By By GREG KATSKI
Community Editor
CHOCOWINITY — Fountain Powerboat Industries Inc., parent company of Fountain Powerboats, is out of bankruptcy and back at work.
Following a hearing held in the U.S. Bankruptcy Court in the Eastern District of North Carolina on Wednesday, Randy Doub, chief bankruptcy judge, approved Fountain’s reorganization plan, lifting the company from Chapter 11 bankruptcy protection.
In late August 2009, Fountain filed for bankruptcy protection. Several weeks later, the company’s $19.6 million bank note was purchased by a third party, Oxford Investment Group. A bankruptcy auction of the company’s assets was set for early October, but the company instead moved to restructure its Chapter 11 bankruptcy protection and reorganize with Liberty Investments.
With Doub’s approval Wednesday, Liberty became the majority owner of Fountain Powerboats. Reggie Fountain was retained as the company’s president and CEO, and Bill Gates was named chairman.
According to Gates, Liberty Investments, which is based in Florida, also is majority owner of Donzi and Pro-Line Boats. Fountain called the investment group “avid boat-lovers.”
As part of the reorganization plan, Liberty agreed to pay Oxford Investments $6.9 million for the bank note and an additional $500,000 for unsecured debt. Fountain’s other creditors were awarded $500,000. The company also has transitioned from the public to private sector, and will not be traded publicly from this point forward.
“First of all, I’m pleased with the judge’s decision,” Gates said. “It was a little bit of a bumpy road, but we were confident all along.”
Gates, now the highest-ranking individual at Fountain, said he is optimistic about the future of the company.
“I’m confident Reggie can steer the company in the right direction,” he said.
Fountain said the success of the company that bears his name depends on the economy.
“If the economy comes back, Fountain comes back,” he said.
Fountain said the company’s performance at the Miami Boat Show, which starts Thursday, will be a “good harbinger for what to expect in the future.”
The company is shifting its focus from building what Fountain called “pleasure boats” to government-contracted boats to be used by the Navy, Coast Guard and other branches of the U.S. armed services.
Fountain referred to a 42-foot-long interceptor-type boat the company is working developing.
“It’s like the James Bond boat, but better,” he said.
The Bahranian government recently placed an order for 24 interceptors; the company has already built six, Fountain said.
After halting production for some time, the company began building boats again in earnest last November. Production was aided by Liberty, which helped finance Fountain operations during the reorganization process.
In November, the company made $300,000; in December, it made $1.2 million, Fountain said, adding that he hopes the company will be pulling in $3 million a month by March. With the rebound in production, the company has been able to hire 120 employees. As recent as October, the company had just 10 full-time employees, Fountain said.
If the company reaches $80 million in sales by the end of 2010, it can return its work force to 400-plus employees, Fountain said, adding that hiring more workers depends on how the market rebounds.
Gates expects it will take two to five years for the sportboat industry to recover.
“We understand that it’ll be slow to return,” he said, “but our vision is to lead the market.”