Genmar Bankrupt- Purchase by Platinum

A Beverly Hills, Calif.-based private equity firm was the big winner Friday in the auction of Genmar Holdings, one of the nation’s largest boat companies, formerly led by Irwin Jacobs.

Platinum Equity LLC paid $70 million for the bulk of Genmar’s holdings in the auction, which stemmed from Genmar’s Chapter 11 bankruptcy filing last summer.

Jacobs, the Twin Cities financier who resigned from Genmar last year after the Chapter 11 filing, did buy back a piece of the company Friday. A company called JD Acquisitions — which includes Jacobs and a partner — acquired the Carver and Marquis brands for $6 million. Those brands include the yacht group of Genmar.

A third bidder, MCBC Hydra, acquired Genmar’s Hydra-Sport brand for $1 million.

The results of the two-day auction are subject to court approval. A hearing is scheduled for next week.

Platinum has made about 100 acquisitions since 1995, and its diverse group of companies represent more than $27 billion in annual revenue. Last year, Platinum bought San Diego’s metropolitan daily newspaper, the Union-Tribune.

At the time of its bankruptcy filing, Genmar had about 1,500 employees and 1,100 dealerships. The company was started by Jacobs, who got into the boat business in 1978 when he purchased Lund Boat Co. Genmar products range from runabouts to yachts, with brands that include Ranger and Larson, Wellcraft, Four Winns and Glastron.

The nation’s recession has punished the boating industry.

Revenue estimates for Genmar totaled $460 million for the 12 months ended in June, down from about $1 billion in calendar year 2007.
The winning Genmar bidders are anxious to bring “closure to this transaction so that the businesses can refocus their energies and resources on sales and service,” said Mark Sheffert, the CEO of Manchester Cos., which led the restructuring effort. He said the buyers are well capitalized and ready to work with dealers and suppliers.

The resolution of Genmar’s bankruptcy can’t come soon enough for retailers who sell Genmar brands, said Phil Keeter, president of the Marine Retailers Association of America.

All boat retailers are dealing with a slow economy and tight credit markets, Keeter said. “Those that are Genmar dealers also don’t know what they’re going to do about product,” he said.

The boat show season is starting now, and some dealers have no 2010 Genmar brand models, Keeter said. Dealers of competing boat brands probably will use the bankruptcy to make customers leery of buying a Genmar brand, he said.

“It’s a huge mess,” Keeter said. “A lot of dealers could be bankrupt over the situation.”

In November, Platinum made an opening bid of $55 million for Genmar. Considered a “stalking horse” bid, that action set a floor for other bidders.

Attorneys representing the various bidders started the auction Thursday morning and went until late that night, and then ran another five hours Friday. There were two bidders for the core assets and four for the remaining assets, Sheffert said. As the auction progressed, some of the bidders might have decided to alter their initial bids, leading to more negotiations.

“There was no legal hang-up; it was just the process,” Sheffert said.