Mustang Marine - is it the end of the road?

by Bob Wonders on 26 Oct 2007 When the Mustang Marine Group was placed into receivership on October 19, I guess it was understandable to a point that rumours would flow thick and fast.

Ferrier Hodgson, one of Australasia’s foremost insolvency and corporate advisory firm, was appointed official receiver with partners Will Colwell and Steve Sherman handling day to day matters.

They were making every effort to continue to operate the Gold Coast-based manufacturer, but earlier this week, the owner of the site sent in security guards and locked the gates.

It was the move that set off the rumour mill. I was told punches were thrown between security guards and contractors attempting to retrieve their tools; I was told some suppliers were threatening to break into the premises to seize equipment. Gold Coast media reports indicated 400 jobs were at risk.

Fortunately, Powerboat-World was able to speak with Ferrier Hodgson partner, Peter Gothard yesterday and he was in a position to totally discount many of the tales being told.

'There’s no way 400 jobs are at risk,' he said. 'I am not accurately aware of the personnel involved, but it’s certainly not 400, more like 30 or so employees and about 50 to 60 contractors,' he added.

On the rumour of security guards and contractors being involved in 'punch ups', Mr Gothard said that was one story he had not heard. 'That would be news to me', he said.

He also denied any threats by suppliers seeking to break in and seize equipment. 'Nothing could be further from the truth, we are working closely with a number of suppliers involved, keeping them informed and I can say all are acting with extreme patience,' he explained.

Mr Gothard said negotiations with the landlord (the site owner) were at a 'delicate' stage, but were proceeding and some form of resolution was expected, perhaps prior to the weekend.

'If we can achieve agreement with the landlord the business will re-open and continue to operate,' Mr Gothard explained. 'We believe the company has a strong brand name, a significant presence in the market and an accepted product line-up. Our primary intention will be to sell the company as a going concern,' he added.

Asked if a buyer would be likely to purchase the company and shut it down, Mr Gothard said such a situation would be very unlikely. 'A worse case scenario would be a tenant winning the site and seeking to use it for another business altogether,' he said.

Mr Gothard said an asking price had not yet been discussed. 'It’s something we would arrive at after testing the market,' he explained.

'Ferrier Hodgson is hopeful and is making every possible effort to show the parties involved that there is commercial sense in protecting the business. 'We can only hope that those involved will work with us in maintaining business operations while a purchaser is sought,' he added.

'My colleague, Steve Sherman, has expressed his thanks to the Mustang management and staff, the dealer network and the majority of the suppliers for their understanding and support.

'Their cooperation is essential if we are to achieve the best possible result for all concerned.'

Mustang Marine Group CEO, Paul Scanlon, said the company had a 'healthy' cash balance, but had suffered from the high Australian dollar, the overseas shipping costs and a shortage of skilled labour.

He said plans to move production of some models offshore to offset costs and remain competitive had been rejected by the National Australia Bank resulting in the receivers being called in.

Two years ago, Mustang management wanted to increase its exports from 20 percent to 50 percent.

That announcement was made following a reported $65 million buyout from former owner Gary Garoni.

Mr Gothard said there had been 'some interest' expressed in purchasing the group, but that it was far too early to make further comment.

Bill Barry-Cotter, CEO of the award-winning Maritimo yard, said his company had no interest in purchasing Mustang.

He warned that with the Australian dollar hovering on the US 0.90 cent mark, other manufacturers in the marine industry would be facing similar problems.

Bill Barry-Cotter said Australia’s tough environmental laws helped make offshore manufacturing more attractive.

'We need a pro-active government to support the industry, not to try and demolish it,' he declared.

Several Mustang workers have sought employment at Maritimo.

The Riviera Group, founded by Barry-Cotter and sold by him in a $180 million deal led by Sydney-based Gresham Private Equity in 2002, declined to comment on the Mustang situation.

Mustang was established in 1974 by well-known Queensland marine industry identity Graeme ‘Noddy’ Williams.

The production facility was on what was then a near desolate stretch of the Brisbane Road, at Labrador.

'I had enormous problems even getting a telephone on', Williams said yesterday.

The Mustang marque enjoyed considerable success with Williams at the helm, particularly through the late 70s and into the 80s, before he sold out to Garoni in 1998.

Garoni sold off the company sector producing smaller craft to the Hancock brothers who kept the name Mustang Pleasure Boats to differentiate it from the original.

In 2004, Mustang Marine was honoured as ‘Large Advanced Manufacturer of the Year’ in the Queensland Premier’s Export Awards.

Its newly released 3800 Sports Cruiser was named Australian Boat of the Year at the Australian Marine Industry Federation’s Australian Marine Awards in 2001.