, materials and supplies for pennies on the dollar. All real estate was leased. However, the receiver has an obligation to sell the company for the most money it can get. So, the receiver will seek to entice multiple buyers to bid on the business, which remains a distinct possibility, Hanemaayer explained.
“If there is only one buyer, that buyer will pay just slightly more than the appraised value in liquidation,” he said. “The appraiser will walk through the plant and set a price on everything based on the ability to sell it right now, rather than shop for a better price.”
For example, if there is a partially built Sprinter chassis on the line, how much is it really worth? Probably less than $50,000, Hanemaayer noted. Yet, if the chassis were completed and sold, it could bring in $120,000 or more.
“With a single buyer, a receiver doesn’t have much negotiating power,” he added. “So, the receivers will seek several buyers to bid up the value for the company, and its assets.”
When Erwin Hymer Group (EHG), which is based in Germany, sold the company, all assets were turned over to Thor Industries except the North American operation. Thor did not want to acquire those assets, so it was carved out of the transaction.
All of EHG’s brands went to Thor Industries, with the exception of the Roadtrek brand, which is still owned by EHGNA.
Following the sale to Thor, EHGNA will have use of the EHG brands for up to 12 months to complete and sell existing EHG brand inventory, Hanemaayer explained.
“Thor wanted a larger footprint in Europe and China, and they were able to get that through the acquisition of EHG,” he added. “The Roadtrek brand also have given Thor the No. 1 or No. 2 selling Class B motorhomes in North America.”
However, with the carve out, Thor Industries left Roadtrek on the table.
Anyone who buys the Roadtrek company now will only be able to manufacture Roadtrek models in the long term, he explained. But, that’s really okay because Roadtrek is the strongest brand EHGNA owned. The buyer would not need the other brands produced by the Canadian factory to successfully relaunch the company, said Hanemaayer.
EHGNA tried to grow too large, too quickly, Hanemaayer said, noting that that when Industrial Opportunity Partners (IOP) sold Roadtrek to EHG in Feb. 2016, Roadtrek had $48 million in assets and about $37 million in debt while employing less than 300 employees in one manufacturing facility.
EHG then changed the company name to Erwin Hymer Group North America.
By the time EHGNA shut the doors Feb. 15, the company had more than $300 million in debt and about 900 employees, after reaching a high of 1,000 around the end of 2018.
“When I was involved, it was complicated enough manufacturing just Roadtreks in one 120,000-square-foot plant,” Hanemaayer explained. “In two to three years, EHGNA had expanded that footprint into three significant manufacturing plants in Canada and two smaller plants in California in addition to various support and storage facilities. They added numerous other Class B brands and models as well as other RV types to the product mix.”
That amounted to four times the manufacturing footprint compared to the company’s size in 2016.
“I have a lot of pity for employees, creditors and RV owners who are stuck with useless warranties,” said Hanemaayer. “Even if there are multiple bidders for the Roadtrek assets, the unsecured creditors, like suppliers, are likely to get nothing out of the deal.”
Banks in Germany issued loans to EHGNA that were secured with EHGNA assets. So, whenever those assets are sold, at whatever price, the proceeds will go to the secured lenders first.
Hanemaayer said the amount of secured debt exceeds $140 million, and he doubts that the sale of the company by the receiver would bring in anything near that amount. That means, the trade creditors which are owed upward of $86 million won’t collect on that debt.
“I could be wrong, but I doubt many of the suppliers would have put all their eggs in the Roadtrek basket,” said Hanemaayer. “But it will depend upon how much is owed to each supplier as to whether those firms can weather that loss and take on new business with a new company.”
Without those suppliers, it may be more difficult for Roadtrek to restart operations.
Still, Hanemaayer is confident the Roadtrek brand will emerge from this fiasco and remain a valuable brand for dealers and consumers.
“My father’s revolutionizing design determined how Class B camper vans were built,” he explained, noting that Roadtrek was 18 years old when he started working at the company.
“I hate to see 30 years of my effort ruined in just three years,” said Hanemaayer. “Roadtrek is a great company and there are a number of people interested in buying it.”
He also teased that an employee-owned buying group has sought his opinion on acquiring Roadtrek’s assets.
“I would be very surprised if someone didn’t take advantage of this situation to buy only what they wanted at a very cheap price,” said Hanemaayer.