Now we are all shareholders in Fairline.......

rafiki_

rafiki_

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Noting the news this morning onthe MBM site from page re our bank, RBS, I guess this helps to secure the medium term future of the business. I had been aware of cashflow issues, and some suppliers getting a bit frustrated with payment times, so this is good news for the business/staff/customers.
 
A bit of a reality check for the Fairline management and 3i after valuing the company at £100m in 2008. I wonder if the managers who bought the company with 3i in 2005 even got their original investment back? What with the problems at Sunseeker, this is not good news for the UK boat building industry IMHO. If an export orientated manufacturer like Fairline can't make good money when Sterling is on it's knees against all other major currencies, then it's certainly not going to be any easier when Sterling eventually strengthens, which it will inevitably do.
 
rafiki_ said:
Agreed Mike, and do the new investors value the business? How do they plan to get a decent return?
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Turn the Oundle factory site into a housing estate or maybe build a windfarm on it!:)
 
This is what is on the industry news sheet tonight - roughly 20% of last valuation it seems.


The UK boatbuilder has been purchased in a joint venture between the Royal Bank of Scotland (RBS) and an investment firm

After months of speculation in the press, UK boatbuilder Fairline has been purchased in a joint venture between the Royal Bank of Scotland (RBS) and an investment firm. The news follows the announcement in November last year that Fairline’s previous owner, 3i, was looking at “strategic options” for the business.

Better Capital Ltd, which is wholly owned by the BECAP Fund LP, has bought a majority stake in Masco 30 Ltd, a new company set up solely for the purpose of acquiring 100 per cent of the share capital of Fairline Boats and its subsidiaries.

Under the agreement, West Register (Investments) Limited, a company wholly owned by RBS, will acquire a minority stake in Masco 30 Limited.

“This investment will allow us to focus on three core elements paramount to our continuing success as a UK manufacturing business, being new product development, the implementation of new build technologies and the support of further growth in burgeoning overseas markets,” says Fairline CEO Derek Carter.

“The investment allows our three-year model launch plan to be set in motion which includes the completion of our much awaited flagship, the Fairline Squadron 80.”

BECAP and RBS have committed £16.6m and £3.9m respectively to finance the transaction and to fund restructuring and working capital requirements.

Nick Sanders, a member of Better Capital LLP, will join the Fairline Group board as chairman.
 
I heard that Fairline was for sale for quite some time now. About a year or so.
Obviously these where rumours and could be real or false. Seeing the news today these where very real indeed.
But I did hear from some bees that both Ferretti Group and Azimut Benetti Group where interested or contacted to buy.

Sunseeker is apparently in not so good waters and they also changed there Italian dealer more or less about a month ago which was representing SS for about 10 years now.

Boat building is in very low production numbers in all sizes, but may be moving to bigger sizes with all the investment that you do need to do this is not so the receipt to solve all.
 
It all sounds like time for a reality check for Fairline and Sunseeker.
Both firms building bigger and bigger boats - I for one would like to see the profit/loss accounts and see what their roi figures are/aren't.
Maybe time to look at smaller boat production?
Or even respond to market trends / demands?
They certainly ain't doing it right at the moment, that is for sure.
They can't blame recession / economic slowdown all the time - if the punters aren't there or not spending, they don't have a business. Selling boats at nil profit to "keep production lines going" doesn't work.
 
Bassplayer said:
They can't blame recession / economic slowdown all the time - if the punters aren't there or not spending, they don't have a business. Selling boats at nil profit to "keep production lines going" doesn't work.
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Yup, agree with that. We're 3 yrs into a global recession and the only thing the Brit boatbuilders can think of is building bigger boats where they think the margins might be higher. The market for gas guzzling power boats is unlikely to recover to pre 2008 levels for years and maybe never at all given environmental and fuel cost issues. The best companies use downturns to innovate radical new products in order to gain market share from competitors. I dont see any signs of any radical thinking in the boat building industry as yet and by radical thinking, I mean significant improvement in hull and drive efficiency or a significant reduction in cost
 
Whilst all the above makes sense, I have to say in my industry, Art; paintings are selling very very well.
I attend and watch online regular sales from the big boys and works in the hundreds of thousands, sometimes millions - proves that there is still plenty of cash for spending, by the rich.
 
Vern said:
Whilst all the above makes sense, I have to say in my industry, Art; paintings are selling very very well.
I attend and watch online regular sales from the big boys and works in the hundreds of thousands, sometimes millions - proves that there is still plenty of cash for spending, by the rich.
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I agree - in times when the majority of people either have less discretionary spend or are spending less of it the traditional move for luxury items is upmarket. I think basically the rich get richer and the poor stay poor - but it's the majority who are merely "not rich" that get squeezed. Those on 50K to 200K-ish incomes won't use finance, won't use savings (especially with pension raids likely) and use what they have on school fees, maintaining the lifestyle, etc. The biggish "bonuses" they might see (a policy maturing, shares doing well, well-off parents deciding to off-load before IHT hits, etc.) tend to disappear for them too.
 
I'm unsure if this news is good or bad for Fairline and its MBO team etc.

The word was £100m as Deleted User says but I assume that was to buy the whole company and take on the debt too - so £140m as I understand RBS carried this loan.

So RBS write off the debt and add £3.9m in cash.

BECAP paid £16.9m


So the £140m quoted worth is actually only 40% in cash today.


Is my thinking correct here? What did the MBO team and 3i pay the S African?
 
mjf said:
I'm unsure if this news is good or bad for Fairline and its MBO team etc.

The word was £100m as Deleted User says but I assume that was to buy the whole company and take on the debt too - so £140m as I understand RBS carried this loan.

So RBS write off the debt and add £3.9m in cash.

BECAP paid £16.9m


So the £140m quoted worth is actually only 40% in cash today.


Is my thinking correct here? What did the MBO team and 3i pay the S African?
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We understand the company was bought for around £35 million.

3i backed the MBO of the company in 2005 for £40 million.

RBS capitalised the debt, exchanging it for a "significant" minority stake in Fairline.

Better Capital tell us they are generally looking to get out of an investment in 3-6 years, but added quickly that this could be longer or shorter, depending on circumstances.
 
Bassplayer said:
MG / Rover as such doesn't. The Phoenix 4 still do with all the cash they robbed from MGR. The enquiry didn't do much to help either....:mad:
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MG as a brand still exists, and has just launched the MG6, with majority of the engineering, and the final build at Longbridge. While it is not something I would rush out and buy, it is a worthy effort.

Having just come back from China, I saw a large number of Roewe 750's and 550's. The 750's are the old 75, and the 550's a smaller sedan. Looked quite good.
 
petem said:
Mike I don't need to remind you that you recently criticised Sealine for not following this strategy!....

http://www.ybw.com/forums/showthread.php?t=270517&page=3
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Pete thats not quite correct. What I criticised them for was that they had not taken sufficient care of their brand image in order to allow them to compete at the bigger end of the market, which is not quite the same thing.
Building larger boats is only a short to medium term strategy though as that market will get crowded if many builders follow that strategy and there is a limited market for boats of that size anyway. I still think though, in the long term, motorboat builders cannot survive by building boats consuming fuel at a rate of less than 1mpg and the boat builders who will prosper in the future will be the ones who can make boats that are significantly more fuel efficient
 
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