UK Fairline Yachts Looking for Strategic Options - 11/03/2010

Fairline Yachts is one of the UK's largest builders of large motoryachts, building boats from 38' to its flagship, the 78' Squadron shown above. Just five years ago CEO Derek Carter lead a management buyout, but now the board of directors for the equity owners have hired Deloitte to suggest "strategic options" -- which usually means a sale or recapitalization of some sort. The last several years virtually all of Britain's builders of large boats have been acquired by new owners.

Fairline Squadron 78
The Fairline Squadron 78 shows her stuff along the French Riviera.

Reprinted from The Evening Telegraph

Investors consider selling stake in Fairline Boats

3i has hired advisers from Deloitte to look at "strategic options" for the business, which could lead to a disposal of the company. It is, though, not clear how much 3i will get for Fairline. Two years ago, 3i hired bankers from Cavendish Corporate Finance to sell the business for an estimated £100m.

However, following just a few expressions of interest from mystery Middle Eastern buyers, 3i shelved the sale and opted instead to inject fresh capital into Fairline. Royal Bank of Scotland, Fairline's main lender, is also thought to have reinvested in the group.

Fairline specialises in the manufacture and distribution of boats in the 34 to 78 foot range costing up to £2m. 3i first invested in the boat company, which is based in Oundle and Corby, in 2005 as part of a management buy-out.

3i and Fairline both declined to comment on Friday.

Other European Builders Sold

During the credit boom boat manufacturers were highly sought after by private equity firms. In 2006, Candover bought Italian luxury yacht maker Ferretti for £1.1bn. L Capital – an investment arm of Groupe Arnault, which is controlled by Bernard Arnault, France's richest man – also acquired Princess Yachts in 2008 for around £200m.

However, it has not always been plain sailing for these private equity buy-outs. During the financial crisis, Candover lost all of its investment in Ferretti after the yacht maker breached its banking covenants. The company eventually went through a complex financial restructuring and lenders took control.

Recently a group of investors including Stagecoach boss Brian Souter and Mike Clare, founder of bed retailer Dreams, snapped up Sunseeker International for an estimated £25m following a restructuring of the company's debt.

02 November 2010

By Helen O'Neill

News reporter

3i Looking for Exit

A spokesman for 3i, which bought a stake in Fairline in 2005, said: "It is early days. We will be looking at how we can grow the company but one of the options will be our exit strategy."

The spokesman said 3i normally sells its stake in a company between three and seven years after making an investment. The spokesman said: "We are at the five-year point with Fairline. Now we will be looking at what needs to be done to grow the company."

Business as Usual

A statement from Fairline's chief executive Derek Carter said: "We confirm that the directors are working with 3i and Deloitte in considering a number of strategic options for the business. Fairline has been part of 3i's investment portfolio for five and a half successful years.

"As regards the day to day operations of the company, it is business as usual, as work continues on the new products due for release in 2011 and the development of the business's leading position in the global leisure marine market."

Mr Carter refused to make any further comment on the announcement.