Christensen Shipyards appears to be struggling financially

Christensen Shipyards, the Vancouver-based builder of custom yachts, appears to be struggling to pay its bills.

On Dec. 3, as rumors circulated of a temporary closure and layoffs, the company issued a statement saying, in part, that it was “currently working on a multipart ownership restructure.”

At the time, answers were few.

Since then, however, at least one of Christensen’s suppliers is concerned it won’t get paid for construction materials it provided, public records show. Likewise, another creditor, Umpqua Bank, is worried about securing what it’s owed.

Meanwhile, speculation continues about the role Henry Luken — the deep-pocketed Tennessee businessman and investor in Christensen — may be playing in the ownership changes.

In an email Monday to The Columbian, Joe Foggia, president of Christensen, said an estimated 50 workers are on temporary layoff and that “we are striving to bring them back as work allows.” He said Christensen will pay its suppliers and the bank.

“Like all businesses, especially our type of business,” Foggia said, Christensen “has regular concerns with cash flow. With over 300 employees, this is common in large construction projects. Projects start and stop regularly due to economics, world events, disagreements, changes in life. For example, if we have a customer who made their money in oil, more than 50 percent of their wealth would be lost in the last several months. Their yacht being built would be the first thing to stop. We have to balance this.”

‘No defined time frame’

The company has “nine different projects in various stages,” Foggia said, with costs ranging from $20 million to $45 million. As to Christensen’s restructuring, Foggia said: “Methodically ongoing. No defined time frame.”

The company, which once sold a yacht to Tiger Woods, has previously overcome financial headwinds.

A September 2011 story by The Columbian illustrated Christensen’s recovery after the global economic crash forced it to jettison workers and to halt construction on a second shipyard in Tennessee.

Part of the company’s rebound came by way of adopting the principles of lean manufacturing to a complex workplace that includes finish carpenters, stone-workers, metal smiths and upholsterers. At the time, Christensen believed it could operate at full capacity with about 250 employees — less than half its pre-recession peak employment.

In February 2014, the company issued a press release announcing a $36 million contract for the construction of a 164-foot custom yacht. “Currently, as the nation’s largest producer of motor yachts over 120 feet, almost 90 percent of the contract price goes into payroll, health care, local and American made materials, goods, services, local and federal taxes,” the company said. “Christensen currently employs 380 full-time jobs, and potentially will hire 100 more employees going through 2016.”

Foggia said the company now has between 300 and 350 employees.

One of Christensen’s suppliers, FarSounder Inc., a Rhode Island-based company specializing in navigation systems, said it hopes the company works through the current turbulence. “I do hope for the best for Christensen,” said Cheryl Zimmerman, CEO of FarSounder, “as they have been a fine, quality yard, and what the U.S. needs in order to keep its hand in the shipbuilding industry.”

‘Restructure’

Questions about Christensen’s future surfaced on Dec. 3.

That’s when the company, responding to questions from The Columbian, issued the following statement through Mike Bomar, president of the Columbia River Economic Development Council: “The board of directors at Christensen Shipyards Ltd. are currently working on a multipart ownership re-structure which should be completed in principle by this weekend. Operations should commence the week of Dec. 8.”

Operations did start up again, but questions about the company’s health didn’t go away.

Some of the company’s creditors filed notices in December and January under the Uniform Commercial Code, which governs commercial transactions including sales of goods and negotiable instruments.

The filings don’t necessarily mean something bad will happen. But parties issue them to put others on notice that they’re claiming an interest in another party’s property, usually as collateral for a debt. The notices typically involve large accounts.

On Dec. 24, Stellar Industrial Supply made six initial commercial code filings, according to the Washington Department of Licensing. The filings, which name Christensen as a debtor, list multiple “motor yacht” hulls as collateral. One filing, for example, flags “Motor Yacht Hull No. 41 and any and all improvements.”

Christopher Allen, an attorney with the Tacoma law firm Morton McGoldrick who filed the notices on behalf of Stellar, said “we are asserting liens” on boats under state law. “We want to be able to say we have a secured interest in those vessels,” he said.

Allen said the filings “should not be seen as adversarial” and that Christensen remains “a valued customer.”

Stellar’s notices came a day after similar commercial code filings were made by Hyak Electroworks, based in Vancouver. The company declined to comment.

More recently, Umpqua Bank stepped into the situation. On Jan. 23, the bank, using California-based CT Lien Solutions as its filer, issued two initial commercial code notices naming Christensen as a debtor. Among the items listed as collateral by the bank: a marine measuring device, a machining apparatus “including Murphy Rodgers Dust Collector,” and a Kyocera color copier.

Responding to the commercial code filings, Foggia said: “We have onsite vendors and vendor managed inventory as such with Stellar Industrial Supply. These materials and equipment are very expensive considering what we build. It is normal to have UCC filings in this case. In terms of Umpqua bank, it is again normal for equipment financing.”

Luken: No comment

Meanwhile, another question lingers: Where does Luken, an investor in Christensen who made his original fortune in the telecom industry, stand in all of this?

A representative of Luken, reached by phone at Luken Holdings, his Chattanooga-based real estate company, said Luken declined to comment. In November 2010, the Knoxville News Sentinel reported that Luken and Christensen planned to follow through with completion of a $20 million shipyard on Tellico Lake.

However, the Tellico Lake facility “was put on hold when the economy and demand for large yachts went down,” Ron Hammontree, executive director at Tellico Reservoir Development Agency, said last week. “I have heard nothing about the shipyard moving forward at this time.”

In responses to questions from The Columbian, Foggia described Luken as a “partner, adviser and board member since 2003.” Asked what percentage of the company Luken owns, Foggia said Christensen is a privately owned company between Christensen family, Foggia, who is the stepson of company founder Dave Christensen, and Luken.

As to Luken’s role in the restructuring of Christensen’s ownership, Foggia wrote in his email: “Partner/Advisor/Board Member.”

Asked whether Christensen is seeking to be acquired by another company, Foggia said: “We are working on a succession plan for the Christensen family.”

In describing the company’s current financial health and outlook, Foggia said, Christensen is “moving forward to become stronger every day” and “working to further refine processes and stabilize cash flow within our control.”

Foggia also noted Christensen has “currently been launching” a new custom series yacht that “boasts almost double the square footage of any competition in the world at approximately 8,000 (square feet).”

Christensen has more than 180,000 square feet of manufacturing space and a 7-acre marina, according to the press release it issued in February 2014. The company incorporated in July 1985 to build luxury yachts and, by 1986, had its own facility and mold to build hulls, according to its website.

Company founder, Dave Christensen, retired in 2009.