Jacobs resigns as head of Genmar

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Irwin Jacobs has stepped down as CEO, chairman of the board and as a director of Genmar Holdings to avoid a potential conflict of interest as he pursues a purchase of the company.

In a letter dated Monday, Nov. 9, company president Roger Cloutier says the change was effective Nov. 6.

“I’m keeping all of my options open, everyone will just have to wait and see what the outcome is,” Jacobs told Soundings Trade Only this morning, “I’ve stepped aside, I resigned from the board, so that I’m free to do whatever I want to do. Otherwise it would obviously be a conflict.”

“Given the circumstances surrounding Genmar as it moves forward in the sale of the company’s business and non-core assets, this change in Mr. Jacobs’ role was made in the best interest of all constituents,” Cloutier said in his letter. “The separation will allow Mr. Jacobs to pursue his objectives relative to Genmar’s asset sale process in an effective and independent manner and eliminates potential conflicts of interest.”

Since Genmar filed June 1 for Chapter 11 bankruptcy protection, it has been operating under the direction of Manchester Companies, a firm that serves as the chief restructuring officer.

“At that time, the CRO was given the full authority generally vested in the chief executive officer role,” Cloutier said. “An office of the president also was established, which included two representatives of Genmar and two representatives of Manchester.”

Mark Sheffert, chairman and CEO of Manchester Companies, commented that Jacobs has “given a great deal to the Genmar organization and the boating industry” and stepping down as head of the company will allow the sale process to move forward in an “effective and independent manner.”

Less than two weeks ago, Genmar announced its intention to pursue a sales process rather than a reorganization as a means to exit Chapter 11.

New York-based bankruptcy attorney Leonard Bellavia, of Bellavia Gentile & Associates, told Soundings Trade Only it’s not unusual in this economic climate for Chapter 11 reorganizations to result in straight liquidations.

“The bankrupt companies simply do not have the income to remain current on their obligations, even without the pressure of paying old receivables and creditors, especially secured creditors, have little patience seeing the continued deterioration in the value of their collateral,” he said.

Bellavia also said that it would be “uncommon” for a current officer or shareholder of the company to bid on his own company in a bankruptcy sale, as it would create a conflict of interest.

Jacobs has said he plans to be the highest bidder for Genmar’s assets. No other bidders have been named publicly.

“My interest was in the company intact, for the most part, that’s all I can tell you,” he previously told Soundings Trade Only. “I can’t give you anything more than what’s out there right now.”

On Nov. 4, a bankruptcy court judge approved Genmar Holdings’ motion to enter into an exclusivity and expense agreement with an unnamed potential stalking horse. This gives that unnamed bidder a 20-day exclusivity period. Also, Genmar has been authorized to reimburse this party up to $700,000 for “certain due diligence expenses under specific circumstances.”

That bidder is not affiliated with Jacobs or Genmar, Sheffert said.

Jacobs had no comment on the potential stalking horse and said he had “no concerns at all.”

Genmar has identified the potential stalking horse as “the party that has submitted the best offer to date from the standpoint of cash consideration and probability of consummation.” It does not, however, identify that party, in order to “preserve the integrity of the sale process.”

In an unrelated motion, the judge last week also extended the period in which Genmar has the exclusive right to file plans for reorganization through Jan. 31, 2010, and the exclusive right to obtain acceptances of such plans was extended through April 1, 2010.

Click here for the full text of Cloutier’s letter.

— Beth Rosenberg

b.rosenberg@tradeonlytoday.com

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Comments

40 comments on “Jacobs resigns as head of Genmar

  1. surf343

    If I was a former Genmar Dealer this kind of News would make me furious, I hope someone is speaking on behalf of all the dealers that have been screwed by Genmars actions.

  2. Compact45

    I feel for all of the Genmar dealers right now…I would disassociate myself from this company and Jacobs pronto!!!!!

  3. Jeff

    What a joke.  Some look at this like he’s a smart business man, I look at him in a totaly different light.

  4. Ole Boat Builder

    Orginally, in declaring bankruptcy, Irwin effectively shed all of the supplier debt from Genmar.  Had Genmar come out of bankruptcy, while a privately held company, the company still had stock value, most of which was owned by Irwin and the hundreds of employees which work for the boat companies under the Genmar umbrella. 
    In resigning as Chairman and CEO to privately pursue the purchase of the assets of Genmar, Irwin has now effectively created zero value for all of the shares of stock owned by the hundreds of employess who either purchased or received stock as a bonus.
    Talk about debt free!  Under the new corporation which would be formed by Irwin to purchase the assets of Genmar all of the supplier debt is wiped out……….all of the stockholder value of Genmar is wiped out…….and Irwin winds up with a boat building corporation at probably 30 cents on the dollar!
    Way to go Irwin!

  5. Unbelievable

    So how much money does Jacobs make off of this scam that is all funded by his suppliers!  He should not even be allowed to bid – this is why the economy is the way it is today because of people like this!

  6. Bill Kearns

    If Jacobs get hold of Genmar, which is what he is trying to do, he has to bring in top industry people to run the company. He has to take a step back. He can’t re-invent the wheel. There are no more state of the art hull designs, no more unique materials to use in production, no more crazy marketing promotions.
    He is right in focusing on the entry level boater – this segment has been ignored for the last fifteen years. Focus on quality, pricing, retail and dealer banking relationships and non-redundant product across Genmar companies and things might improve.
    Top performers will be important -  in terms of R&D, sales and marketing, management and dealers.

  7. Brokeboatman

    You know what you call Brunswick Corp. and Genmar boat companies on the ocean floor?
    A good start to a cleaned up marine industry.
    PS: Lets not forget GE too.

  8. Scott

    I hope he comes back even stronger than before. Those who think this industry doesn’t need a strong #2 should be concerned about the hand that feeds them. He was successful at selling lots of boats. I’m not gonna lay the downturn on him.  While his motivations aren’t altruistic, Jacob’s has generally been a good industry leader (ex. trying to get model year changed, investing in new technology (VEC), etc.).  Maybe this will completely untie his hands at making a serious bid for his former companies.

  9. Boat123

    Ole Boat Builder:
    Genmar is/was a privately held company. There is no stock to purchase or to receive as a bonus. Irwin owned all the stock.

  10. Troy

    Scott,
    You cant be serious!! Jacobs is the one that kept pushing dealer meetings earlier and earlier to capture everyones floorplan money before the other builders could offer product for sale. The several year later he comes along crying about the dealer meeting being to early, and builders are introducing their new model year earlier and earlier. He is the one that drove all of this!! And you want to cval him an industry leader???? Jacobs is ot that hard of a guy to figure out. I am from Mn. and he has touched alot of things around here. I live veru close to him. The only thing you need to know about Jacobs is,, he has one mission: you have money in your pocket….he wants it in his!! End of story. I would not call him an industry leader. He has done more to hurt this industry than anything…and all for his gain, not anyone else.

  11. Genmar Dealer

    Reading the comments on here I am not quite sure what all the concern is for Genmar dealers. Genmar market share is up recently. The boats are terrific, the warranty claims were paid early on in the bankruptcy. Gheesh. As for the naysaying about Irwin buying the company, what’s the alternative? Let the company fail and then what do the dealers have to sell? With Brunswick dealers within a 1/4 mile, are you suggesting they should “double up” in markets? If so, sign me up if you want to share your piece of the pie! How about some common sense and best practices?

  12. walks like a duck....

    What a squirrel.
    Daddy always said, “the devil you know is better than the one you don’t.”
    When the shell game’s all done, nobody in this industry is fooled.

  13. Andrew

    Does anyone still remember long before Irwin Jacobs / Minstar began his boat company buying spree and bought Aegis, (Wellcraft/Hatteras/California Yachts/Starwind Sailboats). He began what OMC and Brunswick followed up with some years later, some say ahead of his time.
    Sure, he made his money buying distressed companies and real estate then liquidating non relevant assets.  (Remember ”Pretty Woman:?)   This is a smart business man that got caught up in the boating dream…and  then bought other companies to build his boat company empire.  A dream that lasted some 20+ years, through all it’s ups and downs.  The economy brought him and his dream to an unfortunate reality check with a heart stopping wake up call, as did many others, both larger and smaller.
    Bankrupcy was never his original intention any more than it was for all the others whom are experiencing the same demise.  Ask anyone whom has gone through the process if they enjoyed it!  It is a SAD day for everyone when a company or an individual has to file bankrupcy. Many lose, few win.
    If Irwin happens to be the winner of the post-bankrupcy Genmar, he may find it unlikely to win back the support of the pre-bunkrupcy dealers and vendors than a totally new entity might.  He may win the battle, but end up losing the war.
    Like I said, boating got into his blood like many of us.  We just feel empty when we don’t have our boats around us..Whether you agree or not, sometimes it clouds our best judgement as well.

  14. comedywatcher

    Roger – we can see your strings!  It’s a good thing for you there is no “I” in “PRIDE”.  Wait – that’s “SELF RESPECT”.  Listen, Pinocchio – we all know Irwin is your Gepetto.  Act like a man and bow out.  All of you.  There are probably a bunch of foreclosed double-wides you can buy right up the road in Little Falls.  Stay out of the boat business.  You had your chance and you blew it. 

  15. Troy

    Genmar Dealer,
    No need to “double up” . You dealers need to quit taking the hose job from these big builders….getting product rammed down your throat. There are tons of small builders out her, building quality product. Why do some of you fall on your own sword to be associated with this guy? Why do some dealers keep taking it year after year. There are builders that dont shove product on you. Search us out..we are here and have products as good and even better than Genmar products!!

  16. Troy

    oh…and you said that Genmar market share is up……according to Jacobs!! I saw the same article you saw. So to that I say whoopdee doo!! Doesnt mean anything. This is the same guy that pushed a dealer here in MN with all of this same kind of thing. Loaded them up on product…and then sold the aluminum companies to Brunswick. This dealer was swinging in the wind and are now virtually gone. This dealer had alot of issues of their own, but they bought into Jacobs line of thinking. Still the question…why do dealer keep working with this company?? There are so many other good quality builders out here.

  17. GC

    I’ve been in bankruptcy.  I learned this, never do it again, no matter what. Most times it’s not necessary after you realize what you have been through with all the trauma. You owe the money, period, and you don’t have enough revenue to cover the debt.  Secured creditors get theirs, and for everyone else its a crap shoot. Meanwhile everyone knew the risk from the beginning. The court is not your friend, it is your new boss, while the lawyers salivate.
    Whether Jacobs survives is irrelevant at this point, he had his day. The free market works with him or without him.

  18. Al Williams

    The pattern was clear with his actions a month ago.  Apparently our bankruptcy laws will allow him to purchase the Genmar assets for cents on the dollar, write off all the old supplier and non-secured debt and be back in business as the owner of the new company.  That is unless somebody else gets into the game and bids against him.  Troy, you should partner up with a private equity partner and make a bid for Genmar yourself.  You could clean up the company and raise product quality at the same time.

  19. P.V.

    I can’t, for the life of me, believe Yamaha (who’s just related how much money they haven’t made this year) and Volvo,would supply the new Irwin lead company with engines. After losing their arses with the old Irwin lead company… Ditto for all the other suppliers!! That Genmar/Irwin didn’t like Brunswick (after he sold them the three aluminum boat companies) means he didn’t get to screw Mercury/Mercruiser like everyone else he screw’d!! No love lost for the guy!!!……….

  20. Boat Chick

    Is there any other industry in the world more dramatic than ours? Why hasn’t anybody made a TV reality show about us?

  21. X Ray Old Bilge Rat

    maybe some old Sea Ray boatbuilders that are non binding to Brunswick now ought to get together and out bid Jacobs and make it an employee owned company. Man that would be someing huh

  22. andyzane

    I was a NY banker handling the AMF account back around 1970 when Jacobs discovered boating and decided to become a player. His image as a corporate raider had already been well established and was widely known (and reviled) when one day he appeared in the office of CEO Thomas York in the White Plains HQ of AMF, which had already become the largest conglomerate in the recreational industry. AMF was still wallowing in multi-millions of cash flow generated from, of all things, enormous royalty revenues from Japan from AMF’s proprietary automatic bowling pinspotting machines. They had already acquired Alcort, Crestliner, Hatteras, Head Skis, Voit, Harley and a bunch of other companies.
     Jacobs announced he was there to purchase Hatteras. York said it wasn’t for sale, thank you very much anyway, and that’s when it got really hostile. York told Jacobs to get lost. Jacobs told York he would rue this day. Within 30 days Jacobs announced a proxy fight with full page ads in WSJ, NYTimes, and other venues, and within 30 days had won control of AMF. (Not long after, lots of other terrified CEO’s came up with the idea of the “poison pill” defense against such raids, which is almost universal today.)  Anyway, celebrating his great victory, Jacobs sold off more than, as I recall, some 28 subsidiaries that AMF had corralled.  Then he told York to get lost… and sent him home to Greenwich or wherever in a limo with a multi-million dollar golden parachute. Jacobs hasn’t changed much since. 

  23. amazed

    Gotta love it when the capitain jumps from a sinking ship! Hell, Irwin has pushed his dealers and emplyees aside and took the last lifeboat…

  24. youngsee

    hey look if it works and he gets this company on the way to profits sweet. people get back to work, and they can get off the unemployment line. if  this doesn’t work he may loose enough of his own money to hurt a little. nobody winns if he walks away now!

  25. carroll downing

    the rich no how to get more money from the bank & the court. look he got this from omc for penny on the dollor or i should say it had more inv. than he pay for these companys & then he sold the aluimum companys off to mercury &THEN WENT BROKE WITH THE REST. MUST BE NICE TO  WALK AWAY WITH ALL THE MONEY????????????????????????????????????/

  26. gordy mckelvey

    Last week I wrote a comment concerning Mr. Jacobs climb back down the ladder. Someone said Mr. Jacobs didn’t have to climb down the ladder at all, he was sort of vested at the top. B/S, not only is Mr Jacobs coming down the ladder he’s headed to the bottom like a greased brick.

  27. Fed Up

    Jacobs didn’t step down as everyone is reporting – He was pushed out.  Also, inside track says that Jacobs won’t even be a contender as there are three PEF’s that are bidding higher than Jacob’s.

  28. Whatta' ya' know

    I sat across the table from him at Michelle’s on Waikiki beach, after he bought Arctic Cat.  I hated what he did with that company. Money is his God.  ( Ex- Cat dealer)

  29. ex disgruntled

    Gordy… it is all just smoke & mirrors. If I wanted to sell you a lemon I would never let you taste it first!

  30. Screwed

    As a former employee of 26 years at Four Winns I have been through 2 bankruptcies and 2 sales.  Each time this happend the problem that keeps creating these events is still there, THE MANAGEMENT!!!  I know the econmy hasn’t helped matters but management doesn’t seem to change witht he times.
    The people who work hard day after day to make the company run do not get the recognition they deserve and Management keeps running the company into the ground by unethical practices like excessive overtime, bonues and such. 
    Each time the company went through bankruptcy or a sale they kept THE MANAGMENT that was causing them to go under.  Don’t you think they would learn after the first time? 
    The only reason these sales and bankruptcies keep happening is to make the “FAT CATS” richer while the employees who put their heart and soul into the company get screwed into the ground.
    Doesn’t seem like fairplay to me and the many others who are currently unemployed after many years of service. 

  31. Bluedog One

    “corporate raider”
    Ok so Jacobs was a king at corporate raiding back in the 70’s, Why is every one so suprised when he steps out to “corporate raid” his own company,
    He has a huge set and he will pull it off. It would be like me letting the bank take my house and loosing my 500k morgage, then walking in and getting it back for 200K. I could never do that,
    Jacobs will get his company back. All the vendors will again work with him, terms may be stronger but they will.
    I would work for the new genmar, he does know what hes doing. Lets not forget everyone is feeling the hangover from the party.

  32. JM

    You are all missing the bigger picture here. The longer it takes for this to get sorted out the more people are out of jobs. It all boils down to the oil companies raising the price of oil to exorbitant levels. This affected everyone on the planet. Thats what caused all the foreclosures, loss of jobs, & bank failures. Everyones money was being spent on fuel. This took away from the mortgage payment, the car payment and all the other bills people need to pay on a regular basis. Therefore we have forclosure’s, loan defaults etc. etc.
    The Goverment in their high profile society are unable to see the true cause of the present economic situation. All the money the oil companies made never trickled back into the economy. It went into a few individuals pockets and thats where it will stay. Our Goverment is now attempting to replace all this money in the economy with stimulus money to make up for it. They better keep it coming because its going to take a lot more!
    Get your life boat ready, the end is no where in site. We have to rely on speculation. As we know, that is meaningless?

  33. Grand Man

    I guess the downturn had nothing to do with the banks and financial institutions loaning money on less than credit worthy people, or poor business projections, …. and not to mention refinancing 125% of values. It was the oil companies and greed, and that explains everything. (whew!)
    The intentional downsizing of the marine industry is directly related to exposure vs. assets and bottom line. The financial companies and banks had to take a hit, so guess what…………….. they will recoup it by managing the debt. It’s been teriffic hasn’t it. Kinda like the govenment today, going to manage our future.

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