The future of Fountain Powerboat Industries should become clearer in the next few months as company founder Reggie Fountain and FB Investments, the corporation that owns the bank note on the company, continue to disagree on what's best for the powerboat manufacturer.
Reggie Fountain told Soundings Trade Only he expects to file a reorganization plan with the bankruptcy court in North Carolina next week. He wants to reorganize with the help of Liberty Investments, which also recently became majority shareholder of Donzi Marine and Pro-Line Boats.
"We don't think there'll be a stronger company in the world," Fountain said of the possible pairing up of Liberty and Fountain, which would bring four boat lines under one organization.
FB Investments, however, is asking the court for permission to file its own plan of reorganization for the company and expects to receive a ruling on that motion next month. FB Investments is a corporation formed by the principals of California-based Oxford Investment Group for the purpose of acquiring the note.
Fountain said his company had been looking for investors for months, and once he filed Aug. 24 for Chapter 11, "[possible investors] came out of the woodwork."
When filing for Chapter 11, Fountain said he initially requested a sale of his company's assets because he wanted to go through the auction process. However, in September, FB Investments purchased the $19 million note at auction from Regions Bank for $6.75 million and had put in an unopposed credit bid of $8.75 million for Fountain.
Fountain says FB did that against his objections and in order to circumvent the sale process.
Selwyn Isakow, chairman of Oxford Investment Group, however, said Fountain encouraged him to purchase the note if he was serious about buying the business.
"That's not so," Fountain said. "I would never have encouraged him to buy the bank note. I wouldn't have been sitting there in court trying to get this reorganization going if I had tried to get them to buy the note."
Isakow says when he first met with Fountain, about a week after the company filed for Chapter 11, it was a great meeting. It was only after the sale of the bank note that the relationship began to sour.
Fountain said James Bursey, the consultant sent by FB to his company, caused huge problems. Bursey told the security guards not to let anyone on the property unless he said it was OK, he threatened employees with their jobs and he put his own locks on doors, among other things, Fountain contends.
"He did about 24 or 25 things that you should never be able to do that are in direct violation of lender's liability," Fountain said. "He broke every rule in the book. They haven't invented a rule that guy didn't break."
Also, Fountain said, Bursey had little experience in boatbuilding yet talked about coming in and changing processes that have long been in place.
Isakow said Bursey is no longer a consultant for FB investments. He had no additional comments on Fountain's accusations against the consultant.
Isakow said his company has been looking at the boating industry for more than 10 years and is eager to get into the business and return Fountain to profitability.
One difference between Liberty's proposal and FB's proposal is Liberty has said it would retain Fountain as CEO of the company, whereas FB has made no such promises.
"It's very clear that was a differentiating factor," Isakow said. "You can't do things the way they were done and expect a different result in anything you do. We know we have to make some changes.
"We still think that Reggie's one of the world's great marketers and we would love the opportunity to have him lead that effort, but we were not prepared to say everything's going to be exactly the same as it was," he said.
Isakow admits he was "absolutely shocked" when in October the court did not approve the sale of the company, instead allowing Fountain to put forth a reorganization plan with Liberty. However, he's still hopeful the court will rule in FB's favor on the latest motion.
If the sale is eventually successful, Isakow says he would eventually want to bring more boat lines to the Washington, N.C. plant, but right now he's only involved with Fountain.
"I personally think very highly of Reggie, we would like to supplement his skills, with the turnaround skills that we have, the manufacturing skills we have," Isakow said.
Fountain, for his part, says he won't work with FB should they eventually succeed in the bid for the company.
"Their chances of making it work are zero to none in my opinion," he said.
Continue reading Trade Only Today for the latest news on Fountain.
— Beth Rosenberg