DougH
Well-Known Member
Where did you get that information from, or was it something you read somewhere?
Fairline - any news?
- Thread starter DougH
- Start date
Where did you get that information from, or was it something you read somewhere?
MapisM
Well-Known Member
I stand corrected, you obviously know the specific situation much better than myself.
I'm just surprised to hear that no assets are pledged, are there any in the operating company, to start with?
petem
Well-Known Member
Yes, here.
DougH
Well-Known Member
Then it must be true then.:ambivalence:
jfm
Well-Known Member
Cash in? Not in anyone's wildest dreams. The thing consistently burns cash in bigger lorry loads than Fairline. The only hope of any sale of P at any price, let alone a gain for L, is if there is a credible turnaround plan. That plan must involve one or both of big changes in the business and a belief that the market is coming back. Assuming the latter is not really believed by anyone, really big changes have to happen at Princess and it's surprising we haven't seen any hint of them yet but I guess they must be coming.
As a small aside and not one that is going to turn the burning super-tanker around, one change is that they are making clear they no longer have their previous "inflexibility" in the 20-24m segment where they used to insist they were right even when no-one else agreed: they are messaging that will now listen to customers and build you a semi custom boat if you'll sign the order form. Interestingly that's the very opposite of low cost platform building as is being espoused on this thread!
jfm
Well-Known Member
Well if you have no debt then you wont have pledged any assets. It would be not normal for assets to be pledged to trade creditors, dealer stage payments and rent
I'm going just from the published accounts
The assets, very broadly and afaik, are the plant/equipment/tooling, work in progress, intellectual property, and office fit out, etc. The offices/factories are rented (Mapism, I'll give you a bit of power to your elbow and inform you that the previous private equity owners 3i, around the 2006-7 time iirc, pre-Lehmans, did a sale and leaseback on the factories and iirc used the proceeds to redeem debt!).
jfm
Well-Known Member
Financial comments like that are generally in the present tense; a snapshot. The business was making an operating profit, until the point at which it stopped making an operating profit
jfm
Well-Known Member
The issue isn't as simple as end-customers paying/not paying deposits; it's dealers wishing not to pay deposits because their heads get fully shaved before the end-customer starts having his hair cut too
jfm
Well-Known Member
That's way off the mark. For many years the management of the UK's big 3 (+4, if you add in Sealine) were/are remunerated mainly on equity (some sweet, some not) not salary. Thus they suffer the opportunity cost of a potentially life-changing sum of money when these companies fail to hit plan, let alone fail into bankruptcy. Your "old boys network kicking in" is Daily Mail mentality and forgets that many people don't work just for salaries but take an exposure to equity
pan
Well-Known Member
Clearly JFM knows more about the financial structure at Fairline than myself, but the latest accounts I can see from 2013 show Liabilities of £64m, if no bank debt, then presumably corporate debt (don't imagine that suppliers could be that much into Faitline!), Assets showing around £19.6m, but without ongoing business presumably worth less than half in a liquidation.
If the £64m is corporate, I suppose they will take the biggest haircut, unless prefferencial. I can only image that WB have some card up their sleeve, or there is some back door deal with the sellers or they are just plain crazy!
Shame really but the writing was on the wall 2 or 3 years ago! Not pleasant situation for anyone involved, the problem should have been dealt with 3 years ago, there would have been less fallout.
If the £64m is corporate, I suppose they will take the biggest haircut, unless prefferencial. I can only image that WB have some card up their sleeve, or there is some back door deal with the sellers or they are just plain crazy!
Shame really but the writing was on the wall 2 or 3 years ago! Not pleasant situation for anyone involved, the problem should have been dealt with 3 years ago, there would have been less fallout.
MapisM
Well-Known Member
Agreed.
For some reason, when you said "nor are its assets secured pledged against parent company bank debt", I thought that the parent company could have granted an asset-secured loan to the operating co., which is not exactly the same as securing the parent co. bank debt, at least formally.
Anyway, if the operating co. indeed has some valuable assets (even without the buildings), and there are only "operating" unsecured creditors, then the situation for crazy4557 and others maybe is not as bad as I (and some others) were fearing. Best of luck to them, anyway.
As well as to employees etc. for a business recovery of course, though I'm afraid to be rather pessimistic on that side...
PS: Mmm... I didn't see the 64m liabilities number pan posted, before writing my post. Maybe there's a big chunk of parent co. loan in that, and possibly/likely secured...?
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lionelz
Well-Known Member
Why way of the mark?
I happen not to read the daily mail. And I will accept that not all MDs are like that however many arè. if these companies have been making losses for years and no sign of turning it around how is that good business? Going into CVA will no doubt result in small companies taking a financial hit. I feel for them. Many of these small business are privately owned and may now themselves suffer cash flow issues. I understand that sometimes these things happen but why did the new company buy them if they could not see a way of making money?
MapisM
Well-Known Member
I obviously don't know, but so far the only logical answer to this question that I can think of is the one Deleted User already gave in his post #122...
crazy4557
Well-Known Member
Luckily I'm down only a few grand and have learnt from past experience that 99 times out of 100 you won't, as a small creditor, get anything back in a situation like this.
I already wrote this off instantly I heard they were in trouble as we'll never get precedence over the administrators or the taxman.
Supplying Fairline has always been risky IMHO and I'm grateful for making a few quid from them over the years so I'm not concerned. Just a shame that such another great brand disappears.
I already wrote this off instantly I heard they were in trouble as we'll never get precedence over the administrators or the taxman.
Supplying Fairline has always been risky IMHO and I'm grateful for making a few quid from them over the years so I'm not concerned. Just a shame that such another great brand disappears.
DougH
Well-Known Member
100% agree John, that's what I thought I was saying to Petem.
Sorry Pete, my written English was lacking.
jfm
Well-Known Member
No. If you read the footnotes in the very same accounts you'll see that the £64m (or whatever the figure is) was owed to the parent company and was capitalised into shares shortly after the year end. Hence my comments above that there is no debt other than trade creditors, suppliers, a bit of rent maybe, and suchlike
petem
Well-Known Member
OK, so instead of saying "up to that point I believe the business was making an operating profit", I should have said "at that moment in time I believe the business was making an operating profit".
I know people must think my stance over this is bonkers but I do think that a lot of the comments here have been with very little knowledge of the facts. I am largely playing devils advocate and I have a habit of supporting an underdog. Incidentally I don't have the facts either but I know of at least one dealer who was pleased that FL were under new ownership and a conversation I had with a staff member last week suggested they were optimistic that the business could be saved. What I can't understand is, why WM are still maintaining the pretence of turning the business around? If they were going to asset strip the business the why appoint a receive who specializes in turning businesses around? Why were they exhibiting at FLIBS last week? Perhaps they're even more bonkers than me! Perhaps they genuinely reckon they can get it back on their feet (did they not do that to a much smaller scale with Fletcher)?
Of course there are questions to be answered, not least how are WM going to pay the wages and other bills and how are they reassure potential buyers that they will get their boats. And how they can rebuild their supply chain.
Ironically, I'm possibly one of the few people that might benefit from Fairline's demise - it might drive some more traffic to my website!
Pete
jfm
Well-Known Member
It's hard to see the point you're making but to try to respond:
1. Can we keep the goalposts still on MDs? You originally referred to the MD in this case, not MDs in general. but in the quote above you switch to MDs in general. I was very clear that I was referring to the MDs of the big 3/4 uk boatbuilders when I said they are/were heavily equity incentivised; not MDs in general. I'm happy to discuss either the 3-4 UK boatbuilders, or MDs in general, but not randomly shift from one to the other
2. No-one is saying making losses is good business, but I'm not sure what your point is.
3. You seem to be saying the new owner WB shouldn't have bought Fairline if it didn't see a way of making money and saving the creditors/employees etc. If you posted a big sign at Fairline's HQ saying "Only people who DO see a way of making profit and protecting all the suppliers and workers should apply to buy this company" then feel free but the queue of bidders would be short. And hang onto the sign, because you can use it again. It is conceivable that as Deleted User says WB contemplate a prepacked administration, and an administration (though not necess a prepacked one) asap might be the best answer for everyone other than the landlord of the factory space that I guess they no longer need. The harsh fact is that when a business fails it isn't just the shareholders who suffer.
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pan
Well-Known Member
Unfortunately the the accounts I was looking at did not overlap into the following year showing the capitalisation into shares of that corporate debt. I do realise it is dangerous to read too much into historical financials, however it did (appear) that there was a very large debt over-hang in the company in 2013. Seems the previous owners have already taken the haircut!
jfm
Well-Known Member
Pete:
1. You're not bonkers!
2. People talk of "asset stripping" and you're right to dismiss it. Look, there aren't many assets to strip in the financial engineering sense so that cannot plausibly have been WB's plan. What there is is a bunch of liabilities to shed. That's what administration does. I don't have data beyond published accounts but it is conceivable that the best thing for the brand/jobs/suppliers/dealers, etc is to go thru administration (not necess pp), shed the liabilities (eg rent ) and come out the other side leaner, operating profitable again, etc. I don't know at all if that is the right medicine, its just an apparent possibility that the doctors will wish to consider, unlike asset stripping which is Daily Mail nonsense.
3. FLIBS - if I told you I'd have to shoot you.
4. Get back on feet - looks to me like it is possible, after admin, but will need working capital (cash) to make some stock boats and repair the brand and customer confidence. Perhaps a few £m, which prima facie looks a lot for current owners but other owners can make that investment, hence my comment that a non pp admin might be a good result.
Going back to Princess, apropos other ramblings, the total failure of F would of course be a good thing. Fairline's normal run rate pre troubles was say 50-100 or whatever boats pa, and those customers still exist, so many will migrate to P. And with only the big 2 there will be a slight oligopoly/supply curve shift in margins/pricing