FOR IMMEDIATE RELEASE
INVESTOR AND MEDIA CONTACTS:
Anthony S. Cleberg Colleen T. Bauman
Chief Financial Officer Investor Relations
(248) 340-9090 (248) 340-7731
CHAMPION ENTERPRISES, INC.
ANNOUNCES AGREEMENT TO ACQUIRE
CIT MANUFACTURED HOUSING
LOAN ORIGINATION BUSINESS
PRIVATE PLACEMENT OF PREFERRED STOCK ALSO ANNOUNCED
CONFERENCE CALL SCHEDULED FOR
11:00 A.M. EASTERN TIME ON THURSDAY, APRIL 4, 2002
CALL-IN NUMBER (973) 321-1020
REPLAY NUMBER (973) 341-3080
AUBURN HILLS, MICH., APRIL 3, 2002--CHAMPION ENTERPRISES, INC. (NYSE:
CHB), the nation's leading housing manufacturer, today announced that it has
entered into an agreement to acquire CIT Group Inc.'s manufactured housing loan
origination business for approximately $5 million. The transaction is expected
to close in mid-April. Champion also announced that it has completed the private
placement of $25 million of convertible preferred stock with Fletcher
International, Ltd. In addition, the company stated that it expects to be a
party to a $150 million warehouse facility to support the finance company's
future operations.
CIT, with over 50 years in the manufactured housing lending and
servicing business, has some of the most technologically advanced systems in the
industry and receives almost all of its loan applications from retailers via the
Internet. The senior management team that will now be employed by Champion
averages 20 years of lending experience. In 2001, CIT originated $685 million in
manufactured housing loans while maintaining the industry's highest credit
quality among the national lenders.
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Champion Chairman, President, and Chief Executive Officer, Walter R.
Young, commented, "We're excited about these transactions, which are important
to our short and long-term strategic objectives. By acquiring CIT's manufactured
housing lending operations, we benefit by quickly and effectively entering the
chattel, or home-only, finance business with the experience, systems and
processes of a strong origination platform without buying an existing portfolio.
We will be using the name of HomePride Finance Corp. to move forward quickly by
taking advantage of existing state licenses and registrations. HomePride will
provide chattel financing for customers at our company-owned stores and select
independent retailers, which will mitigate the effects of the recent contraction
in industry chattel financing.
"We still see the shift to real estate mortgages as positive for the
industry, but estimate that chattel financing will remain at least 30% of
manufactured housing financing, particularly for homes going into land-lease
communities. New home chattel loans currently being written are very profitable
and Champion plans to share in the attractive spreads now being realized without
exposure to potential losses on previous loans. In addition, our strategy
includes strongly aligning company-owned retail stores' operations with the
performance of loans originated. We believe this strategy, which has been proven
in the industry, is fundamental to attaining performing loans," Young continued.
For the first quarter ending March 30, 2002, the company stated that it
continues to anticipate that consolidated net sales will be in the range of $305
million to $315 million and expects a loss in the range of $0.23 to $0.27 per
diluted share. For the first quarter of 2002, EBITDA is estimated to be in the
range of negative $5.8 million to negative $9.0 million, which will compare to
negative $15.8 million in the first quarter of 2001. For the twelve month period
ending March 30, 2002, net sales are projected to be in the range of $1,527
million to $1,537 million and EBITDA in the range of $42.1 million to $45.3
million. EBITDA for the year ended December 29, 2001 was $35.3 million. EBITDA
consists of net income or loss before interest, income taxes, depreciation,
amortization and non-recurring items.
The convertible preferred stock has a seven-year term, a 5% annual
dividend and an initial conversion price of $9.63 per share for common stock
during the first 15 months. Fifteen months after issuance the conversion price
will be adjusted to 115% of the common stock's market value, subject to certain
limitations, and the preferred stock is redeemable by Fletcher 24 months after
the date of the agreement. Fletcher can purchase an additional $10 million of
preferred stock on the same terms by June 24, 2002. In connection with this
transaction, Fletcher received warrant rights for approximately 1.1 million
shares of common stock at $12.04 per share, subject to certain adjustments. The
warrant may only be exercised on a net basis, which minimizes dilution. Fletcher
also agreed to convert or redeem the $20 million of preferred stock issued in
July 2001 no later than March 29, 2004 and Champion allowed the redemption
period to begin at the date of closing. At today's conversion and redemption
prices, these transactions would result in potential additional share dilution
of approximately 8.8%.
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"We are excited that these capital structure transactions enhance our
liquidity and allow us to enter a new platform for growth that complements our
existing operations. We are particularly pleased that Fletcher, one of our
largest investors, so quickly and strongly supported our entry into this
business. This year our finance company, which will account for its structured
securitizations using the portfolio method, is expected to report a loss. As a
result, Champion expects to be at break even for 2002 including the cost of the
additional debt. In future years we expect our finance company to be profitable
and our manufacturing and retail operations to realize the benefits of having
our own finance platform," Young concluded.
About Champion
Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is
the industry's leading manufacturer and has produced nearly 1.6 million homes
since the company was founded. The company operates 47 homebuilding facilities
and 214 retail locations. Champion's homes are also sold by more than 1,000
independent retail locations that have joined either the Champion Home Center or
the Alliance of Champions retail distribution networks. Approximately 400
builders and developers also sell Champion built homes. The conference call and
replay will be available via the company's website, www.championhomes.net.
Please also view this website for additional information about Champion.
About CIT
The CIT family of companies are subsidiaries of Tyco International Ltd.
(NYSE: TYC, LSE: TYI, BSX: TYC). CIT is a leading, global source of financing
and leasing capital and an advisor for companies in more than 30 industries.
Managing $50 billion in assets across a diversified portfolio, CIT is the
trusted financial engine empowering many of today's industry leaders and
emerging businesses, offering vendor, equipment, commercial, factoring, consumer
and structured financing capabilities. Founded in 1908, CIT operates extensively
in the United States and Canada with strategic locations in Europe, Latin and
South America, and the Pacific Rim.
About Fletcher
Fletcher International, Ltd. and other affiliates of New York
investment firm Fletcher Asset Management, Inc. make direct investments in a
wide range of established and growing public companies in a variety of
industries. More information about Fletcher International, Ltd. and Fletcher
Asset Management, Inc. may be found on their website, www.fletcher.com.
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This news release contains certain statements, including projected
closing dates of the CIT and warehouse line transactions, statements of
strategic objectives, our speed and impact of entry into the consumer finance
business, the percentage of chattel finance of manufactured housing finance,
profitability of consumer finance, our plans to align the interests of our
lending and retail activities with the goal of attaining performing loans, our
estimates of sales, profit, loss, and EBITDA and our estimates of dilution from
these transactions, that could be construed to be forward looking statements
within the meaning of the Securities and Exchange Act of 1934. These statements
reflect the company's views with respect to future plans, events and financial
performance. The company does not undertake any obligation to update the
information contained herein, which speaks only as of the date of this press
release. The company has identified certain risk factors which could cause
actual results and plans to differ substantially from those included in the
forward looking statements. These factors are discussed in the company's most
recently filed Form 10-K and other SEC filings, and those discussions regarding
risk factors are incorporated herein by reference.
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