Oceanside Funds Feasibility Study : Hobie Cat Builders Get Help in Bid to Buy Company
In recent years, it has been perhaps the high-profile company in Oceanside. As manufacturer of the world-famous Hobie Cat sailboat, Coast Catamaran Corp. has been the sort of firm any city official would love--a steady employer with an appealing product that has helped put Oceanside on the map.
But when Coast Catamaran’s parent firm, Coleman Co., decided to place its Hobie Cat division in Oceanside up for sale last month, local officials began worrying that a new buyer might uproot the city’s most prestigious employer and move it to some far-flung land.
On Wednesday, the City Council took steps they hope will ensure that the speedy, twin-hulled sailboats are built in Oceanside for years to come.
Throwing their backing behind an effort by many of Coast’s 180 employees to purchase the firm and keep it here, the council voted unanimously to use $16,000 in federal community block grant funds to finance a study to determine the feasibility of the buyout.
The effort by the Coast employees comes as officials with Coleman Co.--manufacturers of lanterns, camping gear and other recreational products--are eyeing more than a half dozen offers from potential buyers.
‘Tough Competition’
“Obviously, there’s some tough competition,” said Doug Campbell, president and general manager of Coast Catamaran Corp. and a leader of the employee buyout effort. “There’s no way we have a lock on it. I’d say that in a scale of 1 to 10, our chances are in the area of 2 or 3.”
Campbell said Coleman officials have told him that “all things being equal, their preference is our group,” but he noted that the publicly owned company will undoubtedly be forced to “take the best offer” that comes along.
He said the employees were motivated largely by concerns about losing their jobs or having to move from the area if another firm took over. Although it is far from certain that a new owner would move the Hobie plant, Campbell and others have speculated that a shift might occur to take advantage of cheaper labor in other parts of the United States or foreign countries.
Oceanside officials are eager to see Coast stay put, pointing to the tax benefits accrued from the company as well as the numerous jobs the company provides for local residents.
A more intangible benefit is the Hobie name, a fixture even outside sailing circles. It’s just the sort of clean, beach-related industry that image-conscious officials in Oceanside don’t want to lose.
“It’s a high-profile name, all the more reason we’d want to keep them here,” said Mayor Larry Bagley. “And there are a lot of jobs at stake. What’s more, I think we’re sending a signal to the industrialists in town that we’re interested and we’ll help out when we can.”
City officials realize that time is of the essence, so they’ve put a one-month deadline on the feasibility report, which must be completed before the employee group can finalize their bid to purchase the firm. The study, which is being undertaken by President’s Capital Assn., Ltd., will determine how an employee-owned company would be structured as well as the financial feasibility of such a deal.
Tax Advantages
As currently envisioned, the employees would probably use a stock ownership plan to pay off money borrowed from banks and investors to buy Coast, according to Richard Goodman, Oceanside’s chief of housing and coordinator of the community block grant program. Goodman said there are additional tax advantages for Coleman if the firm sells to its employees.
Some council members reported Wednesday that residents have questioned the use of the federal funds to finance the feasibility study for the Coast employees. Goodman, however, said the deal is justified because the block grant funds are intended to help benefit low- and moderate-income residents, and 51% of the employees at Hobie are in those categories.
In announcing their plans to sell the Coast division, Coleman officials cited disappointing sales in the sailboat industry in general over the past five years. Nonetheless, Campbell said he feels sales will begin to pick up again in the coming years, noting that Coast is expecting this year to post a significant gain over 1986.
Bargain Price
Coleman acquired the firm in 1976 from principal shareholder and Coast Catamaran founder Hobie Alter for the price of $3 million. The firm’s sales peaked three years later at $30 million, but have fallen to less than $20 million in recent years.
While no sales prices have been announced as Coleman officials negotiate with various buyers, Campbell speculated that the firm will go for between $10 million and $20 million, far above its price tag of a decade ago.
Aside from the 200,000-square-foot Oceanside manufacturing plant, the firm owns a small plant in Hyeres, France. Hobie builds its famous catamaran as well as Holder monohull recreational sailboats. It also serves as the U.S. distributor for Alpha sailboards.
