'Sunseeker deal: Irish investors take majority stake in yacht manufacturer'

Dyflin

Dyflin

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IRISH INVESTORS, led by private equity players FL Partners, have taken a majority stake in luxury yacht and motorboat manufacturer, Sunseeker, for €30 million.

FL Partners, headed by Peter Crowley and Neill Hughes, confirmed yesterday it had joined forces with a group of Irish and British investors to provide £25 million (€29.9 million) in new capital to Sunseeker, in return for a significant majority stake in the company. Sunseeker is based in Poole in Dorset in southern England. It has been manufacturing high- end yachts and motor cruisers for more than four decades. Sales last year topped £300 million, which was slightly ahead of 2008 and 20 per cent up on 2007.

The company’s chief operating officer and managing director designate, Stewart McIntyre, said yesterday that sales remained consistent through the recession and that its order books were strong. High-profile Sunseeker owners include one-time Formula One boss Eddie Jordan and actor Nicole Kidman. Its craft have featured in a number of recent James Bond films, including Die Another Day. Under the terms of the FL deal, Sunseeker co-founder Robert Braithwaite will remain the largest single shareholder outside the private equity firm, and will be president and non- executive chairman of the overall holding company, while Mr McIntyre will take over as managing director. Mr Crowley and Mr Hughes will join the board. They will be joined by Andy Macfiel of Souter Investments, the investment vehicle controlled by transport entrepreneur Brian Souter of Stagecoach.

Sunseeker recently spent £40 million on expanding its facilities in Poole to allow it to deliver yachts of up 40m in length and to pave the way for plans to built craft of up to 50m.

FL is refinancing Sunseeker’s debt with a package provided by Australian bank Macquarie and specialist investor, Haymarket Financial. FL owns the Racing Post newspapers and website and holds a strategic stake in broadcasting group UTV. It owns two Irish manufacturing businesses – mattress and beds specialist Kaymed and ATA Group, which designs and produces pneumatic tools.
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source
 
Does majority mean "more than the next-largest-shareholder" rather than "controlling"?

In that case, the figure may not seem out of line depending on percentages owned.
 
No, a majority stake means more than half, and a "significant majority" means significantly more than half. Having more than the next largest shareholder gives you a "plurality".
 
princess

Princess announces strong earnings for 2009

By IBI Magazine/Motor Boat & Yachting

The UK's Princess Yachts International today announced strong earnings for 2009, despite a background of continued economic uncertainty.

Turnover at the Plymouth-based motorboat builder rose to £213.8m, up 3 per cent from the previous year, but pre-tax profit dipped, from £26.58 in 2008 to £18.4m last year.

The news follows the announcement last month that Sunseeker had made a pre-tax loss in the year to July 2009.

The results are announced at an interesting time in Princess's development, as the yard takes big steps into the superyacht arena, with plans for 32m (105ft) and 40m (131ft) boats.

As part of this development, Princess is investing £45m at its new Devonport South Yard manufacturing site, which should lead to 200 new jobs being created at the company.

Chris Gates, managing director of the firm, says: "We are delighted with this strong set of financial results but we must remain cautious about the market outlook.

"We recognise that the greatest concern to customers currently is security of purchase, especially when building larger boats with longer lead times, so we are very happy that these accounts will give both our customers and our distributors added comfort that the Princess name is encompassed within a strong and resilient company."
 
Nick_H said:
SS must have an awful lot of debt if you can buy a significant majority stake for £25m.
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As I read it, that is a cash injection to refinance debt, not a payment for shares. In other words, Braithwaite has given away the majority of his company for nowt just to get some working capital into it. That sounds like a pretty desperate thing to have to do, considering the value of the brand. Am I understanding this correctly?
 
Well you can't take a majority stake in a company without owning the majority of the shares, so they must have received shares for their money. The article says "new capital", which would normally mean an issue of new shares, and if that new capital gets the buyer a significant majority stake, then that values Sunseeker prior to the injection at significantly less than £25m?? It doesn't seem to add up to me though, despite the 2009 loss, for a business with SS's earnings potential
 
Nick_H said:
Well you can't take a majority stake in a company without owning the majority of the shares, so they must have received shares for their money. The article says "new capital", which would normally mean an issue of new shares, and if that new capital gets the buyer a significant majority stake, then that values Sunseeker prior to the injection at significantly less than £25m?? It doesn't seem to add up to me though, despite the 2009 loss, for a business with SS's earnings potential
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No, I don't understand it either. If it's correct, Braithwaite has given away the majority of his shares for an injection of capital, which is very common for a start up but, as you say, is shocking given the established brand that company has and, thus, it's proven ability to generate revenues. Again, if this is correct, the company must have been very close to going under for Braithwaite to be forced into this position. Maybe the press release is incorrectly worded?
 
Nick_H said:
that values Sunseeker prior to the injection at significantly less than £25m?? It doesn't seem to add up to me though, despite the 2009 loss, for a business with SS's earnings potential
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Your analysis is correct, in my books.
And I also don't think that their EBITDA multiplied by any reasonable factor is less than £25m.
Trouble is, what's their net debt...?
 
MapisM said:
Your analysis is correct, in my books.
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Yep, I had the same questions from the press statements, how did £25m turn into a significant majority stake? There are a lot of new faces on the board too and I didn't read much about their experience in the industry.
 
25 million plus placing SS debt with new bankers thus preventing pressure from 'old' bankers to reduce current corporate debt?, or perhaps a requirement to reduce corporate debt in the immediate/short term which would have left the company short of operating capital?. I think the truth is yet to be seen, but will no doubt emerge in due course
 
kcrane said:
Yep, I had the same questions from the press statements, how did £25m turn into a significant majority stake? There are a lot of new faces on the board too and I didn't read much about their experience in the industry.
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There aren't enough numbers to pice it all together from the press release. I'll try to foind some more. \but \i expect it will have gone like this:

1. Parties will have agreed an EV for Sunseeker (ie assuming no debt) of say 80m, based on an assumption the business becomes soundly financed to cure the liquidity things I've talked about on here before
2. The debt package from maquarrie and haymarket might be say 40m, leaving equity value 40m
3. Funds managed by FL (as opposed to FL, btw) inject 26m for 26/40 (65% ish) of the enlarged equity
4. Shareholders agreement to regulated Braithwaite vs FL behaviour!
5. RB and other shareholders get diluted to 14/40ths of what they had before in terms of % shareholding

My numbers are guesses, but it will have gone along those lines

Sounds like good news. The company desparately needed a refi for the reasons talked about on here. I'd consider ordering an 80 now, whereas I wouldn't have before, but they're 4 weeks too late! The fact this deal needed doing and has been done kinda proves I was right not to extend credit to s/seeker. Other potential buyers were taking the same view as me - ie "do not lend £1m to s/seeker" - because their liquidity issues are well known within financial circles at least (where many of their customers come from), but now they have done a refi the customers will return I hope and things should get better. Good luck to them
 
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