Potential Buyers Circle Sinking Tollycraft -- Kelso Yacht Builder Owes About $4 Million

Potential buyers are lining up to bid next month for Tollycraft Yacht Corp. of Kelso, which stopped production and filed for Chapter 11 bankruptcy protection last month.

At least one major competitor, a lender and others are expected to bid for the company at a hearing Jan. 13 in U.S. Bankruptcy Court in Tacoma, said Albert Kennedy, Tollycraft attorney in Portland.

He would not identify the competitor. The lender, already doing business with Tollycraft, is the Portland office of California Factors & Finance.

The company is worth about $2 million, Kennedy said. A buyout likely would involve cash and debt assumption. Total debt listed to creditors in the bankruptcy filing is about $4 million.

About 100 employees are out of work until the future of the longtime pleasure-boat producer is settled. At its peak in the late 1980s, Tollycraft employed more than 300.

Founded in 1936, Tollycraft has had average annual sales of $20 million in the last five years. It produces about about 30 yachts a year, all pre-ordered.

Even though its models - made of fiberglass and up to 65 feet - are particularly popular with Puget Sound-area owners, the company has not been profitable in the last three years, Kennedy said.

The bankruptcy filing came when another of the company's lenders, Debas Financial, an affiliate of Mercedes-Benz, withdrew its line of credit. The last payroll was not met, Kennedy said.

Tollycraft was losing money because of the slowing economy and because of the federal tax on luxury boats that prompted many potential buyers to wait until it was lifted this past fall, he said.

"We're hopeful the company will get back together." There is optimism about the long-term outlook for yacht sales because of a pent-up demand that grew while the luxury tax (on sales above $100,000) was imposed, he said.

Tollycraft has 32 boats on order worth an estimated $15 million in wholesale value. Kennedy said some work may be resumed the first week in January in anticipation of buyout approval from bankruptcy Judge Philip Brandt.

Randall Bogrand, former president and chief shareholder who bought into the company about a year ago, has resigned, but remains as a director. Donald Cooley, chief financial officer, is acting president.