CAVALIER HOMES COMMITTEE FOR CHANGE SENDS SECOND LETTER TO
Stockholders to Vote FOR the Committee’s Nominees on the GOLD Proxy
FORT WORTH, TEXAS, May 4, 2009
– The members of the Cavalier Homes Committee for Change (the “Committee”)
announced today that it has sent a second letter to the stockholders of Cavalier
Homes, Inc. (the “Company”) (NYSE Alternext US: CAV) urging stockholders to
elect its three highly qualified and experienced director nominees, Michael R.
O'Connor, Kenneth E. Shipley, and Curtis D. Hodgson, at the Company's 2009
annual meeting of stockholders scheduled to be held on May 19,
2009. The members of the Committee beneficially own an aggregate of
1,694,892 shares of common stock of the Company, representing approximately 9.6%
of the outstanding shares of the Company’s common stock.
text of the letter follows:
THE GOLD PROXY CARD FOR CHANGE YOU CAN BELIEVE IN!
significant stockholders of Cavalier Homes, Inc. (“Cavalier” or the “Company”)
(NYSE Alternext US: CAV), we are deeply concerned that the Company’s current
Board has no real plan to rebuild value at Cavalier. The members of
the Cavalier Homes Committee for Change (the “Committee”) own approximately 9.6%
of the outstanding shares of the Company and have a direct interest in
maximizing the value of Cavalier’s shares. We are therefore seeking your support
to elect our slate of director nominees, Michael R. O'Connor, Kenneth E.
Shipley, and Curtis D. Hodgson, at the Company’s 2009 annual meeting of
stockholders, scheduled to be held on May 19, 2009, to make the changes
necessary to restore profitability. The Committee urges stockholders to
vote FOR the Committee’s highly experienced and qualified director nominees on
the GOLD proxy card.
29, 2009, the current Board, at the Company’s expense, sent another letter to
stockholders claiming they have been “proactive” in their response to market
conditions. We do not believe they have. Their letter
would have stockholders believe that our nominees have been “fast and loose”
with the facts. We would like to set the record
clear. Here are the undeniable facts.
recently reported in its latest quarterly report that its first quarter market
share in Cavalier’s “core” 11 states decreased from 10.0% to 8.8%, despite the
fact that the number of companies operating in this market has significantly
decreased. Patriot and Fleetwood have each gone bankrupt, Palm Harbor
closed its North Carolina plant and General Homes closed its Georgia
the decrease in the number of companies serving this core market, we question
which manufacturers have picked up this market share: Horton Homes? Clayton
Homes? River Birch Homes? We believe Cavalier clearly has
FACT: Industry-wide shipments of
manufactured homes to Cavalier’s core states (excluding the partial states of
Florida, Missouri, and Oklahoma) were down only 16% from 2006 to 2008, but
Cavalier's shipments to these core states were down 26% during the same
period! In 2009, while industry statistics show January's shipments
down by 33% in these core states, Cavalier's first quarter revenues were down a
whopping 60%! As the numbers show, in Cavalier’s core
states, their market share is rapidly eroding. We believe cost
cutting, without a real plan for revenue growth, will simply result in more pain
for stockholders. Instead of “weather[ing] the storm,” by liquidating
asset after asset after asset to maintain the appearance of profitability, we
believe the Board needs a serious business plan to either improve revenue or
regain market share.
states in their letter (inclusive of grammatical error) “Has worked to provided
wholesale floor plan financing." We ask the Board to explain what
they have accomplished, since their latest quarterly report merely states, “We
continue to explore alternatives to the current crisis in wholesale floor plan
lending for our independent dealers to enable them to purchase our products.” Is
this what they mean by “proactive”? It’s already May 2009 and we
believe the Board has yet to produce a wholesale financing plan, other than to
say they intend to use cash in the future to provide financing. We have been encouraging the Board to
develop a wholesale floor plan program since May 2008! And again in
June 2008! And again in November 2008! GE, Textron and
21st Mortgage all announced last year that they would no longer provide floor
plan financing to Cavalier's retailers, yet the self-described “proactive” Board
has still failed to act.
“divested” its retail financing business by selling CIS. The Board
states in its letter that they left this business “…because it eliminated the
risk in Cavalier’s retail finance business, freed up capital and allowed
management to focus on the Company’s core manufacturing
operations.” Was the Board unaware of the fact that a government
program had already been announced to reduce the risk in the retail finance
business (Subtitle B of Title II of the Housing and Economic Recovery Act of
2008; Public Law 110-289, "The FHA Manufactured Housing Loan Modernization Act
of 2008," approved July 30, 2008)?
FACT: Cavalier’s revenues in the first
quarter of 2009 are down 60% from the first quarter last year, while SG&A
expenses only decreased 27%! The Company appears to applaud
itself for improving its gross margins; however, according to their first
quarter earnings conference call held on April 24, 2009, gross margins
(excluding certain items) were approximately just 17%, which included a 2.5%
decrease in the cost of raw materials. We believe the conference call
revelations leave little doubt that the Company is actually suffering
significant losses from continuing to operate a single line of business –
manufacturing. In fact, Cavalier’s five remaining manufacturing
plants are operating at only 27% capacity, a level which we believe will produce
sizeable operating losses.
the Board’s recent letter to stockholders they do not dispute the Committee’s
statement that bonuses may be paid under the current compensation plan despite
declines in market share and an extreme decline in revenue. They do
not dispute that Barry Donnell has received over $7.0 million dollars in
compensation from the Company. They do not dispute that they continue
to use a skybox for Alabama football games as (in their words) a “sales
tool.” They cannot dispute that they chartered a private
jet last August (and paid two lawyers to accompany them) as they flew from
Alabama to Georgia to North Carolina, to announce the termination of David
Roberson, the former Chief Executive Officer of the Company. With the
Company’s revenue stream in a freefall, we question whether these extravagant
expenses are worthwhile for stockholders.
Board claims Legacy and Cavalier are “direct” competitors of the
Company. Do not be fooled. National companies such as
Fleetwood, Champion, Palm Harbor, Clayton, Patriot, Southern Energy and
previously, Oakwood, Tidwell and Cavalier, have all maintained manufacturing
facilities in both Texas and the southeast, separately serving the different
markets. Texas manufacturers simply do not directly compete with
southeastern manufacturers. The transportation costs and regulations
simply make the cost of competition prohibitive.
opinion, over the last ten years, this self-proclaimed “proactive” Board has
overseen the dwindling of Cavalier's independent dealer base, massive declines
in quarterly revenues by approximately 85%, cumulative losses mounting to over
$75 million, and the disintegration of total assets from approximately $244
million to $76 million.
seeking minority representation on the Board to protect our investment and the
investment of all stockholders in the Company. Our nominees understand and take
seriously their fiduciary duty to Cavalier and will always put the interests of
stockholders first! Our Committee’s plan for restoring
profitability to the Company includes, among other things, taking real steps to
expand into retail and wholesale floor plan financing and rebuilding the
Company’s brand names. As significant investors, our highly-qualified
nominees would exercise their fiduciary responsibility to act in the best
interests of all stockholders to maximize stockholder value.
Committee urges all stockholders to vote the GOLD proxy card to elect its three
Nominees. Collectively, the Nominees have over 100 years of
experience in the manufactured home industry and have the incentive and
commitment as large investors to restore value to the Company. Vote
for change on the GOLD consent card – Today!
SUPPORT on the enclosed GOLD proxy will make a difference!
to call us any time.
elect the Committee’s nominees, we urge all stockholders to sign and
return the GOLD
or not you have already returned a white proxy sent to you by the
Committee urges all stockholders not to sign or return any white proxy
sent to you by the Company.
the Committee recommends that you use the GOLD
Proxy and vote by mail or if you own
shares through a bank or a broker, you may vote by telephone or
you have already returned the white proxy, you can effectively revoke it
by voting the GOLD
Only your latest-dated proxy will be counted.
you have any questions or need assistance in voting the GOLD
Proxy, please contact
proxy solicitor, Okapi Partners, at the toll-free number or email address