Monaco files Chapter 11

The company plans to continue operating the business as a debtor-in-possession in preparation for one or more sale transactions involving parts or all of the business. Imperial Capital, LLC, the company's lead investment bank, is actively assisting the company in working toward a transaction that will allow operations to resume.

In conjunction with the filing, Monaco is seeking customary authority from the bankruptcy court that will enable it to continue operating its business and serving its customers in the ordinary course. This includes the authority to make wage and salary payments, continue various benefits for employees and pay post-petition providers of materials and services in the normal course of business. Monaco is negotiating with its lenders for two debtor-in-possession (DIP) financings to supplement its working capital. The company expects continuation of the line of credit on a cash collateral basis prior to the execution of the DIP financing.

Monaco announced on March 2, that it was terminating the majority of its remaining workforce and continuing to seek additional financing or capital, or a corporate transaction. Over the past 20 months, the company has taken aggressive steps to improve the absorption of indirect expenses and to reduce material and labor costs.

Despite these drastic efforts, a variety of factors has combined to prevent the company from generating the necessary liquidity or obtaining the additional financing to operate outside bankruptcy protection. The economic climate has deteriorated considerably since the company entered into its current financing arrangements announced on Nov. 6, 2008, and the national and global credit markets have continued to tighten.

Kay Toolson, chairman and CEO of Monaco Coach Corporation, said, "We have taken intensive measures to overcome our weakened liquidity position. The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and move expeditiously toward a sale of parts or all of the company. In the meantime, we are committed to maintaining our dealer and customer relationships which should benefit all parties in the long run."

"We appreciate the support we have received from our dealers and customers through this extremely difficult period and are hopeful their patience will be rewarded. With this support, we believe the opportunity exists to leverage our market position, preserve the strength of our brands for our dealers and assure the continuation of the Monaco lifestyle for our customers," continued Toolson.

"We understand how difficult the events of the past several months have been on everyone at the company, and we recognize the changes personally affect many people. Further, we understand and deeply regret the effect of the action taken today on vendors and others with whom we have business relationships," concluded Toolson.

Additional Information

The Chapter 11 filing affects all of Monaco's wholly owned subsidiaries.

Custom Chassis Products, LLC, the company's chassis manufacturing joint venture with Navistar, Inc., is not a party to the bankruptcy proceeding.

SOURCE: Monaco Coach Corp.