Platinum Equity Says It Will Be Aggressive

Yesterday morning press releases hit the Internet making the Platinum Equity acquisition of certain Genmar boat companies official. Those acquisitions include Ranger, Stratos, Champion, Wellcraft, Four Winns and Glastron boat brands; their factories and related equipment. From the tone of the press release breaking the official news it sounds to us as if Platinum Equity is loaded for bear. With a war chest of $3.5 billion according to its website, Platinum Equity could probably buy up most of the marine business in its weakened state and still have change for a McDonald’s Happy Meal. Indeed, Louis Samson, PE’s point man on this $70 million acquisition, says that its new company plans on being a “leader in the marine industry,” is “well-capitalized” and “will not hesitate to take advantage of attractive opportunities.” We haven’t heard that kind of talk in long time. With virtually every boat company hunkered down, the PE brands could gobble up huge market share the old fashioned way – through sales.

The Four Winns V285 has a new owner and so far it’s a love fest as Four Winns management gets to know its new boss.

PE’s Samson said, “Each of the brands we acquired has a rich heritage, a strong and loyal customer base, and significant opportunities to grow following very challenging times throughout the boating industry. Platinum has a strong track record of supporting companies through difficult transitions and we look forward to putting each of these brands on a path toward long-term growth and profitability.”

The newly acquired boat brands will now have the backing of Platinum Equity, with its extensive operational resources and a multi-billion dollar capital base, according to the press release.

“Prepared to Be A Leader”

“We are coming out of the blocks a well-capitalized company prepared to be a leader in the marine industry, and while we always maintain a disciplined approach to managing our portfolio companies, we will not hesitate to support the business and take advantage of attractive opportunities as they arise,” Samson said.

A transition is now underway that will establish Platinum’s new portfolio of former Genmar brands as a standalone business under a new corporate name. Details about the new corporate identity will be announced as the process unfolds.

“The marine industry has a lot of potential, and we’re very excited to be part of it. Right from the start, we intend to protect the core elements – customers, employees, suppliers, and dealers – while we devise new strategies for the future,” added Samson.

Organizational Structure

Platinum announced yesterday that it has appointed David Huls President and Chief Financial Officer (CFO) of the new consolidated corporate holding company. Huls was previously Senior Vice President and CFO of Genmar Holdings, Inc. and had been with the company for more than five years.

Huls noted that rebuilding confidence in the company from inside and out is a top priority. “The last eight months have been extremely difficult for our employees, dealers and suppliers,” said Huls. “I’m grateful for everyone’s support and cooperation as we worked through so many challenges.”

Platinum also announced the executives who will lead the various brand operations:

Randy Hopper will continue to serve as President of Wood Manufacturing (Ranger), a position he has held for more than 20 years, and will oversee Ranger Boats, Stratos Boats and Champion. Wood Manufacturing will be managed independently from the other brands.

Jeff Olson will continue to serve as President of Four Winns and Wellcraft.

Mike O'Connell has been appointed President of Glastron, and Bruce Sargent will remain VP of Sales and Marketing.

More Decentralized

“We have designed a flatter, more decentralized organizational structure to give the brand management teams independence without compromising the efficiencies and other benefits of our combined scale,” explained Samson. “We are fortunate to have a strong mix of seasoned industry veterans who, in partnership with the Platinum team, are well positioned to lead these businesses into the future.”

Sale of additional assets to J&D Acquisitions, LLC completed

Platinum also confirmed yesterday that it completed the acquisition of certain other assets from Genmar Holdings, Inc., and in turn sold those assets to J & D Acquisitions, LLC in a transaction previously announced on January 21, 2010. J&D Acquisitions, LLC is controlled by Irwin Jacobs and Jean-Paul Dejoria.

The assets acquired and then sold to J&D include: The Larson, Seaswirl and FinCraft boat brands, as well as the Little Falls, Minn., manufacturing facility that builds those brands; the Seaswirl manufacturing facility in Culver, Ore., and all of its related assets; VEC Technology, LLC, located in Greenville, Penn.; the Triumph boat brand and related assets; and the Windsor Craft boat brand and related assets.

About Platinum Equity

Platinum Equity (www.platinumequity.com) is a global M&A&O® firm specializing in the merger, acquisition and operation of companies that provide services and solutions to customers in a broad range of business markets, including information technology, telecommunications, logistics, metals services, manufacturing and distribution. Since its founding in 1995 by Tom Gores, Platinum Equity has completed nearly 100 acquisitions with more than $27.5 billion in aggregate annual revenue at the time of acquisition.

BoatTEST.com’s Take

Both Irwin Jacobs and PE’s Louis Samson have been quite complimentary of each other’s handling of the buyout negotiations and going-forward plans which by their very nature require good-faith cooperation for the next six months or so while the brands and their operations become disentangled. Platinum Equity has a reputation for professionalism, integrity, and no non-sense operations, and because of that are a welcomed, and much needed, addition to the boating industry.

With its deep pockets it is clear that PE is prepared to spend money if it can see positive ROI. That will be the cheapest way to gain market share. By being aggressive with its product development, marketing and customer service and prudent with its expenditures on tertiary projects, PE brands can grow quickly, in our opinion, in a fiscally sound way. Further, because the field inventory of most of its brands is in tune with market demand, it will not have to spend money to clear out a pipeline clogged with non-current product.

Warranty Matters

We have asked Platinum Equity management if it will honor all appropriate pre- Chapter 11, and during Chapter 11, warrantees for the brands it now owns. We have yet to receive a response. That answer will be the boating public’s first concrete indication about the nature of this new player in the industry.