MarineMax extends loan to $950m
By increasing the amount it can borrow, the boating conglomerate has increased its overall debt to over $1.5bn as it looks to bolster its inventory…
MarineMax has increased the amount of money it can borrow by extending its line of credit to $950m. Previously, MarineMax’s creditor’s ‘floor plan facility’ (a line of credit used to finance inventory acquisitions) allowed the company to borrow up to $750m. Now with the improved cash flow, MarineMax aims to grow its portfolio with the purchase of new and used yachts.
“This increase is consistent with our historical practice of augmenting floor plan capacity as needed for growth,” says Michael McLamb, Executive Vice President, Chief Financial Officer and Secretary of MarineMax. “The expansion of our floor plan facility, as provided by the accordion feature of our credit facilities, underscores the success of our growth strategy and the strength of our balance sheet.”
The extension increases the company’s overall loan (which it secured in August last year) from $1.35bn to $1.55bn. Other than the changes to the floor plan facility, all other terms of the loan remain unchanged, including the maturity date of August 2027.
The floor plan financing was led by M&T Bank as Administrative Agent and Joint-Lead Arranger, along with Wells Fargo Commercial Distribution Finance as Joint-Lead Arranger and Floor Plan Agent.
“We appreciate the ongoing support and confidence of our bank group partners as we execute our initiatives,” adds McLamb.
This is the latest development in MarineMax’s superyacht industry expansion. The company acquired Fraser Yachts in 2019 and Northrop & Johnson the following year. At the time, MarineMax said the acquisitions would enhance the overall customer experience through the ongoing development of marketing capabilities. Kevin Merrigan, CEO and chairman, and the entire Northrop & Johnson team, have continued to operate and manage its activities.
“The merger with Northrop & Johnson marks another significant step in the diversification of MarineMax into a higher margin and digitally enhanced business. On a global scale, the unified team of Fraser Yachts and Northrop & Johnson creates an unprecedented superyacht powerhouse,” said W. Brett McGill, CEO and President of MarineMax.
More recently, the company bought IGY Marinas in August last year for $480m in cash. Around $400m of this was facilitated as part of the firm’s original $1.35 loan. The firm then went on to finish the year with record sales revenues of $2.2bn.
It’s also part of the bigger story of giant corporations buying marinas and refit yards in the US. And the entities being snatched up include some of the most iconic names in the US such as Rybovich, Bahia Mar and Lauderdale Marine Center (LMC).
Writing earlier this year, guest author asked Kevin Goeing asked that whilst the yachting industry has been mainly small-business-oriented, why now have the big boys decided to swoop in and bundle together phalanxes of otherwise unrelated boatyards?
His answer: good old-fashioned American consumerism. There is money to be made.
As is well documented, boat sales went through the roof during the pandemic, and all of those boats will need a place to live, as well as somewhere to go for repairs. The margins for housing and refitting boats are much more lucrative and dependable than for building them, as there is less dependence on an owner’s whims. There simply aren’t as many last-minute changes or deals falling through.
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This news comes just a few weeks after MarineMax announced their acquisition of IGY Marinas
MarineMax expects the transaction to close in the first half of fiscal 2023, subject to the satisfaction of customary closing conditions