Plain sailing for French yacht makers

France's luxury yacht makers are riding out the recession in bankruptcy protection, irking European peers who say their state-sanctioned refuge skews competition.

Rodriguez Group, which built convicted conman Bernard Madoff's vessel "Bull", and Poncin Yachts SA have been using France's liberal bankruptcy laws to stave off creditors and delay debt payments. Couach SA is in administration. The three companies are among France's four publicly traded yacht makers and build boats that can cost as much as $40 million.

"We would love to go for another year without paying our bills," said Fabio Ermetto, commercial director at Heesen Yachts in Oss, the Netherlands, which specializes in building luxury motor boats. "This is not balanced competition."

Yacht makers across the continent are cutting jobs and slashing profit forecasts as wealthy customers trim spending on luxury goods and flood the market with secondhand boats they can't afford to maintain. European yacht sales have plummeted as much as 50 percent this year, and more than 7,000 permanent and temporary jobs have been lost, according to Nick Hopkinson, publisher of International Boat Industry magazine.

Rough waters

Royal Denship A/S, whose Princess Mariana features a helipad and cinema, was declared bankrupt by a court in Aarhus, Denmark, in April, after customers canceled orders or failed to pay on time. About 100 people lost their jobs, according to Danish newspaper Dagbladet Borsen. Aicon SpA posted its third straight quarterly loss in April. Auditor PricewaterhouseCoopers LLP said it couldn't express an opinion on the Sicilian company's accounts because of "significant doubts" the boat builder can survive.

"Rules applied to boat makers should be the same throughout Europe," Anton Francesco Albertoni, chairman of UCINA, Italy's marine industry association in Genoa, said in an interview.

The average super yacht takes two years to build and sells for about $1 million a meter, according to Ellie Brade, research editor at The Yacht Report in London. They sport luxury features, such as glass elevators encased in marble or a children's slide passing through the ship and into the sea. A single order can bankroll an entire shipyard, she said.

Cannes-based Rodriguez and Marans-based Poncin, France's second- and fourth-largest listed boat makers, opted to use France's "sauvegarde" law as demand for boats sank with the financial markets. The safeguard legislation, available for companies that aren't yet insolvent, affords creditor protection for as long as 18 months and keeps management in place to renegotiate debt.

Bloomberg News

(China Daily 06/08/2009 page11)