By Iris Richmond. In the wake of retail lending losses, the manufactured housing industry has taken another hit. Conseco, the industry's largest lender, stopped providing floor plan lending on March 31.
The Indianapolis-based company explained that it needed to generate cash. Last fall, it was forced to retire debt at its subsidiary Conseco Finance rather than refinance it. This put the company in a cash bind for 2002, according to executive vice president of corporate affairs Mark Lubbers.
While Conseco was the largest floor plan entity, with more than a quarter of the market, Lubbers says the business represented less than 2 percent of the total $18 billion in revenue generated last year by the company, making it the obvious place to trim.
The good news is that Conseco gave plenty of advance notice of its plans, allowing other lenders to ramp up to fill the gap. Champion Enterprises, the country's largest maker of manufactured homes, awaits the replacement of 20 percent of its dealer inventory that Conseco used to finance.
Champion CEO and president Walter Young, describes the withdrawal as orderly. Independent dealers, he says, will be able to obtain financing from other sources and that repurchase obligations will be manageable.
Deep Impact: Conseco's exit leaves a nearly $800 million hole to be filled by other lenders.
Market Shares (as of March 30, 2002)
|Company||in millions||% Market Share|
|Banks amp; other||$1,000||34.0%|
Source: BBT Captial Markets