MINNEAPOLIS, Minn. Wheeling and dealing his way through bankruptcy hearings, Genmar Holdings CEO Irwin Jacobs has become the most likely new owner of the company whose famous boat brands include the likes of Ranger, Stratos and Hydra-Sports.
In June, slammed by the economic downturn, Genmar was granted Chapter 11 protection from its creditors and asked to develop a reorganization plan that would help it regain its financial stability.
As CEO, Jacobs spearheaded the effort during the summer amid rumors that Genmar would be sold piecemeal or in whole to any of various corporate suitors that include some familiar names in the boating industry. Tuesday, on the evening before the reorganization plan was to be presented in U.S. Bankruptcy Court here, Jacobs made it known that he wanted to own Genmar outright.
"The simple answer is, I'm going to buy the company," said Jacobs in response to his plans for Genmar, which employs approximately 5,000 people and manufactures 15 boat brands. "My plan is to make the high bid for the company. Beyond that, I don't see a lot of change in the company's direction."
Presumably a federal judge, and Jacobs' current investment partners will have the final say in whether Jacobs realizes his goal, though no decision is expected soon. In the meantime, it's business as usual at the various manufacturing centers, which have already been trimmed of staff and some product lines since June.
Not too big to fail in the eyes of federal bailout meisters who wouldn't come to its rescue, Genmar was able to keep afloat thanks to an unexpected bounce in boat sales. According to Jacobs, as bidders started lining up to stake their claims to all or parts of the boat-building juggernaut, the company gained a 6 percent increase in market share. In August, a dozen would-be buyers had been narrowed down to one, whose name was kept confidential. Jacobs gained fame and fortune in part because of his adroitness in acquiring bankrupt businesses. He was assumed by many to be the secret suitor all along.
Some of Genmar Holdings' creditors on a long list that includes financial institutions, law firms, parts suppliers and outboard motor manufacturers, have been vocal in their denunciation of the reorganization process and the lack of transparency surrounding any potential sale. Though not against such a sale in principal, the creditors have expressed concern that they aren't being kept informed of all developments. The Committee of Unsecured Creditors, which is composed of various Genmar creditors, issued a statement "generally to support a process that will result in the sale of the Genmar assets, to either one or multiple buyers."
Jacobs, who owns 40 percent of Genmar Holdings at present, would own about 80 percent of the company if his purchase bid is accepted. Though long-range plans are a work in progress, it's anticipated that Genmar will follow market trends and add more low-end and moderately priced boats such as FinCraft to its lines rather than focus on the high-margin yachts that characterize the offerings of such company icons as Carver, Marquis and Windsor Craft.
"I believe most of our employees and dealers will be supportive," Jacobs said. "I've known a lot of them for more than 30 years and we're a team. It [bankruptcy] wasn't a result of us doing things badly; it was because of the economic downturn that had been building for the last year and a half. So, we look to the future. There's a lot of work to be done and it's going to take a lot of money and effort to get where we want to go. But we'll get there."
If creditors who don't trust his capital can convince the bankruptcy court that Jacobs' bid is somehow deficient, the company might be broken up and sold as many observers originally expected.