Oyster Yachts gone into administration

[pvb]

The Times article does not entirely ring true to me.
It implies that the whole Oyster business is not worth carrying on with, because of a £7M dispute.
Suggesting that the worth of the company is less than £7M?
That does not seem right with an £80M order book, and reasonable prospects of selling useful numbers of boats next year and beyond.

I didn't read it that way. The problem seems to result from the reluctance of HTP to put any more money into the company. They may feel that it's time for them simply to walk away, possibly as a result of recent information emerging about the 825 fiasco. This won't have been helped by the fact that Mr Pundert owns 825-03, which he's now put up for sale. HTP still own all the brand, moulds, intellectual property, etc, which should have some value.

 

[dom]

Fair point. Out of interest, would your insurance pay out if you were negligent?

Depends on the insurance contract, but professional indemnity insurance is common in finance, accounting, legal svces, medicine, etc. and is specifically there to provide protect businesses and their clients where allegations of professional negligence are made.

Unsurprisingly, whenever a large claim is lodged all sorts of legal argy-bargy ensues and the claim will ultimately be constrained, obviously to the maximum of the policy, but also by any contributory negligence which can be alleged/demonstrated on the part of the client, either in the circumstances leading up to the claim and the steps taken post-claim to minimise the commercial impact.

The process is inevitably protracted, but PI houses will be used to this, are generally rational and possess deep(ish) pockets. Perhaps importantly in this case, they are more than comfortable engaging in legal, financial and game-theory based strategies.

 

[maby]

Fair point. Out of interest, would your insurance pay out if you were negligent?

Yes - professional liability. It was a requirement of our customers - they just want to know that if it all went tits-up, they would not be out of pocket.

 

[lw395]

I didn't read it that way. The problem seems to result from the reluctance of HTP to put any more money into the company. They may feel that it's time for them simply to walk away, possibly as a result of recent information emerging about the 825 fiasco. This won't have been helped by the fact that Mr Pundert owns 825-03, which he's now put up for sale. HTP still own all the brand, moulds, intellectual property, etc, which should have some value.

I would have thought, as the loss from the 825 has largely already been borne, it would be far better to sell as a going concern. Unless the ultimate parent did not have the cash to keep going long enough for a sale to go through, and could not borrow it on reasonable terms.
I would think that going into admin has wiped far more off the value than the 825 fiasco.
As I read it, the mould tools etc belong to Oyster Marine Holdings so are part of the administration. A mould for 70ft yacht is quite an asset if you have the orders and the ability to fulfil those orders. Otherwise it's just an expensive thing to store that you will struggle to get rid of.

 

[Walther]

Out of interest, would your insurance pay out if you were negligent?

Liability insurance only pays out when you have been negligent. That is the entire point of such insurance.

The Times article does not entirely ring true to me. It implies that the whole Oyster business is not worth carrying on with, because of a £7M dispute.

+1. One suspects that the litigation is being used as a fig leaf for a desire to exit the business for more commercial reasons.

The writing has been on the wall since at least 2012, long before the Polina Star III accident.

 

[Walther]

Nasty speculations based only hearsay and jealously don't help anyone

Funny that you speak of nasty speculations, but are apparently quite happy with Oyster's initial willingness to point the finger at Polina Star III's skipper & crew based on mere speculation of a possible hard grounding.

Am I happy that Oyster has gone under, no. But I am not surprised.

 

[pvb]

I would have thought, as the loss from the 825 has largely already been borne, it would be far better to sell as a going concern. Unless the ultimate parent did not have the cash to keep going long enough for a sale to go through, and could not borrow it on reasonable terms.

HTP has more than enough cash! I think they just saw the writing on the wall. As I've posted previously, HTP's investment in Oyster was tiny in their terms, and was probably driven by Mr Pundert's enthusiasm for getting an Oyster to use himself. Sadly, it went wrong for him, they gave him a flawed boat, mishandled concerns over a sister boat, then were landed with a huge compensation claim. I reckon I'd have walked away too.

 

[dunedin]

Funny that you speak of nasty speculations, but are apparently quite happy with Oyster's initial willingness to point the finger at Polina Star III's skipper & crew based on mere speculation of a possible hard grounding.

Am I happy that Oyster has gone under, no. But I am not surprised.

Big +1. It is very sad for the hard working staff, trade suppliers and in-build customers.

But the root causes seem to be in the hands of the Oyster management themselves.

And from Autumn 2015 I was concerned that Oyster seemed apparently to be trying to blame the customer, the subcontractor etc for the Polina Star problems. Apparently blaming the subcontractor, in particular, does not create any brand trust - if Oyster chooses to use subcontractors it is accountable to the customer for the quality of the work, and NEEDS to put in place monitoring and control systems to ensure the work of the subcontractors is fit for purpose.
Their response at the time seemed, on the face of it, rather arrogant and complacent, but seems to be coming back round at this time - including the arrogance of still this month advertising the specific model as an “incredible success”. A touch more humility may have helped them survive the crisis, as indeed they may in due course if a route forward can be found.

 

[Walther]

dunedin, I couldn't agree more. Well said!

 

[Scolly]

Funny that you speak of nasty speculations, but are apparently quite happy with Oyster's initial willingness to point the finger at Polina Star III's skipper & crew based on mere speculation of a possible hard grounding.

Am I happy that Oyster has gone under, no. But I am not surprised.

I didn't say I was happy with any part of this and resent anyone implying such.

Also I still feel that a number of posters are seemingly enjoying this situation, but I guess that human nature being what it is I should expect to be disappointed.

 

[pvb]

... but I guess that human nature being what it is I should expect to be disappointed.

One has to ask why you put yourself through the torment of interacting with other human beings on an internet forum.

 

[SO40]

I didn't read it that way. The problem seems to result from the reluctance of HTP to put any more money into the company. They may feel that it's time for them simply to walk away, possibly as a result of recent information emerging about the 825 fiasco. This won't have been helped by the fact that Mr Pundert owns 825-03, which he's now put up for sale. HTP still own all the brand, moulds, intellectual property, etc, which should have some value.

For the people who own HTP, owning Oyster obviously meant something, but in scale is peanuts for them. They are in the business of investing in companies to make them grow, strong and profitable (read: making them money). And Oyster is not making them money, on the contrary as we can read. So, as it always goes in that venture capitalists world: get rid of it. Their emotional commitment is never the same as it would be with an owner/director, who will eat bread and drink water rather than giving his company up.

But I do wonder when the management of Oyster take their responsibility and resign. As in the end, they are ultimately responsible for what Oyster is now going through. Sure, they will blame the investors. But maybe they themselves should look into the mirror too. As whatever happened with the Polina Star and the whole aftermath, it happened during their shift. But maybe this sort of scenario only happens in politics and PLC companies and if and when Oyster is saved, we can applaud them.

 

[Walther]

I too am disappointed/disgusted/resentful. I blame Oyster's management for such a pathetic end to a once-proud marque.

As SO40 rightly says, when will they resign? The fiasco happened on their watch.

 

[Walther]

Don't worry the vast majority of posters on here wont have sailed a single mile on an oyster and are therefore probably spouting uninformed nonsense. (myself included).

Speaking for myself, I've sailed thousands of miles on various Oysters, and am scheduled to do another delivery on one next month. I think they're great boats.

The problem is with the current management and private equity owners, not the yachts.

 

[Walther]

Agreed!

 

[Ian h]

Sorry but I would not trust Oyster

See this thread
http://www.ybw.com/forums/showthread.php?469562-Forum-Help&highlight=

I have heard many other stories about the way they conducted business, and how they thought they could just charge what they liked, I heard 1 story where the client was in dispute over a very large refit bill and ending up just taking the yacht.

Not a company I would like to ever do business with again

 

[Tranona]

Sorry but I would not trust Oyster

See this thread
http://www.ybw.com/forums/showthread.php?469562-Forum-Help&highlight=

I have heard many other stories about the way they conducted business, and how they thought they could just charge what they liked, I heard 1 story where the client was in dispute over a very large refit bill and ending up just taking the yacht.

Not a company I would like to ever do business with again

So you had a dispute with a yard about a small refit job. Not a particularly pleasant experience for you and I hope you ended up with a satisfactory outcome.

However I fail to see what that has to do with another business in the group that does completely different things. There are often disputes when building multimillion £ yachts because of the complex nature of the activity so not sure your experience indicates that Oyster are any better or worse at dealing with them than other custom builders.

 

[maby]

So you had a dispute with a yard about a small refit job. Not a particularly pleasant experience for you and I hope you ended up with a satisfactory outcome.

However I fail to see what that has to do with another business in the group that does completely different things. There are often disputes when building multimillion £ yachts because of the complex nature of the activity so not sure your experience indicates that Oyster are any better or worse at dealing with them than other custom builders.

Most of the big names have gone bust - or come close to it - over the last few years. There are two ways to make a million pounds - sell one item for a million, or sell a hundred items at £10,000 each - manufacturers like Oyster are in the first group; Beneteau, Bavaria etc are in the second. If the market takes a bit of a downturn for an Oyster, their quantum of lost revenue is much larger than it is for BenJenBav.

 

[pandroid]

Most of the big names have gone bust - or come close to it - over the last few years. There are two ways to make a million pounds - sell one item for a million, or sell a hundred items at £10,000 each - manufacturers like Oyster are in the first group; Beneteau, Bavaria etc are in the second. If the market takes a bit of a downturn for an Oyster, their quantum of lost revenue is much larger than it is for BenJenBav.

The problem with that argument is that it looks like they went bust with a pretty full order book. Maybe they were expecting the Dutch to divvy up some float cash, and they got unexpectedly turned down.
It does seem like the Dutch had a fit of pique because you would expect them to offload it as a going concern, unless there are some big liabilities we *don't* know about.

 

[dom]

Looking at Oyster's promotional video of its flagship 118, the entire process seems inefficient.
https://www.youtube.com/watch?time_continue=3&v=IHJOR2UIfiI

And it's not simply a function of size; the German Meyer Werft shipyard lies in stark contrast to these techniques. There's that old hangar Oyster have tried to convert, the specialist tooling and climate control systems which must be fitted for a small run, a large slop and bucket labour force, many of who will inevitably be left standing around for large periods, the use of transportation barges and heavy cranes to bring bits of the hull together, before yet another transfer back to Southampton for fitting.

And all presented by an achingly self-satisfied CEO, seemingly oblivious to the inefficiency of it all.

All of the ingredients are ostensibly present for inadequate budgeting, poor quality control, iffy cash-flow management and lousy cost control. How on earth could the engineers and accountants figure out that morass of fixed and floating costs ex-ante?

The problem might boil down to weak and unpredictable gross- and net-margins, far more dangerous than a one-off £7m hit. Worst of all, the problems were potentially magnified by Oyster's relatively recent decision to rapidly move up the size and price spectrum into a world where lawyers stand ready to pounce on any mistake.