8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):    November 15, 2002

OAKWOOD HOMES CORPORATION

(Exact name of registrant as specified in charter)

North Carolina	1-7444	56-0985879
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	file number)	Identification Number)

7800 McCloud Road, Greensboro, North Carolina	27409-9634
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:    (336) 664-2400

Item 3. Bankruptcy or Receivership.

     On November 15, 2002, Oakwood Homes Corporation (the “Company”) and certain of its subsidiaries (collectively, the “Debtor”) filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware. The Debtor remains in possession of its assets and properties and continues to operate its businesses as a “debtor-in-possession” pursuant to section 1107(a) and 1108 of the Bankruptcy Code. The Debtor’s press release in which it announced, among other things, the Chapter 11 filing is attached hereto as Exhibit 99.1.

     On November 15, 2002, the Debtor also reached a non-binding agreement in principle relating to the Debtor’s financial restructuring with creditors representing approximately 39% of the Company’s senior unsecured debt and REMIC guarantee obligations. The terms of this financial restructuring are contained in the restructuring term sheet attached hereto as Exhibit 99.2. These creditors provided a non-binding affirmation that, subject to certain conditions described therein, they would consider the treatment of claims in a bankruptcy proceeding involving the Debtor in the manner described in the restructuring term sheet to be within a range of acceptable outcomes.

     On November 15, 2002, the New York Stock Exchange, Inc. announced that it had determined that the Company’s common stock should be suspended from trading on the NYSE immediately. The NYSE also announced that application to the Securities and Exchange Commission to delist the Company’s common stock is pending the completion of applicable procedures. The Company does not presently intend to object or otherwise seek a review of this determination.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

     (a)  Financial Statements. Not applicable.

     (b)  Pro Forma Financial Information. Not applicable.

     (c)  Exhibits. The following exhibit is filed herewith:

99.1	Press release issued on November 15, 2002.
99.2	Restructuring Term Sheet dated November 15, 2002.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	OAKWOOD HOMES CORPORATION
Date: November 18, 2002	By:	/s/ Robert A. Smith
		Name: Robert A. Smith
		Title: Executive Vice President – Financial Operations

SECURITIES AND EXCHANGE COMMISSION
Washington, DC

EXHIBITS

CURRENT REPORT
ON
FORM 8-K

Date of Event Reported:	Commission File No:
November 15, 2002	1-7444

OAKWOOD HOMES CORPORATION

EXHIBIT INDEX

Exhibit No.	Exhibit Description
99.1	Press release issued on November 15, 2002.
99.2	Restructuring Term Sheet dated November 15, 2002.

EX-99.1 3 g79456exv99w1.htm PRESS RELEASE ISSUED ON NOVEMBER 15, 2002

EXHIBIT 99.1

OAKWOOD HOMES CORPORATION REACHES AN AGREEMENT IN PRINCIPLE
WITH CERTAIN OF ITS CREDITORS TO RESTRUCTURE ITS BALANCE SHEET

Greensboro, NC, November 15, 2002 – Oakwood Homes Corporation (NYSE: OH), one of the country’s largest producers and retailers of manufactured housing, has reached an agreement in principle with creditors representing nearly 40% of the Company’s senior unsecured debt and guarantee obligations to restructure the Company’s balance sheet. The proposed plan calls for the conversion of the Company’s $303 million of senior unsecured debt and its guarantees of principal and interest on $275 million of subordinated REMIC bonds into 100% of the Company’s post restructuring common shares. The plan also provides for the conversion of the Company’s current common shares into out-of-the-money warrants to purchase approximately 10% of the post restructuring common shares.

Myles E. Standish, President and Chief Executive Officer, stated, “We are very pleased to have the support of our creditors, who will become our largest shareholders under the proposed plan, to restructure our balance sheet. The proposed restructuring would leave Oakwood with virtually no long term debt. More importantly, the proposed restructuring would position Oakwood to capitalize on the eventual recovery of the manufactured housing industry.”

As part of the restructuring, the Company expects to file imminently a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court in Wilmington, Delaware. Mr. Standish stated, “With the support of our creditors, we expect to emerge from bankruptcy in a matter of months. I want our employees, vendors, independent retailers and customers to know that we expect to operate on a “business as usual” basis. This is a fresh start for a business that has successfully adjusted and survived for the past 56 years. When we emerge, Oakwood will be stronger than ever. We are working with potential credit providers to ensure adequate liquidity while we are in Chapter 11 and expect to have these facilities finalized shortly.

“As part of the Company’s restructuring, we closed yesterday five manufacturing plants in several states and our loan origination operations in Texas. We also intend to close approximately 75 retail locations. These locations are principally in the Deep South, Tennessee and Texas markets, which are highly competitive and have been negatively affected by the Company’s tightening of retail credit standards over the past 18 months. Exiting these areas should significantly improve the Company’s operating results going forward as well as the performance of the Company’s future loan originations.

“Our filing is largely driven by the continued poor performance of loans we originated in 2000 and before, as well as the deteriorating terms in the manufactured housing asset-backed securitization market into which we sell our loans. Our poor loan performance, coupled with declining recovery rates in the wholesale repossession market, have resulted in the Company’s loan servicing income being substantially eliminated. In addition, these factors have increased

the payments we will be required to make to the holders of the subordinated REMIC bonds that we have guaranteed.

“Our current business is significantly improving. Loans underwritten since 2000 are performing substantially better than those originated in earlier years, and our housing operations are performing better than they have at any time since 1998, even in the face of difficult industry conditions. These improvements, however, have not been sufficient to make up for the overall poor performance of the loan portfolio and the deterioration in the asset-backed securitization market.

“Taking this action now allows the Company to reorganize while it is still relatively strong without taking actions that would impair our future profitability. A restructuring at this time should allow us to eliminate our finance company liabilities and to once again have an opportunity to operate profitably in our finance business. It will also remove the uncertainties about our long-term viability, which have hampered our ability to operate over the past several years.”

The manufactured housing industry, which tends to be a cyclical business, has been in a downturn for a number of years. Shipments of manufactured housing units have declined industry-wide from a peak of 372,800 in 1999 to an estimated 160,000 to 170,000 units this year. Because of weak industry underwriting standards beginning in the mid-1990s, as well as current economic conditions that are adversely affecting the industry’s customer base, annual repossessions have increased to an estimated 90,000 units in 2002, more than 50 percent of new home shipments.

The Company has also been advised by the New York Stock Exchange (the “NYSE”) that the Company has fallen below the NYSE’s continued listing criteria relating to both total market capitalization and minimum share price. The NYSE requires that the Company’s market capitalization must equal or exceed $15 million and that its stock trade at a minimum share price of $1 over a 30-day trading period. The Company has not complied with either of these criteria over a 30 consecutive day trading period.

Oakwood Homes Corporation and its subsidiaries are engaged in the production, sale, financing and insuring of manufactured housing throughout the United States. The Company’s products are sold through Company-owned stores and an extensive network of independent retailers.

This press release contains certain forward-looking statements and information based on the beliefs of the Company’s management as well as assumptions made by, and information available to, the Company’s management. These statements include, among others, statements relating to the expectation that the Company will be able to successfully reorganize itself, the expectation that the Company will be able to obtain the support of its remaining creditors for its reorganization plan, the expectation that the Company will be able to negotiate and finalize facilities to ensure adequate liquidity while it is in Chapter 11 and that such facilities will be finalized shortly, the belief that the reorganization can be successfully completed in a matter of months, the expectation that the Company will be able to operate on a “business as usual” basis, the expectation that the Company will be stronger upon emergence from bankruptcy, the belief

that the restructuring should allow the Company to eliminate its finance company liabilities and have an opportunity to operate profitably in the finance business and the belief that exiting certain states should improve the Company’s operating results going forward as well as the performance of the Company’s future loan originations.

These forward-looking statements reflect the current views of the Company with respect to future events and are subject to a number of risks, including, among others, the following: the Company’s plan of reorganization may not receive the support of its creditors or be approved by the Bankruptcy Court; competitive industry conditions could further adversely affect sales and profitability; the Company may be unable to access sufficient capital and liquidity to fund its operations during the reorganization process; it may recognize special charges or experience increased costs in connection with its securitization or other financing activities; the Company may be required to provide various forms of credit enhancement to its vendors, lenders or others; the Company may recognize special charges or experience increased costs in connection with restructuring activities; the Company may not realize anticipated benefits associated with its restructuring activities (including the closing of underperforming sales centers); adverse changes in governmental regulations applicable to its business could negatively impact the Company; it could suffer losses resulting from litigation (including shareholder class actions or other class action suits); the captive Bermuda reinsurance subsidiary could experience significant losses; the Company could experience increased credit losses or higher delinquency rates on loans originated; the Company could experience lower recovery rates than anticipated on the sale of repossessions, negative changes in general economic conditions or the industry could adversely impact the Company; it could lose the services of key management personnel; and any other factors that generally affect companies in bankruptcy proceedings or in these lines of business could also adversely impact the Company. Should the Company’s underlying assumptions prove incorrect or should one or more of the risks and uncertainties materialize, actual events or results may vary materially and adversely from those described herein as anticipated, expected, believed or estimated.

EX-99.2 4 g79456exv99w2.htm RESTRUCTURING TERM SHEET DATED NOVEMBER 15, 2002

EXHIBIT 99.2

[OAKWOOD HOMES CORPORATION LOGO]

RESTRUCTURING TERM SHEET
CONFIDENTIAL | NOVEMBER 15, 2002

DRAFT FOR DISCUSSION PURPOSES ONLY. NOTHING HEREIN SHALL BE AN ADMISSION OF FACT OR LIABILITY. GOVERNED BY RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER RULES OF SIMILAR IMPORT.

Introduction

o Holders of approximately 39% of the combined value of (a) Oakwood Home Corporation’s (“Oakwood” or the “Company”) $303 million face value of senior unsecured debt and (b) the net present value, as described below, of future payment obligations under the Company’s guarantees of principal and interest on $275 million face value of subordinated B-2 REMIC securities (the “REMIC Guarantees”), have provided a non-binding affirmation that they consider the treatment of claims described below that they may receive in a bankruptcy proceeding involving the Company to be within a range of acceptable outcomes, subject to (a) evidence satisfactory to the Holders that the financial information previously provided to them is correct (b) acceptable financing during the pendency of the bankruptcy proceeding.

Proposed Transaction

o Oakwood proposes to convert its $303 million face value of senior unsecured debt plus accrued interest and its guarantees of principal and interest on $275 million face value of subordinated B-2 REMIC securities (the “REMIC Guarantees”) into all of the post restructuring common equity of the Company in connection with a pre-negotiated plan of reorganization

o Oakwood’s existing REMIC securities, which have been issued by bankruptcy remote REMIC trusts (“REMICs”) including the B-2s, will remain outstanding and receive principal and interest as scheduled to the extent funds are available from the REMICs

Servicing Fee

o Oakwood proposes new servicing agreements for each series of REMICs with tranches that have the benefit of an Oakwood Homes limited guarantee (“Guaranteed REMIC Series”). These will provide the Company with 50 basis points of servicing fees at the “top of the payment waterfall” plus a performance incentive, which will be agreed upon at later date, also paid on a senior basis

o The remainder of the 100 bps servicing fees payable by the Guaranteed REMIC Series would be subordinated as before

o During the pendency of the bankruptcy case, the Company proposes to provide servicing to the Guaranteed REMIC Series in exchange for 50 basis points senior servicing fees

Allocation of Post Restructuring Common Equity

o Holders of the Senior Notes and REMIC Guarantees will receive 100% of the post restructuring shares or 10,000,000 shares

• Holders of the $300 million face value of Senior Notes will receive a pro rata distribution of the post-restructuring common equity based on the face value of the Senior Notes plus accrued interest

• Holders of the REMIC Guarantees will receive a pro rata distribution of the post-restructuring common equity based upon a preliminary estimate of the present value of the guarantee obligations discounted at the risk free rate (30-year Treasury rate, which is assumed in this term sheet to be 4.90%) (preliminary estimate is approximately $172 million)

• Holders of the $3 million face value of Reset Debentures will receive a pro rata distribution of the post-restructuring common equity based on the face value of the Reset Debentures plus accrued interest

• Existing equity holders will receive no distribution of the post-restructuring common equity. However, existing equity holders will receive warrants to purchase one million (1,000,000) shares of the post-restructuring common shares, or approximately 9% of the fully diluted common equity (see Warrants to Existing Equity Holders on page 2)

Post-Restructuring Common Stock Ownership (1)

($ in millions)
			ESTIMATED
			APPRAISED				COMMON			OUT-OF-		FULLY DILUTED
	PRINCIPAL		PRESENT		NEW COMMON		OWNERSHIP			THE-MONEY		OWNERSHIP
	AMOUNT		VALUE (2)		SHARES		PERCENTAGE			WARRANTS		PERCENTAGE
Senior Unsecured Debt (3)	$	306.1	$	306.1		6,403,938		64.0	%		—		58.2	%
REMIC Guarantees		275.0		171.9		3,596,062		36.0	%		—		32.7	%
Miscellaneous Claimants	NA		NA		NA		NA				—	NA
Existing Equity	NA		NA			—		—			1,000,000		9.1	%
Total	$	581.1	$	478.0		10,000,000		100.0	%		1,000,000		100.0	%

Note: Ownership percentages based on post-restructuring shares of 10,000,000.

(1)	Holders of miscellaneous claims resulting from the case may also receive consideration in the form of cash, debt, equity or equity-linked securities. If they receive post restructuring common shares, the percentage ownership received by the other constituencies shown would be reduced on a pro rata basis. The resulting changes in ownership, if any, would likely be small.
(2)	The estimated appraised present value of REMIC Guarantees represents a preliminary estimate of likely future guarantee payment obligations under the REMIC Guarantees, discounted at the risk-free rate (30-year Treasury rate, which is assumed in this term sheet to be 4.90%).
(3)	Includes accrued interest amounts through November 15, 2002 of $1.2 million, $1.8 million, $0.1 million on 7 7/8% Senior Notes, 8 1/8% Senior Notes, and Reset Debentures, respectively.

Warrants to Existing Equity Holders

o The warrants will have a seven year maturity and strike at an initial market value of common stock of $478 million which would result in 100% recovery to the holders of Senior Notes, estimated net present value of REMIC Guarantees and Reset Debentures. The strike price will increase annually at the risk free rate (30-year Treasury rate, which is assumed in this term sheet to be 4.90%) until their expiration

o The warrants will contain “flip protection” which protects the holders in the event that the Company is sold prior to the maturity of the warrants

— At the buyer’s option, the old warrants will (a) be exchanged for new warrants to purchase the survivor’s common stock at a strike price equally out of the money or (b) exchanged for cash at the fair market value of the old warrants based on a Black-Scholes valuation

Warrant Strike Price Analysis

($ in millions, except per share prices)
	Years Post Emergence
	Emergence Date		1		2		3		4		5		6		7
Market Value of the Equity (1)	$	478.0	$	501.4	$	525.9	$	551.7	$	578.7	$	607.1	$	636.8	$	668.1
Strike Price Per Share (2)	$	47.80	$	50.14	$	52.59	$	55.17	$	57.87	$	60.71	$	63.68	$	66.81

(1)	Increases at the risk-free rate (30-year Treasury rate, which is assumed in this term sheet to be 4.90%).
(2)	Based on 10,000,000 shares of new common outstanding.

Distribution of shares based on assumed 10,000,000 New Common shares upon reorganization. The allocation of post restructuring shares will be adjusted to reflect the re-calculation of the attributable value of the REMIC Guarantees using the risk-free discount rate (30 year Treasury rate, which in this term sheet is assumed to be 4.90%)

Claims:

Senior Secured and Unsecured Claims:

Industrial Revenue Bonds:
o	$1.1 million Elkhart County (Indiana) revenue bond secured by LC’s	Reinstated without impairment.
o	$5.2 million Kosciusko County (Indiana) revenue bond secured by LC’s	Reinstated without impairment.
Senior Notes:
o	$125 million unsecured 7.875% Senior Notes due 2004 plus $1.2 million of accrued interest	Converted into 2,641,080 shares or 26.4% of the primary common equity of New Oakwood (the “New Common Stock”).(1)
o	$175 million unsecured 8.125% Senior Notes due 2009 plus $1.8 million of accrued interest	Converted into 3,698,656 shares or 37.7% of New Common Stock. (1)
Reset Debentures:
o	$2.6 million unsecured debentures due 2007 plus $68,568 of accrued interest	Converted into 64,203 shares or 0.6% of New Common Stock. (1)
REMIC Guarantees:
o	Future guarantee payments on the following subordinated B-2 REMIC tranches: 1998-D, 1999-A, 1999-B, 1998-B, 1997-B, 1997-D, 1997-C, 1997-A, 1998-C, 1999-C, 1999-D, 2001-B, 2001-C, 2001-D, 2001-E, 2002-A, 2000-B, 1999-E, 2000-A, 2002-B	Converted into 3,596,062 shares or 36.0% of New Common Stock. (1)
	•   Total principal of $275 million
	•   $172 million preliminary estimate of net     present value of guarantee payment     obligations

(1) Holders of miscellaneous claims resulting from the case may also receive consideration in the form of cash, debt, equity or equity-linked securities. If they receive post restructuring common shares, the percentage ownership received by the other constituencies shown would be reduced on a pro rata basis. The resulting changes in ownership, if any, would likely be small.

Other Claims / Restructuring
REMIC Pooling & Servicing Agreements:
o	Existing agreements between Oakwood, as the REMIC servicer, and each REMIC trust	Guaranteed REMIC Series serviced for 50 bps on senior priority basis with additional fee opportunity contingent on performance.
Miscellaneous Other Claims:		To be determined. (1)
Old Common Stock:
o	9.5 million shares of Oakwood common stock	Warrants with “flip protection” to purchase 1,000,000 shares of the New Common Stock with an initial strike price of $47.80, which results in 100% recovery to holders of the Senior Notes, REMIC Guarantees, and Reset Debentures, rising annually at the risk free rate (30-year Treasury rate). The “flip protection” will provide that in the event that the Company is sold prior to the maturity of the warrants, at the buyer’s option, the old warrants will (a) be exchanged for new warrants to purchase the survivor’s common stock with the same maturity as and struck at a price equally out of the money, calculated as on a percentage basis or (b) exchanged for cash at the fair market value of the old warrants based on a Black-Scholes valuation.
Options and Other Equity Related Securities:		Cancelled and receive no distribution.
Administrative and Priority Claims:		Paid in full, in cash on the Effective Date of the Plan.
Priority Tax Claims:		At the option of the Company, (i) paid in cash on the Effective Date of the Plan or (ii) extended over allowed six-year period.
Releases:		Officers, directors, controlling shareholders, senior management and the advisors to the Company will receive releases under the Plan from all liabilities or claims by the Company and its claim or interest holders, except those arising out of gross negligence or willful misconduct.
Additional Information
REMIC Securities:
o	Approximately $4.7 billion REMIC portfolio serviced by Oakwood	Issued by bankruptcy remote entities and therefore will not be affected. Continue to receive interest and principal payments to the extent that funds are available in the normal fashion according to their respective trust indentures.

(1) Holders of miscellaneous claims resulting from the case may also receive consideration in the form of cash, debt, equity or equity-linked securities. If they receive post restructuring common shares, the percentage ownership received by the other constituencies shown would be reduced on a pro rata basis. The resulting changes in ownership, if any, would likely be small.

Exhibit A

DRAFT FOR DISCUSSION PURPOSES ONLY. NOTHING HEREIN SHALL BE AN ADMISSION OF FACT OR LIABILITY. GOVERNED BY RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER RULES OF SIMILAR IMPORT.

Preliminary Estimated Appraisal of REMIC Guarantees

The preliminary estimated appraisal were based on the assumption that Oakwood receives a servicing fee with respect to the Guaranteed REMIC Series of 50 bps on a senior basis.

			Present Value of Expected
B-2 REMIC	Principal Amount		Guarantee Payment
Series	Outstanding		Obligations (1)
1997-A	$	9,255,770	$	2,357,064
1997-B		8,923,192		3,132,731
1997-C		11,731,441		4,620,014
1997-D		10,096,252		5,399,395
1998-B		15,000,000		11,531,182
1998-C		13,135,281		7,888,939
1998-D		25,554,561		20,343,764
1999-A		24,591,125		19,354,798
1999-B		17,894,150		20,968,728
1999-C		20,374,750		16,402,985
1999-D		16,624,000		14,131,287
1999-E		8,880,666		5,622,881
2000-A		9,442,500		12,722,150
2000-B		8,100,000		1,734,011
2001-B		23,815,098		6,884,645
2001-C		10,745,000		3,007,745
2001-D		11,268,000		3,074,986
2001-E		6,024,000		4,863,668
2002-A		8,993,000		2,586,724
2002-B		14,315,000		5,246,150
Total	$	274,763,786	$	171,873,846

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EX-99.1

Press Release issued on November 15, 2002

EX-99.2

Restructuring Term Sheet dated November 15, 2002