Greg Gerber posted on November 17, 2008 14:06
SEFFNER, Fla. -- Lazy Days RV SuperCenter announced today in its 10-Q quarterly report for the period ended Sept. 30, 2008 that it elected not to make the interest payment that was due and payable today to holders of its senior notes.
Under the governing indenture for these notes, Lazydays has a 30-day grace period before the failure to pay interest becomes an event of default. During this grace period, the company intends to engage in discussions with holders of its senior notes to restructure its long term debt to improve its liquidity or modify its requirements for liquidity while respecting the interests of all parties.
Lazydays is taking this action in order to insure the long-term viability of the company through what is anticipated to be a protracted downturn in the market for recreational vehicles. The negative trends in this market have been exacerbated by a significant reduction in the extension of credit to consumers for the purchase of recreational vehicles, and the uncertainties associated therewith. The company is currently in compliance with all covenants associated with its lenders. Lazydays’ floor plan lenders have been apprised of this course of action and have agreed to continue to honor their credit agreements with the company.
“We have the financial resources to run our operations as we normally would as we approach our selling season. Our primary concern is the outlook for the medium and long-term should RV sales remain depressed for a protracted period. Rather than wait for such a situation and have to respond in a reactionary way, we have elected to be pro-active and address these important issues with our bondholders at this time,” said Randy Lay, chief financial officer for Lazydays.
This year Lazydays has implemented a number of initiatives across all of its business segments to significantly reduce its operating costs in response to the persistent downturn in the RV industry and the overall economy. These measures included reducing employee headcount by 200 people, or 30 percent, eliminating all non-essential spending, and implementing efficient purchasing processes across all segments of the business. While these measures have had a very positive impact on the Company’s cash flow, they did not address the company’s fixed interest costs.
Despite the challenges Lazydays has faced this year, operating expenses have been significantly reduced without diminishing customer service. Also, the company has grown its national and Florida market share in all four of the RV product categories that it sells. John Horton, Lazydays CEO, issued the following statement to the Company’s stakeholders: “I do not anticipate that our efforts to restructure our long-term debt will have any impact on our Company’s ability to take great care of our customers as we have done for the past 32 years.”