Fairline - any news?

[Cheery]

We are in the business of building the best hand-made, custom built British boats in the world and sincerely believe in our plans to ensure the long-term success of Fairline.

Does that mean they could be built in the Far East or is it just poor grammar?

 

[Deleted User YDKXO]

Sad to see further redundancies but a resize of the business is the only way that they will survive. Its good to see that they don't appear to be throwing in the towel and I hope they pull it off.

Er thats not how I read it, Pete. What they are going to do is pull the plug on the existing company and set up a new phoenix company to buy the assets from the receiver and start trading again under the Fairline brand name, whats called a prepack administration. The problem with that of course is that most of their suppliers will get burnt and will refuse to supply the new phoenix company and few if any of the existing staff will be taken on. My guess is that the only purpose of the phoenix company is to hold the few remaining assets of the company like hull moulds and of course the copyright to the brand name and sell it on

So far so predictable. WB are only doing what Better didn't have the balls to do themselves for PR reasons

All IMHO of course and I may be completely wrong in that a shiny new vibrant Fairline boatbuilding company emerges to take on the world

 

[benjenbav]

Interesting challenge: on the one had to invite punters to lend the company £1mio each to build a boat whilst asking existing creditors to take 50p (or whatever) in the £

 

[crazy4557]

As a creditor to Fairline, we have today received a letter stating that they are in talks with the administrators about creating a CVA where we get potentially paid out a % of the debt over an agreed timescale. No doubt we will here something more concrete soon but that is the current state of affairs.

 

[admillington]

As a creditor to Fairline, we have today received a letter stating that they are in talks with the administrators about creating a CVA where we get potentially paid out a % of the debt over an agreed timescale. No doubt we will here something more concrete soon but that is the current state of affairs.

I hope your exposure is not too large or damaging.

Clearly what WB do not understand is that even if they do come out of this as a new company or they get agreement for a CVA, it is going to be very difficult to sell their product. How easy is it going to be for a Princess Salesman to compete against Fairline!

Sealine have managed to re-appear only because they are owned by Hanse and they have come to the market slowly.

Best thing they can do is find a large boat building company to buy the name and start again.

 

[Tranona]

There is no longer an entry into a new boat for the "average" Joe public. 13 years ago we bought a new boat and still have it. Today the price for the equivalent is almost 3 x more, my disposable income hasn't risen anywhere near as a percentage of the cost increase to be able to consider a new boat.

While this may be true of the boats that are the subject of this discussion where the builders seem to be constantly pushing up size, power and specs without the volume to reduce unit costs, it is not true of the smaller size volume sail boat builders.

I have just bought a new Bavaria 33 which replaced a 2001 37 that I also bought new. Despite the difference in length, the new boat is essentially the same as the old in terms of usable size, and displacement. It costs in money terms only 20% more and in real terms about 25% less. Despite that the level of quality in both design and construction is superior.

The main reason for this is efficient building methods. As suggested by some here the key is to use modular construction. Standardised locker sizes, trim mouldings, doors. cookers, sinks, lighting and so on. cleverly designed so that itis possible to use the same building blocks to produce different layouts or fill bigger hulls by using more units. Add to this mechanisation to a level British builders can only dream of. My boat was literally assembled in a week from start to finish and delivered to the Hamble a week later with everything working perfectly.

Instructive to go on the Bavaria Yachtbau site and look at the youtube videos of the factory. Covers the building of their powerboats as well and from what I can see they are using the same principles to build the sort of boats that were the mainstay of the British builders in the past. Don't know enough about their powerboats to judge whether they are any good or good value.

 

[Nick_H]

Er thats not how I read it, Pete. What they are going to do is pull the plug on the existing company and set up a new phoenix company to buy the assets from the receiver and start trading again under the Fairline brand name, whats called a prepack administration. The problem with that of course is that most of their suppliers will get burnt and will refuse to supply the new phoenix company and few if any of the existing staff will be taken on. My guess is that the only purpose of the phoenix company is to hold the few remaining assets of the company like hull moulds and of course the copyright to the brand name and sell it on

So far so predictable. WB are only doing what Better didn't have the balls to do themselves for PR reasons

All IMHO of course and I may be completely wrong in that a shiny new vibrant Fairline boatbuilding company emerges to take on the world

I don't think it's a pre-pack Mike, it's a proposal to creditors to take a haircut in order to avoid administration/insolvency. WB must try to convince the creditors that they will receive a higher proportion of their debts under the CVA than they would following admin/liquidation. Whether they will or not depends on whether Fairline can turn the business round if it's less weighed down by debt.

 

[coliholic]

Sad to see the once great FL in such trouble but if anyone wants to get their hands of their moulds and build their own, I know where they're stored

 

[Nick_H]

As a creditor to Fairline, we have today received a letter stating that they are in talks with the administrators about creating a CVA where we get potentially paid out a % of the debt over an agreed timescale. No doubt we will here something more concrete soon but that is the current state of affairs.

Sorry to hear that Andy, I hope the amount isn't too painful.

 

[rubberduck]

I don't know of many CVA's that worked, I'm afraid to say.
Suggest Mike has it about right, who is going to pay up front for an expensive product from a company in a form of Bankruptcy.

 

[ChrisJefferies]

Bit more from Fairline:

The consultation process is very regrettable but unfortunately the excess capacity cannot be expected to be filled through product demand in the immediate future.
Initially we have thought it would result in approximately 220 redundancies. However this has not been finalised and we expect it to be significantly less. The process is likely to complete in early December.
The Squadron 53GT is under construction and we are planning to launch the boat in early 2016. An announcement on the London Boat Show will be made shortly.

 

[wakeup]

Re #130

CVAs don't tend to work for the creditor's benefit.

CVA route is usually a way for the existing management and shareholder to maintain control at the expense of the creditors when really the assets should be handed to the creditors via a liquidator. The veiled threat is always that the creditors will get less if they don't agree but I am always sceptical of such schemes.

The only benefit for the creditors agreeing to a CVA today is that they will have certainty of the situation today versus uncertainty for who knows how long. CVAs are usually the first choice of rascals in my experience.

EDIT, I mean CVAs leading to a pre-pack of course, edit following Deleted User's post #133

 

[Deleted User YDKXO]

I don't think it's a pre-pack Mike, it's a proposal to creditors to take a haircut in order to avoid administration/insolvency. WB must try to convince the creditors that they will receive a higher proportion of their debts under the CVA than they would following admin/liquidation. Whether they will or not depends on whether Fairline can turn the business round if it's less weighed down by debt.

Nick I'm no expert on these things only in that my company has been burnt a few times over the years, fortunately not fatally, by customers going belly up. As I understand, often CVAs turn into prepacks because creditors won't agree to a haircut and don't like the fact that there's no certainty of being paid. Some creditors also don't like the fact that a CVA implies a strong element of allowing the barstewards to get away with it.

You have to ask yourself this. Why did WB buy Fairline given the fact that Fairline's financial situation must have been crystal clear to them? Did they really expect to run such a business on a CVA basis whilst expecting customers to place substantial deposits and stage payments for new boats with them? Who in their right mind would hand over hundreds of thousands of pounds to a Fairline dealer in these circumstances? And as a dealer would you put your own company in such a perilous position between a customer with whom you have a contract and a manufacturer operating under CVA? All of this would have been obvious to WB when they bought Fairline so IMHO their game was never to attempt to run the company as a CVA with a view to resurrecting it as a going concern.

As I say I hope I'm wrong and that WB are doing this for the best of reasons

 

[Hugin]

Sealine have managed to re-appear only because they are owned by Hanse and they have come to the market slowly.

Best thing they can do is find a large boat building company to buy the name and start again.

Sealine under Hanse has also been priced completely different. If you look at how little they want for a 7 tons C330 then even Bavaria and the french seem embarrassingly expensive.

Agree that best plausible outcome is if a larger builder buys the name and maybe some of the moulds. WB just don't have access to the necessary money - even if there was a viable business plan - so the whole thing is kind of destined to go down the route it does

 

[pks1702]

A CVA from memory is subject to 75% of the creditors (by value) agreeing to the CVA proposals. I guess the answer as to whether a CVA will succeed is to look at who are the largest creditors.

 

[petem]

Why did WB buy Fairline given the fact that Fairline's financial situation must have been crystal clear to them? Did they really expect to run such a business on a CVA basis whilst expecting customers to place substantial deposits and stage payments for new boats with them? Who in their right mind would hand over hundreds of thousands of pounds to a Fairline dealer in these circumstances?

What's odd is that the WB press releases are still bullish, even talking about fewer redundancies than anticipated. As to who would pay a deposit in the current climate, well not every buyer reads these forums and there may be some people around who believe that 'client accounts' still offer protection (vis a vis the recent MB&Y article). What none of us know is whether there is still a viable business there. Is it right for us to speculate without seeing the accounts for the last year (up to that point I believe the business was making an operating profit)?

 

[Anders_P42]

One of my customers went in to CVA, we were given the choice (with other creditors) of pulling the plug and forcing liquidation/adminstration with no chance of recouping much cash, or allowing the full debt to be paid off over a 2-3 year period depending on the success/profits of the on-going company.

We got a quarterly cheque from the CVA managing agent with a report on the quarters profits and breakdown of all creditors and the percentage split of profits to creditors. We got cheques for about two years before the company finally went bust.

in the end circa 70% debt was recovered but we continued to make profit selling goods to them (paid up front of course), so I calculated about 90% recovery in the end taking in to account profit made on new kit sold in that period. This was much better result than choosing to wind them up at the time.

Of course Fariline's situation may be very different to my experience.

Anders

 

[lionelz]

Appears to me that this has been the plan all along. The new company is either not very good or they are trying to make as much money as possible by shafting the employees, creditors and customers waiting for boats. Bottom line in business is you have to sell for more than it costs to make and it does not look, like any of the so called big companies are doing that. For God sake how can making a 10 million loss be good for anyone. Lots of egos being massaged whilst forgetting about the bottom line which is to make a profit. Fairly sure the MDs don't care as they still get a great wage and if it does go belly up then I'm sure the old boys network will kick in and they will get another well paid job.

 

[MapisM]

A CVA from memory is subject to 75% of the creditors (by value) agreeing to the CVA proposals. I guess the answer as to whether a CVA will succeed is to look at who are the largest creditors.

I think it's reasonable to assume that they are banks - which more than likely are also secured, to some extent.
Not sure about UK rules, but I've seen some CVA-equivalent cases, finalized with the banks approval, where close to nothing was left for unprivileged creditors.
All the very best to crazy4557 and any others in his position.

 

[jfm]

I think it's reasonable to assume that they are banks - which more than likely are also secured, to some extent.
Not sure about UK rules, but I've seen some CVA-equivalent cases, finalized with the banks approval, where close to nothing was left for unprivileged creditors.
All the very best to crazy4557 and any others in his position.

No, the filings show that Fairline the operating company hasn't had material bank debt for some years (nor are its assets secured pledged against parent company bank debt). Same applies with Princess and S'Seeker, btw.
The creditors of Fairline will likely be parts suppliers (biggest slice) and dealers (stage payments on boats). The rest is insignificant.
This assumes no odd transaction very recently to inject debt into the company, but it's hard to see how that could have been done and I doubt it was done
But don't forget a significant part of the company's obligations, that an insolvency process might eliminate, is rent on the Oundle factories and office building