Then one of my co-imbibers received a call on his mobile. ‘Strange,’ he said when it was over, ‘I’ve just been summonsed to Sealine HQ. It seems that all dealers will now do business direct with the factory. Peters~Opal now appears to be out of the picture?’

Strange indeed, I thought. Peters~Opal had only taken on the Sealine dealership around 18 months ago - to fill a gaping gap in its portfolio.

Fairline (whose boats it had distributed for decades) had been bought out from the Renwick Group Plc (also owners of Princess) and its new board promptly elected to cut out its distributor (Peters~Opal) and sell direct to dealers.

Shortly after this mystifying Sealine development, rumours began to spread like wildfire, suggesting that the mighty Peters~Opal might be in serious trouble. Then, on the evening of August 14, that Nice Mr Nash put out a BB News Update, datelined for the following morning, August 15. It was a brief but breathtaking announcement that ‘KPMG was appointed to handle the administration of B A Peters Plc yesterday afternoon’.

The official KPMG statement was reproduced verbatim:

Administrators appointed to B.A. Peters Plc
14 August 2007
Jane Moriarty and Myles Halley of KPMG LLP have been appointed joint administrators of B.A. Peters PLC. Headquartered in Chichester, the company is one of the UK’s largest luxury boat dealerships operating from six marinas in the UK and four marinas in Spain. The company is also one of the UK’s largest approved service agents for the key suppliers of Volvo Marine and Raymarine.
The business currently has licence agreements with Azimut, Bavaria, Legend, Rodman and Island Packet for the sale of luxury yachts. Other operations include a Shipyard at Chichester which undertakes warranty work for the Company’s key boat manufacturers.
Jane Moriarty, partner KPMG Restructuring and joint administrator said: “Due to difficult trading conditions the company has experienced extreme cash flow problems. Although the business continues to trade, we have unfortunately had to make 130 members of staff redundant.”
The administrators are currently reviewing the financial position of the company and are actively seeking a buyer for the business.
B A Peters Plc employed 180 people based mainly at Chichester and had a turnover of around £82m for 16 months ended Dec 2006. UK leasehold sales sites are Chichester, Ipswich, Eastbourne, Gosport, Swanwick, Brixham, and Inverkip; Spanish sales sites are Mallorca (Cala d’Or), Sotogrande, and Denia.

Saddened to hear
In double quick time, an announcement arrived from the British Marine Federation (BMF) saying: ‘The BMF was saddened to hear today that BA Peters plc is formally in administration. The business has been a force for many years and has made a huge contribution to the UK marine industry.

As owners of the Southampton Boat Show, the BMF has decided that boats that were to be displayed by B A Peters plc could now be displayed directly by the manufacturers should they wish to do so. This solution will provide continuity for visitors to the show who have already purchased tickets for the Southampton Boat Show based on the knowledge they have of the products on display there.

The situation will be reviewed following the show for next year's event when applications for space will revert to the National Boat Shows (NBS) standard terms and conditions.’

Then there was the small matter of Brian Peters’ recent appointment as president of the BMF. As a previous chairman of NBS, and a long standing member of the BMF management board and national council, there’s no doubt that he would have brought invaluable experience and not inconsiderable weight to the proceedings.

But with the sad demise of B A Peters Plc, Peters had no option. Under the BMF’s own regulations, Rule 2.9 stipulates: A member shall cease to be a member …if it makes any arrangements with its creditors or an administrator or administrative receiver is appointed in respect of the whole or any part of its undertaking.

So while the BMF put out an announcement making it appear Peters had stepped down of his own volition, neither BMF nor Peters had any choice in the matter.

As this is written, the BMF management board has yet to sort out what happens regarding the BMF presidency. Both vice presidents – Tim Coventry and Alan Morgan – have time constraints that make it difficult for either to step up to the plate (so why, if neither could assume the role at a moment’s notice, were they vice presidents, one might ask?).

As BB speculated on the day Peters forfeited the presidency, the most likely scenario might be for Peter Methven, the highly effective immediate past president of the BMF (and still a member of the management board), to be asked to stand in until Coventry or Morgan can find the time to take on the role ahead of the planned takeover date.

The decision should have been taken by the time you read this.

But one part of the BMF statement on August 20 remained completely correct: ‘Brian has been a great servant to the marine industry, particularly during his time as chairman of National Boat Shows helping to plan and run the London and Southampton Boat Shows. We wish Brian well for the future.’ And so say all of us.

What went wrong?
But what went wrong, and what’s likely to happen now? Peters~Opal was a huge company, said to be turning over in excess of £80 million in 16 months at the last count. Founded by Peters in 1972, the company had grown to become the largest motor and sailboat distributor in Europe after buying Bavaria, Island Packet and Legend distributor Opal.

Given that the marine industry has been flying (by its standards) over the last few years, how could the biggest distributor in the business come a cropper in such a sudden and spectacular way?

Virtually everyone I have spoken to puts it down to the loss of the Fairline distributorship – just before SBS in 2005. This could well have been the beginning of the end.

Peters Plc and Fairline had grown up together, with the Newingtons and Peters working in close unison as model sizes grew and turnover expanded. Even when the Renwick Group bought Fairline, this close relationship carried on and Peters Plc continued to distribute a major proportion of Fairline’s production.

But when a management team (with financial backing from 3i Plc) paid what to some looked like a surprisingly high price to buy out Fairline around two years ago, everything changed. Fairline MD Derek Carter immediately set out to increase production efficiency (by means of lean manufacturing and streamlined supply chains) and further enhance profitability by dispensing with a distributor and, instead, doing direct business with area dealers.

And there is little doubt that this process has worked for Fairline, with turnover up around 34% in the last two years and profits up (just in the last year) by around 75% according to PWC.

Apparently Fairline CEO Derek Carter expects 2007 net profits to exceed 10% of turnover, partly resulting from the removal of a distributor’s ‘slice’, perhaps.

But there is equally little doubt that Fairline’s change of direction inflicted major damage on Peters~Opal. Old fashioned retailers used to speak of the dangers of the ‘M&S syndrome’, whereby a huge proportion of turnover came from one single supplier. The same could be said of Peters.

With Fairline gone, the company had a choice of two options. Plug the huge gap in turnover with other suppliers (fast), or drastically cut back on costs and overheads.

It chose the former (ill advisedly as it now appears), signing up deals to add Sealine and Azimut to its portfolio in double quick time. There was also a brief dalliance with Denship.

Stock levels
All this, in turn, will have led to increases on stock levels. And the company proceeded to increase overheads by setting up new sales sites (incurring more rent and staff costs, etc) in several prime (and expensive) marinas and spending not far short of £1m on a sophisticated new computer system.

When I spoke to a previous Opal MD, Julian Gowing, he said: ‘It’s really sad. I feel very sorry for Brian and those who have lost jobs or money. I believe it could have been avoided if the company had cut right back on costs when it lost Fairline; but instead it seemed to expand.’

Both he and one of Opal’s major suppliers (Stephen Cutsforth of Luhrs Marine) reckoned that the loss of Fairline was a hammer blow and that the subsequent loss of Sealine provided the coup de grace.

But the bottom line will have been a large amount of heavily financed unsold stock boats which must have exacerbated the ‘extreme cash flow problems’ caused by ‘unfavourable trading conditions’ noted in the KPMG announcement of the administration.

Rumoured serious warranty problems on a few Sealines will not have helped either. In short, the company failed to shift enough plastic.

Barrie Stilwell, who sold his successful Opal company to Peters around three years ago, agreed that the loss of Fairline was probably the beginning of the end, adding that; ‘lack of powerboat sales must be the major factor.’

Any slowdown in sales means financing a higher inventory, he added. ‘I think Peters wanted to keep on his staff – rather than cutting back – but there seemed to be no contingency plan.’

He also said he reckoned that the pending hike in diesel fuel, upward trend in interest rates, downturn in stock markets and possible end to the housing market rises all combined to make would-be powerboat buyers more cautious.

However he did tell me: ‘Opal was always profitable. But anyone trying to take over the Bavaria, Legend or Island Packet distributorships and run them on a shoestring won’t succeed. It’s an expensive game to be in.’

When I asked if he had any thoughts of re-entering the fray, he cryptically said his phone had not stopped and maybe it might just be possible that he could consider coming out of retirement – or words to that effect! Watch this space, perhaps?

Others also observed that Peters had delegated several aspects of the running of the business because of his workload as a JP, his involvement in various charities and his work for NBS and the BMF.

Services rendered
He did, after all, receive an OBE for ‘services rendered to business and to the community’. But there is a sage old saying that goes; ‘the best manure is the farmer’s boot.’ And it’s possible that Peters’ other commitments meant that he had less time to dedicate to the company and therefore entrusted more decisions to other people than was perhaps desirable.

What happens next is anybody’s guess. Cutsforth told me that Luhrs would run the Legend stand at Southampton but that, when it comes to appointing a new Legend distributor; ‘we can't be boxed-in by Southampton to make a decision. We'll take some more time to ensure we have a long term partner (like the original Opal). Luhrs Marine will manage the show.’

He went on: ‘At this point, we're mostly concentrating on our customers - to take care of various outstanding issues from Peters.’

Azimut Yachts, another Peters~Opal supplier, issued a statement saying: ‘Azimut Yachts will carefully evaluate the measures which will be undertaken to solve the present financial situation of Peters~Opal, analysing the possible solutions of continuity and preserving the excellent dealership and product support activity in the assigned areas.

‘Azimut Yachts will ensure its presence at Southampton Boat Show displaying a wide range of Azimut models directly.’ Make of that what you may – ‘PR Agency Speak’ can be convoluted at the best of times. But it does say that Azimut Yachts will be on show.

Spanish builders Rodman (backed by 3i Plc) also issued a (slightly more intelligible, albeit grammatically challenged) press release saying: ‘To continue their strategic plans and reinforce its presence in the UK market, Rodman will be directly involved in the forthcoming Southampton and London Boat Shows, in September and January respectively, in line with their corporate policy to support its professional dealer and service infrastructure in the country.

‘The recent situation affecting Peters~Opal, distributors for the UK of the Rodman Sport Fish and Cruising boats, has forced Rodman to search for an immediate replacement following their corporate strategy of operating in the top markets through local exclusive distributors.

‘As for the Rodman Yacht and Rodman Muse models Ancasta will continue to represent the brand in Great Britain and Whiterock Yachts in Ireland.

As this article was finished, Island Packet Yachts announced it had done a deal with Premier Yacht Sales to handle its boats in the UK and Ireland. Premier will be showing Island Packets at SBS.

But then there’s another problem that will need sorting before the show. This relates to the ultimate ownership of Peters~Opal stock boats.

Like many major players, Peters~Opal used ‘floor plan’ financing systems to fund such boats. This means that a marine finance house (mainly Lombard I am told in this instance although GE Capital was also in for a fair chunk) will have loaned a high proportion (said to be around 90%) of the cost of each stock boat to Peters~Opal and taken the builders certificate (nearest marine equivalent to a log book) as security.

‘Floor plan’ finance
So any builder who has supplied a boat on which ‘floor plan’ finance has been taken out by Peters~Opal can’t snatch the boat back (if there is any outstanding payment due). It belongs (at least in a major part) to a marine finance house.

In Lombard’s case, this was thought to amount to around 40 new boats and a dozen or so used ones. I am told that these went on the market on August 14 (with Lombard as vendor) and it has already got buyers for almost half of the new boats and a few of the used ones.

Many fast moving bargain hunters may well have been potential SBS buyers, so perhaps this does not augur too well for show sales in September.

But one supplier - who had a different type of scheme for stock financing – suggested he would have to ‘re-purchase the stock’. Either way, there could still be quite a few discounted boats on the market. Which is never good for the trade.

Banks and administrators tend to concentrate on getting money back (as fast as possible) rather than necessarily sticking out for full current retail prices.

And then there’s the damage that could be done to the marine industry as a whole. Customer confidence is a delicate flower – all the more so if interest rates have been rising and stock market volatility is lurking in the shadows.

If a company as big as Peters~Opal can hit the buffers, will boat buyers now be so willing to hand over hefty deposits when ordering new boats from smaller retailers? Those who ask for stage payments might also encounter a degree of resistance.

On a purely numerical basis, Sealines, Rodman Sport Fish and cruising boats, Azimuts, Bavarias, Legends and Island Packets make up a meaningful proportion of boats offered for sale at a UK boat show. And even though these boats are all still there, a pall of uncertainty is likely to hang over their stands.

The stand space may have already been paid for (said to be around £90k’s worth, that the administrators are rumoured to have tried – unsuccessfully – to get refunded by NBS), but there is still the small matter of stand construction, boat transport and staff costs.

In addition, there will be hapless creditors at the show who have lost money which they may be unlikely to recover in full.

Even though Peters~Opal was a very large business in turnover terms, its assets are unlikely to amount to much. I was told that around £1.5m worth of stock (that will have to be flogged off at speed) ‘belongs’ to the administrators, but more of the stock is in hock to one sort of banker or another.

Birdham Pool Marina is being (has been [unsubstantiated, but heavily rumoured]) sold, probably to pay off secured bank loans. Most of Peters~Opal’s sales offices are rented from marina operators.

And any value in the dealerships it held will have been nullified when the company went into administration. So there might not be that much left in the pot once the secured creditors and the administrators have taken their wedge.

Unsecured creditors could have to hold their breath. Possibly for a long time. All in all, it’s a sorry state of affairs that will cause a lot of collateral damage to the industry. Of course potential buyers for the business have already been talking to the administrators and it is possible that new owners may even be in control before the SBS.

But there will be many more twists and turns ahead as more information becomes available.