NY shop bets on bankrupt motor home co.

American Industrial Partners is placing a bet that the long-standing tradition of Americans hitting the highway to see their country isn’t going away.

In mid-July, the New York-based shop completed its acquisition of the motor home business of Fleetwood Enterprises Inc. for $33.2 million. The all-equity transaction was executed through a 363 bankruptcy sale process, and the deal includes Fleetwood’s Goldshield Fiberglass fabrication business.

Considering the depth of the recession that American consumers are grappling with and turbulent gas prices, it might not seem like an ideal time to buy a company that makes motor homes. But Dino Cusumano, a general partner at American Industrial, said his firm believes the challenges facing the recreational vehicle sector are an anomaly given its long-term stability.

In the last 50 years, the sector has typically sold 40,000 to 60,000 vehicles annually. This year, it’s only expected to sell 10,000 to 15,000, he said.

“That’s a massive outlier of industry volume,” he said. “The demand is still there for the product and the longer term demographics are good. We think it will be a much larger industry in three to five years than it is in 2009.”

Cusumano said his firm’s experience with corporate carve-outs has prepared it to face many of the same challenges that come with rehabbing companies out of bankruptcy. “It’s the same discipline,” Cusumano said. “We’ve bought companies that had negative EBITDAs and were bankruptcies but for their being part of a large corporation.”

The deal for Fleetwood, whose history stretches back nearly 60 years, fits nicely with American Industrial executives’ experience with consolidating manufacturing plants, cutting costs, and with the specialty vehicle space, Cusumano said. The firm’s portfolio includes Collins Industries Inc., a Hutchinson, Kan.-based maker of school buses and ambulances; and E-ONE Inc., an Ocala, Fla.-based manufacturer of fire trucks.

The acquisition included two motor home manufacturing facilities, two motor home service facilities and a supply subsidiary, all located in Decatur, Ind. There are also some manufacturing facilities in Pennsylvania and California, but American Industrial is in the process of closing those facilities and consolidating them in Indiana.

American Industrial executives also plan to make the companies manufacturing processes leaner and more efficient while upgrading how it obtains its manufacturing supplies, Cusumano said.

The investment comes out of American Industrial’s fourth buyout fund, a $405 million pool closed in August 2008. The fund is about 40% invested. —Bernard Vaughan