* Cavco, Third Avenue Value to buy Palm Harbor Homes
* Deal subject to higher bids and court approval
WILMINGTON, Del. Nov 29 Cavco Industries Inc
(CVCO.O), a builder of manufactured homes, said on Monday it
would lead a deal to acquire the business of ailing rival Palm
Harbor Homes Inc PHHM.O.
As part of the agreement, Dallas-based Palm Harbor filed
for bankruptcy in Delaware. Cavco and Third Avenue Value Fund
will provide up to $55 million of debtor-in-possession
financing to fund Palm Harbor's Chapter 11 proceedings.
Cavco and Third Avenue formed a joint venture, which will
be part of Cavco unit Fleetwood Homes Inc, that will pay $57.5
million for the assets and some liabilities of Palm Harbor.
The Cavco and Third Avenue proposed purchase is subject to
court approval and higher bids.
Palm Harbor builds, sells, finances and insures
Phoenix-based Cavco has been building manufactured model
homes and cabins for more than 40 years.
Palm Harbor's insurance and finance subsidiaries are not
included in the bankruptcy, but the shares of these companies
are included in the assets to be acquired by Fleetwood.
The company listed assets of $321 million and debts of $280
million. About a third of the company's equity is owned by
Capital Southwest Corp (CSWC.O).
Sally Posey, wife of the company's deceased founder Lee
Posey, and the Sally Posey Trust own roughly 20 percent.
Nasdaq-traded shares of Cavco ended Monday up 1 percent at
34.53 while those of Palm Harbor rose 12.5 cents to 27 cents.
The case is In re: Palm Harbor Homes Inc, U.S. Bankruptcy
Court, District of Delaware, No. 10-13850.
(Reporting by Tom Hals; additional reporting by Santosh Nadgir
in Bangalore; Editing by Tim Dobbyn)