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Jacobs bids for his own Genmar Holdings
Bankrupt boat builder Genmar Holdings has been seeking a buyer since August.
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Five months after taking his boat manufacturing company into bankruptcy, Twin Cities businessman Irwin Jacobs is trying to buy the business back.
Jacobs said Tuesday he expects to be the high bidder for Genmar Holdings Inc., which began looking for buyers after being unable to reach an agreement with the company's unsecured creditors since filing for Chapter 11 bankruptcy in June.
It's a deal that would be appropriate for Jacobs, who made his name by buying bankrupt firms.
Genmar, with the help of adviser Houlihan Lokey Howard & Zukin Capital Inc., has been looking for buyers since August, according to bankruptcy court documents. Houlihan received 12 bids and narrowed those down to one unnamed interested bidder.
That potential buyer has asked the court to be reimbursed for due-diligence-related expenses and for a so-called "lock-up" arrangement that would exclude other potential buyers. Unsecured creditors have filed court documents objecting to the request, noting the secrecy of the process.
At the time of the bankruptcy filing, Jacobs was the largest shareholder in privately held Genmar, with about 40 percent of its stock. Jacobs said he would own about 80 percent of the company if his bid, the amount of which he declined to disclose, is accepted and approved by the bankruptcy court.
Jacobs said his plan would be to acquire essentially all of Genmar, which is the second-largest boat manufacturing company in the world, with brands that include Ranger, Larson and Glastron. He said he also would wind up owning more than 90 percent of the stock of VEC Technology, a Genmar subsidiary that has developed a high-tech process for manufacturing fiberglass boats that was not included in the bankruptcy filing.
Jacobs has blamed Genmar's financial troubles on the credit collapse and weak economy that have decimated sales of everything in Genmar's product line, which includes 12-foot fishing boats, runabouts for water-skiing and luxury yachts for millionaires.
The sales decline began in 2008 but has worsened this year. In court documents Genmar estimated revenue of $460 million for the year ended June 30, about half of what it was in 2008. The company's Chapter 11 petition listed assets of $237.5 million and liabilities of $216.5 million.
Genmar responded to the downturn by slashing expenses, including closing plants in Florida and Oregon and cutting its workforce for the past couple of years from about 4,500 to about 1,500, Jacobs said. Its workforce in Little Falls, Minn., where it has been a major employer for decades, has dropped from about 800 to around 200, he said.
Genmar is one of several companies controlled by Jacobs that operate independently of each other. None of the others -- Jacobs Trading, Jacobs Management, Watkins, FLW Outdoors or Jacobs Interactive -- was included in the bankruptcy filing.
Susan Feyder • 612-673-1723
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