Fairline - any news?

[jrudge]

Henry, when I visit the factory I'll ask what they make of the T53 criticism.

Does not really matter what they think. It's what the customers think. are they buying it? That is the only view that matters in any business. If the reply is well we have just sold 10 then they did a good job. Sold none s bad job. Simples

So how many have they sold ?

L

 

[petem]

Does not really matter what they think. It's what the customers think. are they buying it? That is the only view that matters in any business. If the reply is well we have just sold 10 then they did a good job. Sold none s bad job. Simples

So how many have they sold ?

L

A good number of dealers have taken deposited orders. I can't give you the number as the information was in confidence but it would suggest to me that the number of orders could well have exceeded 10. The question is whether those orders have or will make it to the production line.

 

[petem]

Do not disagree Mike as I have no inside knowledge to make any comment nor judgement.

It was the sentence 'Someone has to take the lead in not attending.', as if they had any choice!!!!!!

Hobson's choice perhaps, attend the show or pay wages.

My take on the whole situation is that new owner is attempting to run the business on a very tight budget. If he had pots of cash he'd pay the creditors in full. If he had no funds he wouldn't be able to pay the wages bill. But he's got a hell of a challenge to rebuild dealer, customer and supplier confidence, pay the ongoing operating costs and fund new model development.

Whether he's a genius, deluded or in it to close it down I don't know.

 

[petem]

Pete

I agree with Doug, your brand loyalty is clear but I feel it may be a little blinkered.

Could you please answer me one question, if you were in the market for a new 50ft+ boat would you be happy to pay Fairline a deposit?

No I wouldn't be willing to pay a deposit at the current time without some guarantee of getting my boat.

 

[DougH]

A good number of dealers have taken deposited orders. I can't give you the number as the information was in confidence but it would suggest to me that the number of orders could well have exceeded 10. The question is whether those orders have or will make it to the production line.

Pete, that is scary news for the poor soles who have paid the deposits.

If the deposits have been paid to Fairline and they are considering a CVA then that money has probably already been spent on survival of the Company.

If the deposits are in dealers accounts then there is hope, albeit very slim, that the dealer will be able to reimburse them.

Unfortunatly the chances of all the dealers surviving is unlikely, as under similar circumstances some always fold along with some of the suppliers. There are always casualties.

This is presumably why Boats UK (Essex Boatyards) broke away so early.

Some of the dealers are not as financially stable as Boats UK and will probably end up as creditors within the CVA (If it is formed) at best.

If my deposit was being held by Boats UK I would not be to concerned as I would presume that they are to shrewd to have passed money to a Company that they presumedly had doubts over.

In any event they would probably have already steered the deposit payer to having a Princess and given them a great deal in compensation.

NOT ALL FAIRLINE DEALERS HAVE ACCESS TO THIS RESOURCE.

Before I am accused by anyone as to being partisan to Boats UK I must point out that I have never bought a boat from them and doubt I ever will, but credit is due where deserved.

 

[DougH]

Hobson's choice perhaps, attend the show or pay wages.

My take on the whole situation is that new owner is attempting to run the business on a very tight budget. If he had pots of cash he'd pay the creditors in full. If he had no funds he wouldn't be able to pay the wages bill. But he's got a hell of a challenge to rebuild dealer, customer and supplier confidence, pay the ongoing operating costs and fund new model development.

Whether he's a genius, deluded or in it to close it down I don't know.

At last Pete you are talking common sense and like you we all hope the new owner has a magic wand and can create commercial miracles.

Doubt there was a choice whether to attend the show or pay wages as it is highly likely they had not paid the show organisers for the stand space!

 

[petem]

Pete, that is scary news for the poor soles who have paid the deposits.

If the deposits have been paid to Fairline and they are considering a CVA then that money has probably already been spent on survival of the Company.

If the deposits are in dealers accounts then there is hope, albeit very slim, that the dealer will be able to reimburse them.

Unfortunatly the chances of all the dealers surviving is unlikely, as under similar circumstances some always fold along with some of the suppliers. There are always casualties.

This is presumably why Boats UK (Essex Boatyards) broke away so early.

Some of the dealers are not as financially stable as Boats UK and will probably end up as creditors within the CVA (If it is formed) at best.

If my deposit was being held by Boats UK I would not be to concerned as I would presume that they are to shrewd to have passed money to a Company that they presumedly had doubts over.

In any event they would probably have already steered the deposit payer to having a Princess and given them a great deal in compensation.

NOT ALL FAIRLINE DEALERS HAVE ACCESS TO THIS RESOURCE.

Before I am accused by anyone as to being partisan to Boats UK I must point out that I have never bought a boat from them and doubt I ever will, but credit is due where deserved.

I don't think it is safe to assume that the deposits have been passed to FL. The brokers will mostly survive as they don't exclusively sell FL's.

 

[MedDreamer]

Hopefully any deposits paid are safe but I would be very concerned if it was me.

I sincerely hope that they are not burning up customer deposit cash to keep paying wages, as it's not clear what other source of funds they have.

How on earth they expect potential buyers, which they need to survive, to part with money up front beats me.

I really wish the loyal staff well and hope they get through it but the signs don't look good.

 

[Whitelighter]

Hopefully any deposits paid are safe but I would be very concerned if it was me.

I sincerely hope that they are not burning up customer deposit cash to keep paying wages, as it's not clear what other source of funds they have.

How on earth they expect potential buyers, which they need to survive, to part with money up front beats me.

I really wish the loyal staff well and hope they get through it but the signs don't look good.

Forgive my naivety, but I always thought stage payments were paid to fund the building of the boat. Since the staff is a big cost of building each boat, surely using stage payments (of which a deposit us part) to pay for wages, materials etc is perfectly routine.

Or do princess et all stick deposits and stage payments in s bank account? Because I don't think they do

 

[diligaf]

Thing is though that for the order to be considered concrete enough to begin the build the dealer would HAVE to send the deposit over to FL - normally they wouldn't begin the build without a deposit never mind with their current financial position. If I were a dealer I would be VERY twitchy about sending them my customer's money as if FL closed it would be the dealer carrying the can. On a boat that size the deposit would be I guess 20% so over £200k and not many FL dealers could or would want to bear the risk.

If the boats have been ordered then the deposit would have been paid. If they have then the money is surely at risk.

If the deposits haven't been paid then the boats can't be considered as firm orders and therefore the 'orders' don't actually exist.

Either way its a big worry for either the buyer or FL.

 

[MedDreamer]

Forgive my naivety, but I always thought stage payments were paid to fund the building of the boat. Since the staff is a big cost of building each boat, surely using stage payments (of which a deposit us part) to pay for wages, materials etc is perfectly routine.

Or do princess et all stick deposits and stage payments in s bank account? Because I don't think they do

Jez

A businesses working capital comes from many sources - preferably it's own funds - but bank borrowings, trade creditors and deposits also make up part of the picture. The concern I am referring to is if the only source of available funds is from deposits then what happens when that has been spent?

For all I know the new owners may have substational funds to invest, but it doesn't sound like it. Suppliers are allegedly not getting paid so I would imagine that they will be reluctant to extend further credit. Perhaps there is bank funding available but again it's not clear what security the owner can provide to support lending so that just leaves deposits/stage payments as a source of funds

Of course the scenario above is pure conjecture based earlier posts but nevertheless if I had paid the company a substantial amount of cash "up front" I would be very nervous

 

[Deleted User YDKXO]

Unfortunatly the chances of all the dealers surviving is unlikely, as under similar circumstances some always fold along with some of the suppliers. There are always casualties.

My thoughts exactly. If you were a FL dealer, why would you risk the solvency of your own company by taking any new build orders for FL boats given that FL is in CVA? As a dealer you would have a contract to deliver a boat to the buyer and a contract to build a boat with FL. You will have taken stage payments from the buyer and presumably you will have passed all or at least a high proportion of those payments on to FL. If FL fail to build that boat, then the buyer is only going to come after you, the dealer, with whom he has a contract. He's not going to be at all interested in the fact that FL have failed to honour their contract with you. Now maybe those stage payments could be backed up with guarantees but how can FL be in a position to provide any form of guarantee in their position?

So if current FL dealers are still taking new build orders for FL boats, I don't understand their thinking because there's a huge risk that the boats aren't delivered and the buyers end up going after the dealers for their money. And all for a tiny % margin on a potential new boat sale

 

[curiouskb]

My thoughts exactly. If you were a FL dealer, why would you risk the solvency of your own company by taking any new build orders for FL boats given that FL is in CVA? As a dealer you would have a contract to deliver a boat to the buyer and a contract to build a boat with FL. You will have taken stage payments from the buyer and presumably you will have passed all or at least a high proportion of those payments on to FL. If FL fail to build that boat, then the buyer is only going to come after you, the dealer, with whom he has a contract. He's not going to be at all interested in the fact that FL have failed to honour their contract with you. Now maybe those stage payments could be backed up with guarantees but how can FL be in a position to provide any form of guarantee in their position?

So if current FL dealers are still taking new build orders for FL boats, I don't understand their thinking because there's a huge risk that the boats aren't delivered and the buyers end up going after the dealers for their money. And all for a tiny % margin on a potential new boat sale

Totally agree. I live in the Far East and it is said the local FL agent is not taking any new boat order.

 

[jrudge]

So a few thoughts from a recent Fairline Customer ....

I would be astonished if they have sold anything like 10 T53s. PeteM I don't know your connection to Fairline but the optimism you show is unrealistic. The boat was launched at the show, is too expensive and has some obvious flaws. Will someone by it - I am sure - but 10 orders to date. I simply don't believe it.

Fairline have now re-commenced work under warranty ( this was all stopped for a while) which I take as a positive sign. How positive I am not really sure, but it is certainly better than the alternative! The new CEO does not reply to emails or phone calls so whilst " A director" maybe bullish the top man is not so communicative. I find this odd as happy customers ( I am one bar the warranty work which they are now doing so I am happy again) go on to by more boats.

Re deposits. I know that some boats are being built with funds in Escrow. The money is only released in return for the boat. The snag here of course is that the manufacturer needs to borrow against the Escrow agreement and when you are entering a CVA people will not be queuing up to lend. Further you need to get the bits to make the boat. The suppliers will be on cash only - and there is a big risk they get £x of cash and just say thanks we will apply this against your account and not supply the goods.

Some boats sold very well ( T48 and S65 from what I am told). However for a buyer to take the risk and hassle of Escrow and so on they are simply going to look at other options ( we would have).

How do you dig your way out of this hole. I would guess by communicating honestly ( they don't - twitter etc. is still churning out living the dream stuff and the website mentions nothing). This need not be a negative line - "we are now a bespoke builder" or whatever with terms of trade etc. that give reassurance to the dealer and customer alike. From a dealer point of view they really need the contract to be with Fairline and for them to be paid a commission - or as above they will go down as well.

On a positive they are still there, they are doing warranty work - they just need to communicate the grand plan to stop speculation on the likes of here.

We will see. I wish them well. I have been a happy FL customer for some while. It was obvious it was going to be sold - just the strategy of someone without money buying it (for a modest deferred consideration ...) was the opposite of what I expected. The snag of course is that if luxury brand X comes along its a hard sell. Just look at Princess and Sunseeker - you too could be like them, errrrr they are really good at what they do and losing heaps of cash .... ohh...

 

[Nigelpickin]

That's very interesting, in regards the to the warranty work. I was going to ask if anyone was being affected but didn't want to stir up anything. Good news and fair play if owners are being looked after.

But of course you're right J, why on earth are FL not offering this info on the forum? and elsewhere? That kind of thing is standard PR and would go a long way toward putting some minds at rest...strange if they are serious about a long term plan.

 

[petem]

I agree with all the above. There are a whole load of questions that are unanswered. Note that I would describe myself as hopeful, I won't be optimistic until I see a credible plan and evidence of how they will recover.

 

[MapisM]

That's very interesting, in regards the to the warranty work.

+1.
I was suprised (albeit pleased!) to read what jrudge reported, because I've seen yards reluctant to take care of their warranty duties well before reaching the level of difficulties that FL seems to be facing at the moment.
Fair play to them!

 

[DougH]

Fairline have now re-commenced work under warranty ( this was all stopped for a while) which I take as a positive sign. How positive I am not really sure, but it is certainly better than the alternative! The new CEO does not reply to emails or phone calls so whilst " A director" maybe bullish the top man is not so communicative. I find this odd as happy customers ( I am one bar the warranty work which they are now doing so I am happy again) go on to by more boats..

Are you sure it's Fairline that has re-commenced work under warranty.

Boats UK have been carrying out warranty work on new boats in Cala d'Or but one owner said that this was at Boats UK volition and that Fairline were not involved.

 

[MedMilo]

Are you sure it's Fairline that has re-commenced work under warranty.

Boats UK have been carrying out warranty work on new boats in Cala d'Or but one owner said that this was at Boats UK volition and that Fairline were not involved.

Hi Doug - The Fairline warranties are a tad complicated in that the first year is typically Fairline and the second year BUK. But even in the first year the warranty work seems to be split between Fairline and BUK with BUK doing the smaller stuff and invoicing Fairline (or, at the moment, contra-ing it off against boat(s) in build!). But in answer to your question, FL are definitely now flying people over to Mallorca to do warranty work - three of them were in Cala D'or last week. That said, BUK continue to provide total no quibbles support for all things boating so I for one am pleased that my second year of warranty is with them!

 

[DougH]

Yep they are a great bunch of guys and deserve their success.

As an aside Shirley was their grandfathers secretary who was the chairman of Ford Europe.

He was a very large personality who scared most people on site. Shirley being a dilly dolly in her twenties could wind him round her little finger. She absolutely loved working for the man.

The brothers father used to work on the oil rigs (not sure what his role was) and he used to come into his fathers office with his dog when he was at home.

I was made to feel very insecure when she would come home from work and go on and on about how 'Abie Babys' handsome son had called into the office that day.