Coast Catamaran Sale Folds; New Bids Weighed
The owner of Coast Catamaran Corp., maker of the Hobie Cat sailboat, has called off an agreement to sell the firm to an Irvine investment group.
Evergreen Partners, an investment banking partnership, signed a letter of intent last November to purchase the Oceanside-based firm from Coleman Co. but missed a Jan. 31 deadline to close the deal, Coleman spokesman Charles McIlwaine said Monday.
Coleman, a recreational products maker in Wichita, Kan., said it is now considering four bids for the firm, including Evergreen’s and a proposed management buyout.
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George Pennington, who is leading the Evergreen partnership, confirmed that his investment group had offered about $16 million for Coast. He said the group missed the Jan. 31 deadline because of delays in completing a study of the purchase, which in turn delayed financing. He said the group is now closing its arrangements with lenders and will have its money before May 15.
The management group, which would turn over 25% of Coast’s ownership to employees, has improved its proposal in the wake of Evergreen’s failed plan by offering increased tax advantages to Coleman, Coast General Manager Doug Campbell said.
“Our offer is well below what Evergreen offered, so I don’t know what our chances are of getting it. But we’ve done all we could,” said Campbell, a member of the 11-member management group.
Hoping to keep jobs and the well-known Hobie Cat name in Oceanside, city officials aided the management group in October by authorizing a $20,000 study on the feasibility of a management purchase.
“Hobie Cat isn’t the largest firm in Oceanside, but they fit in very well with the beachside life of the city,” said city spokeswoman Janet Martin. “They are very important here.”
Coast employs 140 workers at its 30-acre manufacturing plant and headquarters, where it produces a line of fiberglass catamarans known worldwide. The company, which claims to control 80% of the catamaran market, also operates a manufacturing plant in southern France.
Coleman said last fall that it was selling Coast because it had been hurt by an industrywide decline in sales. Coast’s sales peaked at more than $31 million in 1981, but dipped to $20 million in 1986.
For 1987, sales were up and the firm was profitable, Campbell said.
Although the popularity of water sports such as windsurfing has taken sales from the sailboat industry in recent years, sailing experts said the industry might be ready for renewed interest.
“In Europe sailboating has come back. Maybe our turn is next,” said Hobie Alter, who designed the Hobie Cat sailboat and co-founded Coast in 1968. Coast was acquired by Coleman in 1976 for $3.2 million. Alter no longer has a role in the company.
Analysts said Coleman might decide to hold onto Coast following the failure of Evergreen’s first offer.
“If they can’t get what they were expecting for it, they certainly won’t turn around and give it away for much less,” said Dennis Hudson, director of research for George K. Baum & Co., a brokerage firm in Kansas City, Mo.
