Genmar Files for Bankruptcy

[Tonka Boater]

Another sign of the times.....Genmar, the parent company of Four Winns, Glastron, Ranger, Larson, Triumph, etc. has filed for bankruptcy. Being a private company I have doubts that they will survive.

http://www.startribune.com/sports/outdoors...

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[Dave S]

Ouch.............that's a biggie for sure. If they can't make it out of Chapter 11, it opens up a lot of opportunities for companies like Brunswick.

 

[Presentation]

Hey Dave,

As counter intuitive as it sounds, if Genmar goes under it would actually hurt Brunswick, not help it.

Brunswick does not only make boats. It also makes motors and drives and various other parts.

Genmar is a significant customer of Brunswick and Brunswick needs to survive this recession so it needs every sale and accounts receivable it can get with as little uncollectable receivables as possible.

I’m confident that from a financial point of view Brunswick would like to see Genmar, a competitor but also a customer, survive.

By the way, Crownline did not restart operations today as the company previously stated it would. Latest rumor is Rinker is looking at buying some select assets from Crownline but not buying Crownline. If this is true, its a liquidation, not a sale, and the end of the line for Crownline.

 

[fc3]

The boat building marketplace has a lot of brands. Fewer brands won't hurt Brunswick or anyone else, the surviving companies will simply sell more units than before.

 

[Presentation]

The boat building marketplace has a lot of brands. Fewer brands won't hurt Brunswick or anyone else, the surviving companies will simply sell more units than before.

I assume you understand that Brunswick is not in its strongest financial shape these days.

In the short term, Brunswick is not managing for profit; its short term goal is not profit, its short term goal is the management of cash flow.

A chapter 11 bankrupt Genmar is disruptive to Brunswick cash flow however a settlement would likely be reached for some discounted amount of Genmar accounts payable. However a liquidation bankruptcy of Genmar would mean unsecured creditors like parts suppliers, in this case, parts like engines and drives would likely not be paid.

I know its counter intuitive but in poor economic time’s cash is more important that profit for the business to survive.

 

[Mr Salt]

Add to Brunswick's problem the bankruptcy of GM. In Brunswick's 10-k they noted that GM, who supplies engine blocks to Mercury, was/is a business risk.

 

[Presentation]

Add to Brunswick's problem the bankruptcy of GM. In Brunswick's 10-k they noted that GM, who supplies engine blocks to Mercury, was/is a business risk.

I agree, it is a risk but if GM shuts down the division that makes the marine blocks Mercury still has tucked away the castings for the small block V8’s at their foundry.

The marine blocks are not modular like more modern designs. So they would be able to make a replacement for the 5.0, 5.7 and 6.2 pretty fast. The 4 and 6 cylinder sterndrives would be the issue. I wonder if Ford kept its castings for its marine big block 4 cylinder engines?

Keep in mind, Mercury Marine use to make V8 small blocks for GM up to the late 80’s and there have been no changes to the marine blocks since this time.

Cost per unit would go up but the ability and tooling exists and Mercury has a foundry that makes engine blocks now just half an hour away from me.

 

[Tonka Boater]

There is absolutely no doubt that Genmar will survive this. When things turn around, the company as a whole will be stronger than before. Brunswick will be fine as well.
Genmar will not be one of the casualties of this economic downturn.

Hope you're right but I doubt it. Some of the brands will survive but I doubt it'll come out of bankruptcy being the same company as it is today. Jacobs is fully committed to the boating industry but his M.O. was to buy crappy companies on the verge of bankruptcy and try to revive them. He didn't start his career in the boating industry, he bought into it. He'll keep his pet companies such as Four Winns, Carver and Windsor Craft but I wouldn't be surprised to see him sell some of the other brands.

We're all speculating of course and that's just my $.02.

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[RT 240SD]

GENMAR HOLDINGS, INC. FILES FOR CHAPTER 11 REORGANIZATION
IN THE U.S. BANKRUPTCY COURT
June 1, 2009. Minneapolis, Minnesota.
Genmar Holdings, Inc. (Genmar) announced today that it has filed for Chapter 11 reorganization protection in the U.S. Bankruptcy Court. Irwin L. Jacobs, Chairman and CEO of Genmar, stated, “I have been in the boating industry for over 30 years, and throughout those many years, I have personally experienced several of what I thought were the worst and most difficult business conditions our industry had ever gone through. However, those conditions do not even remotely resemble anything close to what has taken place in the retail and wholesale recreational boating industry over the past approximately 12 months. 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. 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. Unfortunately, I didn’t have the necessary time to complete any alternative financing acceptable to the banks. I am sure none of that is necessarily comforting to those individuals and/or companies who are being affected by Genmar’s filing for Chapter 11. Although it’s impossible for me to try to anticipate and/or answer in this press release all of the questions that I am sure are being asked by our Genmar dealers, vendors, and employees, it is important that every interested party affected by Genmar’s situation knows that we plan on successfully reorganizing and ultimately coming out of Chapter 11 as a stronger and better company with a bright and stable future ahead in the recreational boating industry. Surely it’s going to be very difficult for most people to understand and/or anticipate the stressful days, weeks, and months ahead. I know I can speak for everyone within Genmar, including myself, that we are fully committed not only to getting through the very difficult and stressful times that are ahead of us, but we’re committed to attempting to do everything humanly possible throughout the Chapter 11 proceedings in trying to help each Genmar dealer, vendor, and employee as best we can. I have every reason to believe that GE Finance will continue their Genmar dealer floor plan financing program subject to the Court’s approval, which will take place over the next few days.”
Jacobs further stated, “We believe that Genmar will have access to sufficient cash and has current assets available to support our ongoing businesses to service and build dealer boat orders and pay our vendor suppliers on future purchases promptly. Genmar has received a commitment for Debtor-in-Possession (DIP) financing proposal from the Wells Fargo and Fifth Third banks that will be submitted for approval to the bankruptcy court in the first bankruptcy hearing scheduled to take place within the next few days. 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. Genmar currently has over $100 million of current assets as
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well as substantial additional fixed assets and intangible assets that we believe will allow Genmar to come through and exit the Chapter 11 proceedings as a financially stable and strong company with a great future ahead of it in the boating industry. Further, Genmar will be submitting an overall reorganization plan for approval to the bankruptcy court as soon as possible, which will include the necessary details for all interested parties to better understand Genmar’s short and long-term plans and objectives in ultimately successfully exiting the Chapter 11 proceedings.
It’s our intention to do everything we can to protect and support our valuable Genmar brands which will ultimately allow Genmar to exit Chapter 11 and continue to be a leader in the recreational boating industry.”
About Genmar Holdings, Inc.
Genmar, with approximately 1,500 employees and five manufacturing centers, is the builder of 15 premier brands of recreational boats which include, Carver®, Champion®, FinCraft®, Four Winns®, Glastron®, Hydra-Sports®, Larson®, Marquis®, Ranger®, Scarab®, Seaswirl®, Stratos®, Triumph®, Wellcraft®, and Windsor Craft®. Genmar boats are sold worldwide through its approximately 1,100 dealers.