MasterCraft says it has found a way to return to viability without filing for bankruptcy protection, and is asking its vendors to accept a staged repayment plan or a discounted immediate payment.
"This is a very happy outcome compared to what it could have been and what else we're seeing in the industry," CEO John Dorton told Soundings Trade Only. "This will be out of court, and we're just looking for our vendors to help us."
Vendors agreeing to the staged repayment receive 25 percent of the full amount owed, on or before July 30. The balance will be paid in equal quarterly installments during the next four quarters beginning Sept. 30. Vendors choosing the immediate payment agree to accept 35 percent off the full balance and were to receive payment of the remaining 65 percent July 15.
"MasterCraft is in the process of restructuring our balance sheet to deliver and generate the liquidity to ensure our ongoing viability," Dorton said in a letter to vendors.
The restructuring is being accomplished through the support of Wayzata Investment Partners, the company's largest bondholder. Wayzata is a Minneapolis-based investment firm with more than $5 billion in assets, according to a statement released by MasterCraft.
Unit shipments declined 56 percent from fiscal 2008 to fiscal 2009 and, as a result, the Vonore, Tenn.-based boatbuilder went into "crisis cash management mode in order to maintain our liquidity," Dorton said in the letter to vendors.
This meant laying off the majority of the work force, significantly curtailing production, and reducing wages and benefits for remaining employees. The company, however, began rehiring some 200 employees the week of July 6.
Sumerset extends shutdown
Sumerset Houseboats announced an extended production shutdown that is expected to last more than three months. Sumerset's annual summer shutdown began two weeks later than regularly scheduled and is expected to last through Nov. 1, according to company president and CEO Steve Lochmueller.
"Sumerset Houseboats is taking this proactive step to avoid margin erosion and allow a glut of finished inventory to clear out during the second half of 2009," Lochmueller said in a statement. "This downtime is part of managing the houseboat industry sales cycle, and we view it as an opportunity to prepare for the 2010 boat show season."
Lochmueller says he expects recovery for the houseboat industry in 2010, and Sumerset will start accepting orders for the model year 2010 with delivery next spring and summer.
Sumerset Houseboats' corporate headquarters and showroom in Somerset, Ky., are unaffected by the production downtime.
This article originally appeared in the August 2009 issue.