Are Beneteau in trouble?

[Tranona]

Don't have the details of the buyout to hand, but seem to remember that one of the major investors wrote its bonds down to 20 cents. Hardly a ringing vote of confidence. I guess investors are less worried about interest payments and working hard on an exit strategy. However given the markets they may have to stick it out.

After all they are in a high risk business where the returns they expect assume some of their investments go pear shaped. Us oldies remember the Junk Bond scandals of the 70s and 80s. Same thing under another name. Venture Capital has a much better ring to it than Junk Bonds!

 

[maxi77]

How affordable debt servicing depends on several things, and even if the interest rate being charged is low it is fixed thether they sell 1 boat or 1000. They cannot reduce it by laying of staff, closing factories or buying in less materials. The need to make a fixed ammount of margin to pay it. If the volume/ sales price product falls to the point where they cant pay the interest that is it, you cant borrow more, and in the current market who will want equity for their money. Cashing in the company will probably be the best deal for the creditors.

This is not pointed at any specific company just at the problem of high gearing in a recession

 

[StugeronSteve]

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Beny’s 1 year of finance available sounds and is impressive BUT no director worth his salt will let funds dwindle away if there is no end in sight to a downturn or a depression, in fact failure to use those funds to enhance the future of the business or its shareholders wealth will incur their wrath. The French Government will (probably) help them out if they change production to something other than leisure craft. (Their roots are in fishing boats – no exactly a growth industry either)

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Ben do have quite a diverse product range, including, IIRC, prefabricated homes, GRP wet rooms, modular bathroom/toilet facilities and joinery. Not exactly recession proof though. On the basis of my visit to the factory, Beneteau appeared to be a very competently thought out and run business, utilising a good balance of human and mechanized production. The controlling family seemed to be very much hands on. Their prudent (ugh, Gordie has really conditioned me to hate that word) cash reserves don't really come as a suprise. I just hope that they are held within a solvent bank!

 

[dom]

I guess the difficulty with any exit plan as Marsupial hinted at is that we are getting close to the point that people are beginning to expect bigger and bigger discounts. This asset deflation will soon hit service sector incomes which have typically included most of the high earners.

Not much of an environment to try and sell a business. Private equity paper is currently trading around 50 cents on the dollar!

 

[maxi77]

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Not much of an environment to try and sell a business. Private equity paper is currently trading around 50 cents on the dollar!

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Wow as much as that, I would have expected it to be lower considering the overall state of the market, with many comapany shares trading at much less than 50% of last years price.