Receiver thinks Fountain can survive

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Work slowly resumes at North Carolina plant in the shadow of multiple court proceedings

Boatbuilding has resumed at the Fountain plant in Washington, N.C., despite the legal issues swirling around the company.

Ronald Glass, who in late October was named temporary receiver of Fountain Powerboats and its affiliate companies, says the group was expected to deliver a 38-foot Fountain to a buyer the second week of November and was finishing work on a 38-foot Donzi.

“We are back building boats, finishing work in process,” Glass says. “We are slowly but surely calling people back to work and are in business and had reasonable traffic at the [Fort Lauderdale International Boat Show].”

In addition to Fountain Powerboats and Donzi Marine, Glass is temporary receiver for Pro-Line Boats and Baja Marine and their assets, along with Palmetto Park Financial.

As of early November, he says, the Pro-Line, Donzi and Fountain lines all had work going on, but there was no work on the Baja line at the moment. “We have a reasonable inventory of finished Bajas that we need to get to the market,” he says.

North Carolina Business Court Judge James Gale named Glass the temporary receiver in First Capital’s lawsuit against Fountain and numerous other entities. The lender is seeking $61.04 million in damages for an alleged breach of loan agreements, according to documents filed in October in the North Carolina court. First Capital also alleges misappropriation of funds.

The complaint identifies the borrower defendants as American Marine Holdings, Donzi Marine, AMH Government Services, Pro-Line Boats, Fountain Powerboats LLC, Fountain Powerboat Industries, Fountain Powerboats Inc., Fountain Dealers’ Factory Superstore, Baja by Fountain, Palmetto Park Financial, 50509 Marine, Liberty Acquisition FPB and Joseph G. Wortley.

In court papers, First Capital says operations at the North Carolina plant ceased Oct. 7 and that the executive management resigned. Employees were told to go home and not report to work until further notice.

As of early November, Glass says, between 25 and 30 people were working at the facility. And although no new boats had been worked on from Oct. 7 until he was named receiver Oct. 20, it was his understanding that the parts and service department continued to operate during that time.

He says orders for new boats continue to arrive, including some from foreign governments. Glass says the plan is to complete all boats in production and begin building new ones. He says he is “cautiously optimistic” that the business will continue.

“We stand with our dealers in support of our product because the sale of the companies’ boats will enhance the financial picture of all of the companies and their dealers,” Glass said in a statement shortly after he was named temporary receiver. “The thrust of our current effort is to get the company back on track and prepare for major displays and new product launches at the Miami International Boat Show in February.

“My team from GlassRatner is working closely with the management of the companies — including Craig Barrie for Donzi and Baja, Alden Thornton for Fountain and Nat Rich for Pro-Line — to ensure their ongoing operation and the continued support of the dealer network,” the statement said.

A hearing was scheduled for Nov. 17 to rule on First Capital’s motion for the appointment of a continuing receiver.

Also on Oct. 7, Liberty Associates announced it had ceased providing management services to American Marine Holdings, and Liberty’s affiliate transferred its nominee ownership interest in American Marine to First Capital, a portfolio company of HIG Capital.

“Liberty has enjoyed its part in steering the company through the very difficult times that the boat manufacturing industry has experienced recently and wishes [First Capital] continued success with AMH in the future,” the company said in a statement.

After Fountain Powerboats filed for bankruptcy in 2009, Liberty Associates and Fountain filed a joint reorganization plan and Liberty acquired the company. Former owner and founder Reggie Fountain was initially retained as CEO, but the two parted ways at the end of 2010.

Earlier this year, Reggie Fountain sued his former company for money he says is due him, as well as trophies and pictures from his racing days. Court documents Fountain filed also contain numerous allegations of past improper business dealings by Liberty CEO Bill Gates.

Fountain Powerboats filed counterclaims against Reggie Fountain, saying Fountain took company property, as well as trade secrets, when he left the company. Fountain has repeatedly denied those allegations and says there are no trade secrets at Fountain.

Glass says the First Capital case has nothing to do with Fountain’s lawsuit against his former company.

“I know nothing about Reggie’s lawsuit except that it’s out there,” he says.

This article originally appeared in the December 2011 issue.

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