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Location: mille lacs, mn. | Genmar files for Chapter 11 bankruptcy
By Susan Feyder, star Tribune
Genmar Holdings Inc., the Minneapolis-based boat manufacturer founded and headed by Twin Cities businessman Irwin Jacobs, today filed for protection from its creditors under federal bankruptcy laws.
The company’s Chapter 11 petition filed in U.S. Bankruptcy Court in Minnesota listed assets of $237.5 million and liabilities of $216.5 million. Jacobs said the bankruptcy petition does not include more than $400 million in intangible assets, whose value were determined recently by Wells Fargo & Co., its lead banke r. Wells Fargo and Fifth Third bank are the only secured creditors, owed $75 million.
“Even up until the last few weeks this is something I never even dreamt was a remote possibility,” Jacobs said Monday. He said Genmar, like many other boat manufacturers, has suffered a rapid deterioration in sales due to the credit crisis and weak economy.
But in court filings, Genmar also said tighter requirements from its banks propelled it into bankruptcy. “Despite restructuring steps and infusion of significant equity, the bank reduced [credit] availability ,” the documents said. “The bank rejected all... proposals for making adequate capital available and continued to reduce the borrowing base.”
Jacobs is the largest shareholder in privately-held Genmar with about 40 percent of it stock. Other stockholders include employees and private investors, including the family of the late Carl Pohlad, a longtime business associate who was an original investor. Jacobs estimated the Pohlad family’s current holdings at about 15 percent.
Jacobs said Genmar is asking the bankruptcy court to approve debtor-in-possession financing from Wells Fargo and Fifth Third to supplement more than $100 million in cash and current assets so the company can continue to operate.
Genmar is one of several companies that operate independently of each other that are controlled by Jacobs. None of the others – Jacobs Trading, Jacobs Management, Watkins, FLW Outdoors or Jacobs Interactive – are included in the bankruptcy filing.
The bankruptcy filing also doesn’t include VEC Technology LLC, a Genmar subsidiary that has developed a high-tech process for manufacturing fiberglass boats. The bankruptcy is focused on Genmar’s core boat manufacturing business, the second largest in the world, with brands that include Ranger, Larson and Glastron.
Jacobs said Genmar’s revenues for the year ending June 30 should drop by more than half to about $460 million. The company will have a cash operating loss of $32 million to $35 million, compared with a cash operating profit of $9.7 million in 2008, he said.
The dismal results are in line with the rest of the boating industry which has suffered from higher gasoline prices and the economic recession. The National Marine Manufacturers Association has said sales of new boats fell 30 percent in 2008 and are expected to drop another 20 percent this year. Brunswick Corp., the world’s biggest boatmaker, last month reported a 52 percent drop in marine sales for its first quarter.
Genmar has responded to the downturn by slashing expenses, including closing plants in Florida and Oregon and cutting its workforce in the last 18 months from about 4,500 to about 1,500, Jacobs said. Its workforce in Little Falls, where it has been a major employer for decades, has dropped from about 800 to around 200, he said.
Genmar currently has more than 1,000 dealers, but that’s about 20 percent fewer than it had in early 2008. Jacobs said it’s likely that more will go out of business in the coming months and said about 30 percent of Genmar’s current dealers “are just hanging on.” As dealers have gone out of business, more repossessed boats have flooded the market, depressing profits, he said.
Jake Jacobson, general manager of Rapid Sport Marine in Ham Lake, said business the last few weeks has picked up enough that the dealership’s sales this year may equal those for 2008. “But we and everybody else came out of the gate slow this year,” he said. .
Jacobs said another significant problem for dealers has been the fewer firms that provide them short-term loans — so-called floor plan financing — that they can stock inventory and pay boat companies.
Jacobs said Genmar hasn’t missed any payments on the $100 million loan it got from Wells Fargo and Fifth Third Bank. But for several months the company has not met certain requirements in the loan covenant because of its eroded financial results, he said.
Jacobs said that early this year Wells Fargo had a consultant analyze Genmar and subsequently told him more capital had to be injected into the business to offset the losses. Jacobs said about $40 million has been added in the last few months through the sale of convertible preferred stock and short-term loans from himself and other private investors.
According to Jacobs, a few weeks ago Wells Fargo told him Genmar required another $25 million capital infusion by June 15. He began negotiations with an investment banking firm for a $150 million senior debt offering that would have paid off the $75 million balance of the banks’ loan and provide Genmar with another $75 million in capital. But the deal could not be completed in time to meet Wells Fargo’s deadline, he said. That also was the case for another Jacobs’ proposal to raise capital through the public sale of some stock in Genmar’s VEC Technology subsidiary.
He said the bankruptcy filing will allow Genmar to put together a business plan that will resolve the loan issue with Wells Fargo.
“We believe that once Genmar exits Chapter 11 we will be a better and stronger company than ever before,” he said.
Susan Feyder • 612-673-1723
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| Everyone is tightening up credit lines to cover their butts. It is understandable, but the credit issue is the one that the government recongnized as a prime obsticle in the way of a recovery. These problems are what bankruptcy was designed to solve. Hopefully, they can crawl out of this hole.
Take care,
Jim O
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Location: Rhinelander | Mr. Jacobs is an incredibly resourceful man, I'm betting he and Genmar will walk through this. | |
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Location: Waukesha Wisconsin | I am in no way an expert on Chapter 11 bankruptcy so I have more questions than comments.
Doesn't this mean that they will have a chance to get new credit? Looking at their assets vs loans, I'd say that the system is now working. Isn't it good that they are doing this now while they have more assets versus liabilities?
I hope them the best. Way too many boat companies have closed their doors during this mess. Both Brunswick and Genmar have closed doors on several small boat companies that they owned. Personally, I think that they should take a look at Wells Fargo.
I hope Genmar the best.
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| I'm wondering if those assets include any open memo bills, what does this mean for the guys riding on the coat tails of a boat with high hopes of selling at the end of the year and they cant get rid of them or finance them? Under bankrupcy do these assets get called in to be sold at auction? someone enlighten me please. | |
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| "The bankruptcy is focused on Genmar’s core boat manufacturing business, the second largest in the world, with brands that include Ranger, Larson and Glastron."
Just great. There goes my chance of making it on the Glastron Walleye Pro Staff.
Too bad...but I am betting this will help others in the market. No one's buying GM cars right now, and I'm betting people will shy away from Ranger for a while also.
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| Too bad...but I am betting this will help others in the market. No one's buying GM cars right now, and I'm betting people will shy away from Ranger for a while also.
I just spoke with someone from Ranger, and there is no need to think that this is anything more than a reorganization. It's been done before, so this isn't anything new.
Expect Genmar to come out of this as a stronger company.
It's business as usual down at Ranger, so there is no need to think that the pro staff is in trouble, the Ranger Cup program is in trouble, or that they will stop building boats, etc...
If anyone has any questions, I'm told that they can contact the "Boss Man" himself, Randy Hopper, at Ranger Boats 870-453-2222.
Think positive.
Juls
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| Juls:
I know you mean well but what do you really think a company man would say during a time like this? Things probably will be fine and a restructuring of the loans are in order like a lot of companies. But to come on hear and tell people things are fine because he says so just don't cut it.
In the famous words of the captain of the Titanic. It's only a small leak. | |
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Location: Fremont, Wisconsin | Juls - 6/2/2009 12:00 PM
Too bad...but I am betting this will help others in the market. No one's buying GM cars right now, and I'm betting people will shy away from Ranger for a while also.
Expect Genmar to come out of this as a stronger company.
Juls
There is a reason why a company comes out stronger, they no longer owe the bills that they once owed. OPPS? Now What else could possibly be the reason? Do explain. | |
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| "Genmar has responded to the downturn by slashing expenses, including closing plants in Florida and Oregon and cutting its workforce in the last 18 months from about 4,500 to about 1,500, Jacobs said"
Gee, when Brunswick announced layoffs, and plant closings, they were villified as the evil empire. It's not like they had to file for Chapter 11. At least not yet, anyway. Certainly, Chrysler and GM's filing is getting worse play than Genmar's. | |
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| And Carver boats one of the most luxurious lines here in Pulaski WI owned by Genmar..........."business as usual"...tell that to all those out of a job or soon to be. As for the question by curious....how do the assets given to their prostaff affect the bottom line, will they be called in only to be sold?..will they be able to honor them and/or force people into closing their deal? What if they don't or can't come up with the loan in these strict credit situations? would selling those boats save a few jobs?
Good Luck
Tyee | |
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| Ranger president issues statement 6/2/2009
http://www.bassfan.com/images/space.gif
Ranger Boats president Randy Hopper issued the following statement today regarding the Chapter 11 filing of parent company Genmar Holdings Inc. It's reprinted verbatim:
“Unprecedented global economic conditions, unequaled by any seen in my personal experience, continue to affect people in all industries and walks of life. For some time now, the credit-shortage epidemic at the consumer, dealer and manufacturer levels has been a huge issue. Despite good demand for Ranger products and the strength of the brand within Genmar’s portfolio and the market as a whole, the lack of available credit forced Genmar Holdings Inc. to file for Chapter 11 reorganization on Monday, June 1.
"Genmar’s reorganization is designed to allow Ranger to uphold its commitments to its outstanding dealer network and loyal customers while fulfilling the 41-year-old reputation of its product line and business operations. Going forward, Ranger has no plans to relinquish its leadership position.
Our commitment to quality construction, technological innovation and service at all levels will not wane. Likewise, we remain dedicated to our long-standing involvement with so many great tournament anglers, organizations and friends throughout the industry.
While the fishing segment has not been immune to adverse economic conditions, it has not been affected to the same degree as other boating categories. I believe that our segment has hit bottom and we are seeing recent evidence of improvement. Therefore, I expect normal business operations today and throughout the course of Genmar’s reorganization process.
While these types of circumstances are sometimes subject to rampant speculation and rumors, we encourage specific questions be emailed to [email protected] so we can provide a timely response. And remember that regardless of the market conditions, Ranger boats are still built, sold and serviced one at a time. It’s who we are and we remain firmly committed to that legendary legacy of leadership.”
__________________
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| Keep thinking positive! Yea...OK...only if they open a Ranger dealer in China and they may have a chance. What comes around goes around. Their bed-buddy Wal-Mart is not really a friend to the average American fisherman or any American for that matter. Ever hear of the movie "Trading Places?" The two old guys, that's Genmar and Ranger...figure out the rest and where the working American fits in.
Also consider the reason for a push to the green energy future economy is the USA won't be able to afford the gas. Simply put we gave all the means to overseas and now developing 3rd world communist countries, who will now have what we or our forefathers created.
Ah the mantra that a company must go "global." Why yes it's thier only chance. The self driven, self suataining economy of the USA is a thing of yesteryear. Go figure replace middle class auto jobs and all it's feeder employment, with Wal-Mart as the countries now largest employer, bouyed by pacifier easy credit for anything including boats and what do you have??? Bingo...a former american way of life ruined in under 10 years.
After the dust settles, I'd expect Ranger will still be building them "one at time," but a substantially reduced labor cost structure, somewhere else. Now the question is who will be able to buy them? They and their bedfellow sunk the red,white and blue ship and are likely going to move on over to elsewhere and pull the same stunt. It happens everyday and has been for too long, which explains all the messes we're in.
Welcome to Wal-Mart....do you want fries with that??? Get used to it... | |
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Location: Waukesha Wisconsin | | More details on Genmar's Chapter 11 filing |
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| June, 02 2009, 11:00 AM | | Announcing that his company had filed for bankruptcy, Genmar Holdings chairman and CEO Irwin Jacobs noted that previous economic downturns "do not even remotely resemble" anything close to what has taken place in the industry during the last year. Genmar, the country's second-largest boatbuilder, yesterday filed for Chapter 11 reorganization protection in U.S. bankruptcy court in Minnesota. The filings were made by Genmar Holdings and its subsidiaries. The debtors intend to file a motion for joint administration of their Chapter 11 cases. According to court documents, Genmar's board of directors decided May 29 that it was in the best interest of the company to file for Chapter 11. "If someone would have said to me as recently as even one month ago that Genmar would someday be filing for Chapter 11, I would have said it was not even a remote possibility," Jacobs said in a statement. "I've always looked for ways to enhance Genmar's balance sheet and felt that, even though business conditions were incredibly difficult, there were alternatives available," he added. "Unfortunately, I didn't have the necessary time to complete any of the alternative financing acceptable to the banks." Jacobs did not immediately return a call for comment this morning. In his statement, Jacobs said Genmar has access to sufficient cash and has current assets available to support its ongoing business and pay its vendor suppliers on future purchases. The company has received a commitment for a Debtor-in-Possession financing proposal from Wells Fargo and Fifth Third banks that will be submitted to the court for approval, Jacobs said. "Additionally, in the first court hearing, Genmar will be asking the bankruptcy court for approval to allow Genmar to pay appropriate dealer warranty and rebate claims," he added. Genmar has more than $100 million in current assets, as well as additional fixed assets and intangible assets that will allow the company to come through this, Jacobs said in his statement. According to court documents, Genmar Holdings has between 100 and 199 creditors. the company has listed assets of $237.5 million and liabilities of $216.5 million. Jacobs said these figures do not include more than $400 million in intngible assets. In the list of creditors holding the 20 largest unsecured claims, Minneapolis law firm Maslon, Edelman, Borman, Brand is listed as the largest, with a claim of $186,690. Other creditors include additional law firms, Deloitte Tax, PricewaterhouseCoopers, Statistical Surveys and Google. Jacobs said he plans to reorganize and come out of Chapter 11 "as a stronger and better company." The company will submit its overall reorganization plan for approval to the court as soon as possible. Genmar has until Sept. 29 to file its Chapter 11 plan with the court, documents show. Minneapolis-based Genmar Holdings has approximately 1,500 employees in five manufacturing centers. The company builds 15 boat brands, including the recently introduced FinCraft, which are sold worldwide through its approximately 1,100 dealers. |
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| I guess the way I (small business owner) see it, Chapter 11 is becoming an easy way out after you have a tough 6 to 12 months. Do we as Americans not save for a rainy day anymore ? I do my best to keep enough available cash saved so that if sales go dry for 24 to 36 months we can weather out the storm and don't have to go running to bankruptcy court.
JM
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| The problem with bankrupcy court is it is now being used as a financing tool.
You need look no further then Delta's purchase of Northwest. I'm betting the deal was done long ago. They just wanted to hammer the unions then go though bankrupcy with Northwest.
Perhaps Ranger will purchase Brunswick? | |
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Location: Waukesha Wisconsin | | Jacobs talks about Genmar bankruptcy |
| | June, 03 2009, 08:25 AM | | About three months ago, Genmar Holdings chairman and CEO Irwin Jacobs, along with two other individuals, put $40 million in cash into his business, a move he said would not have happened if he thought he would be filing for bankruptcy. "That should tell you where I thought our business was," Jacobs said yesterday in a phone interview with Soundings Trade Only. "I didn't think two or three weeks ago that this was possible, but the banks just became unreasonable, and we just couldn't deal with it." Genmar, the nation's second-largest boatbuilder, filed Monday for Chapter 11 reorganization in U.S. Bankruptcy Court in Minnesota. Citing unprecedented economic conditions, Jacobs said the $75 million the company owes the bank is nothing compared to the millions it owed at one point in 1989 and was able to fully pay back. "The banks pushed us to a level that we couldn't put up with," he said, adding that Genmar has assets of $237.5 million, compared to $216.5 million in liabilities, along with more than $400 million in intangible assets. Despite the filing, Jacobs said it's "business as usual" at Genmar's 15 boat brands, adding that he's taking steps to help his network of more than 1,000 dealers worldwide. "What we're trying to do is prevent [dealers from going out of business]. We're not trying to make people go out of business. We're trying to make them stay in business, and we'll be in a position to hopefully support them as good, if not better, than we were before this happened," he said. Genmar will ask the court to allow it to pay appropriate dealer warranty and rebate claims, he noted. Hoping to come out of Chapter 11 "sooner rather than later," Jacobs said this should serve as a wake-up call for the industry that change is needed. "This is the most unprecedented time in the history of our industry, bar none. I can't sit here and make predictions as to what the business is going to be like, but I will say this to you: There has to be a fundamental change in this industry" he said. "Dealers cannot take the risk that they're taking on, floorplanners cannot take the risk that they're taking on, and factories cannot just produce all the boats they can produce," Jacobs added. "There's something that has to fundamentally change." Jacobs said he could not predict what Genmar will look like after reorganization and whether he will go forward with all 15 boat lines. "We may need to do more consolidation of our manufacturing. We're not going to sit here and have factories running at 30 percent capacity," he said. "We'll come through this thing. We'll be a more stable and, I think, a stronger company when it's done." | | |
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Location: Waukesha Wisconsin | Analyst: More bankruptcies to follow
Boating Industry
Tuesday June 2, 2009
ST. LOUIS — In the wake of Genmar Holdings filing for Chapter 11 bankruptcy late Monday, dealer and manufacturer bankruptcies are expected to accelerate this summer, suggested Timothy Conder, CPA, managing director of Leisure Equity Research for Wachovia Capital Markets, in a statement Tuesday.
Conder said that while Genmar was “not in the most stellar financial condition,” the bankruptcy was not widely anticipated.
“Genmar's filing is likely to put additional pressure on the market in the near-term and underscores our belief that the current '09 selling season will be the most difficult for the industry,” he wrote. “We expect dealer and in turn manufacturer bankruptcies will accelerate during the summer as operators will not want to burn through any remaining financial resources (family wealth) on the hope of making it through the season. We believe '09 will not only be the peak for this industry downcycle, but also a multi-cycle peak in marine bankruptcies.”
Over the long term, Wachovia expects Genmar's bankruptcy to benefit Brunswick. It “should result in further gravitation of the best industry dealers to the Brunswick Corp. fold (best in class attracted to the best in class).”
However, because Wachovia anticipates that “near-term industry conditions will remain very challenging … as dealers and manufacturers struggle to clear the significant amount of aged inventory in the U.S. market against a difficult economic and significantly tighter consumer lending backdrop,” Conder said the company is reaffirming its Market Perform rating on Brunswick Corp. shares.
“ …we continue to see minimal material upside catalysts through '09,” he concluded. | |
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Location: Waukesha Wisconsin | | Bankruptcy court approves Genmar warranty request |
| | June, 05 2009, 10:07 AM | | A bankruptcy court judge approved a request by Genmar to allow its boat companies to honor appropriate past and ongoing warranty and rebate claims, chairman and CEO Irwin Jacobs said in a letter to dealers.
Also, the company says it has received assurances from GE Commercial Distribution Finance that it will continue to support the sale of Genmar boats while the company completes a court-approved agreement with GE. "I believe the court's actions ... provide both our Genmar dealers and their customers the evidence of Genmar's intention to move successfully through the Chapter 11 proceedings and exit as a stable and strong company," Jacobs said. Calling this week's Chapter 11 filing "the most humbling and difficult business decision of my entire career," Jacobs said he is committed to successfully reorganizing the company. Genmar has 15 brands of recreational boats, which it sells through its more than 1,000 dealers worldwide. |
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| I'll buy a new Ranger when it is going for 20 cents on the dollar...
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Location: Rhinelander | Which will not happen. | |
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Your being hopeful. With average world non-cognizant wages paid at 98 cents an hour, the furure of the middle class in the USA is in doubt, as is the sale of 40 thousand dollar fishing boats.
Like I said, 20 cents on the dollar and I will buy one.
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Location: Rhinelander | Uhh, I don't think so. | |
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| Guest - 6/8/2009 9:01 PM
You're being hopeful. With average world non cognisant wages paid at 98 cents an hour, the future of the middle class in the USA is in doubt, as is the sale of 40 thousand dollar fishing boats.
Like I said, 20 cents on the dollar and I will buy one.
I cleaned that up for you, but I still have no idea what you're saying. | |
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| where can I get that Ranger at $40,000 | |
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| It's very simple. Most of these fishing boats in the past have
been sold to people that couldn't actually afford them. Did / Does
anybody believe that 7-12 year loans on a fishing boat is really
a good idea? Lenders in the future will be much more cautious
about lending money. And yes, real wages are shrinking and
have been for some time. Many economists are predicting
Inflation / Hyper Inflation in the very near future. The party is over. | |
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| I'm sure Ranger and Ranger owners will come out of this bankruptcy in fine shape, just like OMC and OMC owners did several years ago. Nothing to worry about at all. | |
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Going to be many boat owners wondering who to blame for such huge asset depreciation.
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Location: Rhinelander | I'd bet against that at this point, we'll see. | |
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OUCH!!