Investment firm The Carlyle Group and private equity firm Stellex Capital Management announced Thursday that they will acquire Vigor Industrial, the Portland-based shipbuilding company that earlier this year purchased the former Christensen shipyard in Vancouver.
The deal will not change the plan for the future of the Vancouver shipyard, according to Jill Mackie, Vigor’s senior vice president of public affairs. Vigor intends to repurpose the facility to build a new type of landing craft for the U.S. Army, bringing hundreds of new jobs to Vancouver.
“There’s no impact at all,” she said. “Our plan is to continue as planned.”
Merger details
The firms intend to merge Vigor with MHI Holdings, a ship repair company owned by Stellex and based in Norfolk, Va., creating what the firms describe in a press release as “a bicoastal leader in critical ship repair services and commercial and defense-related fabrication services.”
Vigor employs approximately 2,300 people in eight facilities across Oregon, Washington and Alaska, and is known for building ferries and military watercraft. MHI employs approximately 800 people and offers repair services for both military and commercial vessels.
The combined company would serve a variety of commercial and defense customers, according to the press release, including the U.S. Navy, U.S. Coast Guard, Military Sealift Command, Boeing, cruise lines, fishing fleets, barges and local and state government ferries.
The transaction is expected to close by the end of the third quarter. The financial terms were not disclosed.
“Through this transaction, Vigor gains responsible, forward-thinking investors who will seek to build on our current platform while maintaining a values-driven culture,” Vigor CEO Frank Foti wrote in the release. “In addition, we are excited to join forces with a company of MHI’s caliber, which has a history of delivering strong results and shares our mission to serve the people who protect our country every day.”
Foti is the majority owner of Vigor. Under the terms of the deal a portion of his ownership stake will be rolled into the combined company, which will be majority-owned by The Carlyle Group. A CEO search is underway for the new company, according to the press release, and Foti will continue as the CEO of Vigor until a new chief executive is found.
Foti will also join the new company’s board of directors and serve as its vice chairman. He will be joined on the board by two operating executives from The Carlyle Group: former United Defense CEO Tom Rabaut and retired U.S. Navy Adm. James Stavridis.
Equity for the investment will come from the Carlyle U.S. Equity Opportunity Fund II, which the press release describes as a $2.4 billion fund that focuses on middle-market companies in North America. Stellex will also contribute new equity as part of the deal.
Vigor’s Vancouver facilities will represent another local investment from The Carlyle Group, which in 2018 became an investor in Vancouver-based marketing database company DiscoverOrg.
Former Christensen shipyard
Vigor announced its acquisition of the Christensen shipyards facility in February and said that it would use the site in the Columbia Business Center to manufacture a next-generation landing craft for the U.S. Army called Maneuver Support Vessel (Light), or MSV(L).
Vigor landed a 10-year, $979 million contract with the Army in late 2017 to build the vessels — the largest contract in the company’s history — and searched for a new manufacturing site in Portland, Seattle and other Washington locations before eventually settling on Vancouver.
Vigor operates a 60-acre shipyard on Swan Island, as well as manufacturing facilities in Vancouver and Clackamas, Ore., that it acquired when it merged with Oregon Iron Works in 2014. Foti told the Columbian in February that the former Iron Works site in Vancouver didn’t meet the needs of the MSV(L) project, which will require aluminum fabrication.
Vigor purchased Ballard-based Kvichak Marine Industries in 2015, and when the acquisition of the Christensen shipyard was announced, Vigor stated that it would close the Ballard facility and transfer its projects to Vancouver, offering the roughly 70 affected employees a chance to relocate.
The Vancouver facility is also expected to pull in about 60 aluminum fabrication positions from Vigor’s Clackamas site. When fully operational, the former Christensen site is expected to employ as many as 400.
The Vancouver shipyard was for decades home to luxury yacht builder Christensen shipyards, but the company was placed in receivership in 2015 after several years of financial trouble following the 2008 recession.
Henry Luken, an investor and later co-owner, bought the company’s assets and restarted operations, which led to a lengthy legal battle between Luken and the family of founder Dave Christensen.
The parties reached a settlement a few days before the Vigor purchase was made public, and Luken announced that he would be relocating the yacht builder’s operations to a new facility at Tellico Lake, Tenn. The last two Vancouver-built Christensen yachts rolled out in June.
Vigor closed the purchase of the site last week, Mackie said, and will soon begin making investments and site upgrades to prepare the facility for its new role.
Production could begin as early as August, she said, although the initial round of boats built at the site will be pilot boats destined for service in Los Angeles; construction of the prototype MSV(L) vessel will likely begin a short time later.
After the prototype is completed and tested, the contract calls for Vigor to build another 36 of the vessels. Vigor also intends to use the facility to build several other classes of boat including aluminum ferries, commercial workboats and Combatant Craft Medium for the U.S. Navy.
