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Bavaria in Administration

by John Curnow 21 Apr 2018 19:46 PDT
BAVARIA C65 © Bavaria Yachts

Contrary to much of the material running around presently, Bavaria Yachts has not filed for Bankruptcy, but rather has placed itself in Administration. There is a vast and significant difference between the two, not the least of which means that customers with boats presently under construction will see their craft soon enough.

Talking with Bavaria’s Australian Agent, Tony Ross of Ensign Ship Brokers, we got to learn a lot more about the events that unfolded on Friday, ahead of a more detailed set of answers due to be released by the factory this coming week.

“It certainly was a shock, but the good thing is that the customers’ boats are all fine, and we have spoken with each of them over the last two days. One of our craft bound for Australia even left the yard on Friday, so to a degree it certainly is business as usual.”

“Management have been asking the board for further capital to continue building the ever growing range and size of craft, which simply cannot be housed in the existing infrastructure anymore. It would seem that the former CEO and the board have parted ways as there was no common ground to be found on this crucial matter.”

Bavaria was sold by its founding family to Bain Capital in mid-2007 for €1.1b, and then onto the hedge funds, Oaktree and Anchorage Capital, who each bought 45% in October of 2009, after €684m was written off by Goldman Sachs and Dresdner Bank. Quite possibly they were still looking for an exit strategy, as is their way, rather than a further investment into a long-term plan. Some might say they kind of lost their appetite in this very tough business.

The question will become whether the business is for sale, either jointly or severally, or whether a fresh round of funding can be secured to continue the terrific rise of the company from Giebelstadt, Bavaria. Both the monohulls from Germany and the Nautitech multihulls from La Rochelle, France have grabbed significant market penetration over the last few years. Innovative designs and products, along with clever production methodologies have seen to that, but growth costs money, and it would seem this is the fundamental hurdle that was not jumped on Friday.

Most importantly, there has been no shortage of customers queuing up to purchase the group’s products. The order book is well out to the future, with craft like the C65 now only available for April 2019 build slots and the impressive new R55 also sharing a fill 12-month wait.

Ross commented, “We have a C57 due to be finished in late September, and its queue now goes into the new year. To see all the momentum come to halt at this time is heartbreaking for all concerned. The entire town is geared towards the yard, and management is staying put, confirming they are well and truly attached to the plan that has been implemented so well, so far.”

“We were meant to have the entire new range as presented at Düsseldorf on display at the Sydney International Boat Show for the debut here. There is a C57 and a C45 Ambition (race version) that will make it for Hamilton Island Race Week, shortly thereafter, if the timeline cannot be met. A C45 Style (family cruiser) is leaving the yard very soon, and one of our Senior Brokers is there at Giebelstadt now, so as to best represent our customers’ interests”, said Ross.

“The big question is how quickly will this all work itself out. It seems they have taken this move into Administration to take stock and work out how to move forward. We have nine boats in the pipeline presently, and of course, this is not the first time something like this has happened in the boatbuilding industry, where cash is king, and timelines can be quite long.”

Nautitech, whilst a wholly owned subsidiary, is incorporated in France and runs as a separate business. All the warranty and spare parts regimes are still in place, as well. No doubt there will be more soon, which is bound to clarify a lot of things but for now the main item is that customers will get their boats, but may have to wait just a little bit longer.

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