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February 2008

ALF Seeks Bankruptcy Protection By Ed Ballam and Lyn Bixby

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“[Patriarch] and its participating lenders have refused to provide additional operational financing outside of a Chapter 11 proceeding,” the lawyers wrote, “and ALF is aware of no other lenders willing to advance funds on an unsecured or junior secured basis.”

ALF in A Nutshell:

American LaFrance President Bill Hinz and Scott Barnes, vice president of sales, made the following points in interviews at the company’s Summerville, S.C. plant with Fire Apparatus & Emergency Equipment one day after the Chapter 11 filing:

Apparatus On Order:

• There are 290 fire truck orders awaiting production slots. They can’t be scheduled until an inventory of parts and component systems is matched with what each truck needs to determine what components must be ordered.

• ALF is committed to completing all apparatus that are subject to performance bonds. However, company officials believe all 290 units on order will be built and delivered if the court agrees to the reorganization plan.

• Updates on apparatus orders will go to customers from their dealers. Each customer will get a new delivery order date that the company will be able to meet.

• As of Aug. 1, 2008, all new orders placed for apparatus will be completed in 200 days or less, assuming the reorganization plan is approved within 60 to 90 days of filing.

• Due to lack of parts, at best two fire trucks a day were being completed when the bankruptcy filing occurred.

• In some cases, components had been pulled off one truck on the production line to complete another that was closer to being delivered.

Suppliers:

• Just after the bankruptcy filing, 22 of ALF’s major suppliers were assured in a conference call that a workable, court-approved plan would be drafted.

• A supply plan needs to be resolved quickly if manufacturing is to resume.

Suppliers had been working on a cash-on-delivery program, plus a payment for a percentage of outstanding bills.

Plant Operations:

• At the time of the bankruptcy filing, ALF conducted operations at 10 owned or leased facilities. The objective is to reduce that to three locations and eliminate costly leases.

• The main production plant  in Summerville, along with the aerial manufacturing plant in Ephrata, Pa., and the pumper fabrication facility in Hamburg, N.Y., near Buffalo, would be retained.

• ALF plans to close its ambulance making plant in Sanford, Fla., and discontinue its ambulance business.

• The plants in Jedburg, S.C., and Lebanon, Pa., would be consolidated into nearby facilities, while service centers and company-owned dealerships in Florida, South Carolina, California and Oregon would be reorganized with leases terminated or renegotiated.

Condor Truck Chassis:

• Orders for 700-plus Condor chassis are backed up due to a lack of parts. ALF produces the Condor chassis primarily for vocational trucks such cement mixers, dump trucks and trash haulers.

• The plant is geared to produce up to 40 Condors a day, but only three or four a day were being completed.

• The Condor production line will be tied up until there is a court-approved reorganization plan. ALF recently introduced a fire apparatus pumper built on the Condor chassis, but that will be on hold too.