Irwin Jacobs eyes ownership of Genmar

by Jeni Bone on 9 Nov 2009 Spending much of his time managing bankruptcy hearings, Genmar Holdings CEO Irwin Jacobs has put his hand up to take over as owner of the company whose famous boat brands include the likes of Ranger, Stratos and Hydra-Sports.

In June, a casualty of 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.

On the night before the reorganization plan was to be presented in US Bankruptcy Court, Jacobs made it known that he wanted to own Genmar outright.

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.

'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.'

A US Federal judge, and Jacobs' investment partners will have the final say in whether Jacobs realizes his goal. In the meantime, it's business as usual at the various manufacturing centres, which have already been trimmed of staff and some product lines since June.

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 considerable fortune because of his appetite for acquiring bankrupt businesses and turning them around. 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.'