Oakwood Homes reaches restructuring agreement, to file Chapter 11

New York, Nov. 15 - Oakwood Homes Corp. said it has reached agreement with holders of 40% of its senior unsecured debt and guarantee obligations on a restructuring and expects to make a prepackaged Chapter 11 bankruptcy filing.

The restructuring plan calls for conversion of Oakwood's $303 million of senior unsecured debt and its guarantees of principal and interest on $275 million of subordinated Remic bonds into 100% of the reorganized company's equity.

Oakwood's existing stock will be exchanged for out-of-the-money warrants to buy 10% of the post-restructuring stock.

"The proposed restructuring would leave Oakwood with virtually no long-term debt," said president and chief executive officer Myles Standish in a news release.

"More importantly, the proposed restructuring would position Oakwood to capitalize on the eventual recovery of the manufactured housing industry."

The Chapter 11 filing will be in the U.S. Bankruptcy Court in Wilmington, Del. and will be made "imminently," Oakwood said.

The Greensboro, N.C. manufactured housing producer and retailer said it closed five manufacturing plants in several states and its loan origination operations in Texas on Thursday. It also plans to close approximately 75 retail locations.

Oakwood said the bankruptcy filing is largely a result of the continued poor performance of loans originated in 2000 and before as well as the deteriorating terms in the manufactured housing asset-backed securitization market.

Poor loan performance along with declining recovery rates in the wholesale repossession market have "substantially eliminated" the company's loan servicing income, Oakwood said. These factors have also increased the payments the company has to make to holders of the subordinated Remic bonds it has guaranteed.

"Our current business is significantly improving," Standish added. "Loans underwritten since 2000 are performing substantially better than those originated in earlier years, and our housing operations are performing better than they have at any time since 1998, even in the face of difficult industry conditions. These improvements, however, have not been sufficient to make up for the overall poor performance of the loan portfolio and the deterioration in the asset-backed securitization market."

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