Why have southerly gone bust (again)?

[jonjo]

Bavaria effectively went bust, and their parent company lost around €1bn in a debt-for-equity swap, in 2009.

I was waiting for this. What happened is that after 29 years of organic growth under the ownership of the founding family, they sold out to some highly leveraged venture fund. Four years later we were in the depths of the financial crisis and the sell out valuation was obviously ridiculous and the loans that funded the buyout were unsustainable.

The high finance people wanted to get the liability cleared off their books so the loans were sold on at 10% of face value. I don't this this counts as an operational crash of the Bavaria business.

 

[JumbleDuck]

The high finance people wanted to get the liability cleared off their books so the loans were sold on at 10% of face value. I don't this this counts as an operational crash of the Bavaria business.

Yes, that's what I said.

 

[Twister_Ken]

If my sources are to be believed, HR went a year without selling a new boat in the UK. And they certainly trimmed back the Swedish workforce quite heavily.

 

[photodog]

Parker went as well a couple of years ago.... And wasn't broom in trouble as well?

 

[RobbieW]

Probably because there has been more going out than coming in.

Whereas the product tends to go under when the reverse is true

 

[Chalker]

Ref. post #6
I googled HR administrator Halberg and could not get a relevant response.
Did I miss something?

 

[AndrewfromFal]

Ref. post #6
I googled HR administrator Halberg and could not get a relevant response.
Did I miss something?

I don't think they actually went under....although IIRC, they laid off a lot of staff and their order book diminished dramatically. - Given the number of other Swedish firms that DID go to the wall though, there is some context here in terms of shrinking demand for quality sailing boats in the higher price brackets; - it's not just a problem for UK boatbuilders.

 

[AndrewfromFal]

I was waiting for this. What happened is that after 29 years of organic growth under the ownership of the founding family, they sold out to some highly leveraged venture fund. Four years later we were in the depths of the financial crisis and the sell out valuation was obviously ridiculous and the loans that funded the buyout were unsustainable.

The high finance people wanted to get the liability cleared off their books so the loans were sold on at 10% of face value. I don't this this counts as an operational crash of the Bavaria business.

I'd contrast what the Bavaria founders did with the attitude of Graham Beck who owned Princess and sold it to LVMH. There were a number of companies who were interested in buying Princess, and were prepared to pay considerably more to buy it than LVMH(can't remember the precise figures, but 40% rings a bell). Beck did the deal with them in preference because they were financing the purchase from cash they had in the bank (that's a lot of handbags), and he didn't want to risk the future of the business by selling to a company financing it on the never-never.

 

[jonjo]

I'd contrast what the Bavaria founders did with the attitude of Graham Beck who owned Princess and sold it to LVMH.

Yes fair point, this old fashioned paternalistic version of capitalism is rare in the without-limits form of global capitalism that runs the world today. We need more of it. I read in another YBW thread that the founder of Amel yachts handed over his business to a workers cooperative on his retirement which is even better.

Phoenix businesses are a curse and prepackage bankruptcy worse still. In the depths of the financial crisis when the Government was running scared of systemic economic collapse pre pack bankruptcies were a reasonable panic measure but they seem to becoming a British business norm.

The British boat building & dealership landscape is littered with the craters of business failure. Any entrant to the world of new boats should be aware that behind the posh talking salesman there is a raft of dodgy characters you would not book a taxi ride with if they operated in your local town.

 

[GrahamM376]

We visited Northshore some years ago, possibly interested in a Southerly they had on brokerage. There were 3 on display, parked under trees, covered in leaves to the extent that 2 had blocked cockpit drains and the interiors were flooded. Obviously we weren't impressed but didn't like the boats anyway but, even before we had told them, the manager showing us around asked what we wanted the boat for. When I said we were looking at longer distances including Biscay crossings, he said straight away "oh you don't want one of these, they slam horribly - you need a Vancouver".

I'm not surprised they went bust, with attitudes like that they asked for it.

 

[Stork_III]

I don't think they actually went under....although IIRC, they laid off a lot of staff and their order book diminished dramatically. - Given the number of other Swedish firms that DID go to the wall though, there is some context here in terms of shrinking demand for quality sailing boats in the higher price brackets; - it's not just a problem for UK boatbuilders.

HR are recruiting at present. http://www.hallberg-rassy.com/news/news/news-post/further-skilled-boatbuilders-wanted/

Seem to be being kept afloat by the British Army (BKYC). http://www.hallberg-rassy.com/news/news/news-post/big-delivery-to-repeat-customer/

 

[Ex-SolentBoy]

HR are recruiting at present. http://www.hallberg-rassy.com/news/news/news-post/further-skilled-boatbuilders-wanted/

Seem to be being kept afloat by the British Army (BKYC). http://www.hallberg-rassy.com/news/news/news-post/big-delivery-to-repeat-customer/

Am I the only one astounded by this sort of thing?

Our army spends taxpayers money and ends up being the biggest customer of a Swedish Boat builder.

Why, oh why can't they buy from a British company? There are several that could have built a suitable boat for less money.

What's even more infuriating is that as nation we haven't created a system that makes buying locally the obvious thing to do.

I very much doubt the French armed forces are trained on non French boats.

 

[Drews]

Me too, unbelievable !!!!!!!!!

 

[TimBennet]

Is BKYC technically an MOD facility spending taxpayers' money? I always thought it was a private yacht club for service personnel. They have always been very thorough in their searches for new boats and despite always favouring UK built boats, have also needed to spend their member's money wisely and get the best boats that are most suited for Baltic cruising.

There is an Army Adventure Training facility at Kiel which charters any boats they use from the RKYC.

 

[Twister_Ken]

BKYC auctions 'retired' boats through a sealed bid process, and gets good money for HR's (at least that used to be the case a few years back).

 

[TimBennet]

BKYC auctions 'retired' boats through a sealed bid process, and gets good money for HR's (at least that used to be the case a few years back).

They're selling ten HR 342s at the moment for €120,000 each. Plus tax. No haggling.
Coming up for 4 years old.

 

[Angele]

What was the final tally of yacht manufacturers who called in the administrators post 2006? From vague recollection...

Sunseeker
Dufour
Aspect (Cornish Crabbers & Uk Hunter)
HR
Malo

I don't think Dufour called in the administrators post-2006. Sure, they were bought by the owners of Bavaria in 2010 and sold again as a management buy-out in 2013. But administration? I don't think so.

The UK importer prior to 2007ish lost the dealership and quickly went under, but that wasn't the manufacturer.

 

[yoda]

G

HR are recruiting at present. http://www.hallberg-rassy.com/news/news/news-post/further-skilled-boatbuilders-wanted/

Seem to be being kept afloat by the British Army (BKYC). http://www.hallberg-rassy.com/news/news/news-post/big-delivery-to-repeat-customer/

Last time I was there I discussed this with a senior bod who explained that the capital depreciation was zero because of the price they were able to negotiate for a large buy of boats and the good resale value they could achieve through a high quality build and proper maintenance. I can't say I blame them for their policy.

Yoda

 

[roblpm]

Yes fair point, this old fashioned paternalistic version of capitalism is rare in the without-limits form of global capitalism that runs the world today. We need more of it. I read in another YBW thread that the founder of Amel yachts handed over his business to a workers cooperative on his retirement which is even better.

.

Until the workers change the company constitution and sell out to private equity........

Happened to my granfathers business!

 

[theoldsalt]

................. The second hand market is buoyant

I beg to disagree. There are many used boats I know of in excellent condition that have failed to sell in over a year.