California firm wins auction for most of Genmar

A California private equity firm emerged as the winning bidder Friday for most of the assets of Genmar Holdings Inc., the Minnesota-based boat builder that entered bankruptcy in June.

Platinum Equity was the winning bidder at $70 million for most of the assets of the company -- including the Ranger, Glastron and FourWinns boat brands -- that had been led by Minneapolis businessman Irwin Jacobs.

But Jacobs isn't expected to fade into the background in the boat industry.

Jacobs and a business partner submitted a winning bid of $6.05 million for the yacht group, which consists of Carver and Marquis boats made in Pulaski, Wis.

Jacobs said in an interview that he also wants to buy Genmar's boat manufacturing operation in Little Falls, Minn., from Platinum. Jacobs said he wants to build Larson, FinCraft and Seaswirl fiberglass boats.

"I have all the faith in the world that we will get this worked out," Jacobs said, adding that he talked with Platinum in the weeks before the auction about his desire to buy some assets from the equity group.

"I want to keep people working," Jacobs said. "Between [Platinum] and us, we will hopefully be able to keep all of the factories up and running."

Many boat businesses saw their revenue fall dramatically during the recession. "We are a victim of the times," Jacobs said. However, he added, in retrospect he thinks he allowed his corporate structure to grow too large.

The former Genmar CEO took part in the two-day auction held at a downtown Minneapolis law office, and the winning bids now will be reviewed by the bankruptcy court. A third successful bid of $1 million was submitted by MCBC Hydra Boats LLC, which will acquire Hydra-Sports.

Mark Sheffert, chief restructuring officer for Genmar, said after the transactions close that the surviving businesses can "focus their energies and resources on sales and service" and do so without the "distractions of being in bankruptcy."

Platinum spokesman Mark Barnhill said his company was attracted to the Genmar assets because Platinum's leaders thought they could bring operational expertise to the business that will "make it a profitable enterprise going forward."

When asked whether Platinum would close any of the manufacturing plants, Barnhill said it was premature to discuss any details about operation of the boat businesses.

John Paul DeJoria, a businessman with many interests, including the John Paul Mitchell Systems hair care products, is Jacobs' partner in the yacht deal. "He is a big man on wind energy," said Jacobs, who has been pursuing development of wind-blade factories.

Those wind blades would use fiberglass technology that Jacobs has used to build boats in Little Falls. Company stock for those virtual engineered composites (VEC) has been part of the Genmar bankruptcy and an asset that Platinum secured with its bid. Jacobs said he wants to buy that stock and hopes to soon begin negotiations with Platinum.

The bidding on the Genmar assets opened at 10 a.m. Thursday, ran "very late" Thursday night and concluded around 3 p.m. Friday, said Stephen Spencer, a director of Houlihan Lokey, which conducted the auction.

"There was substantial competitive tension," Spencer said. "We were able to get that to achieve a good result for the estate."

Sheffert said a second private equity firm, called Gores, bid against Platinum for the majority of assets. There were multiple bidders for the other assets.

A hearing on the bids is scheduled for Jan. 13.

Looking to the future, Jacobs said, "We will run a very tight organization and be very entrepreneurial."

Liz Fedor • 612-673-7709