Analyst: More bankruptcies to follow

ST. LOUIS — In the wake of Genmar Holdings filing for Chapter 11 bankruptcy late Monday, dealer and manufacturer bankruptcies are expected to accelerate this summer, suggested Timothy Conder, CPA, managing director of Leisure Equity Research for Wachovia Capital Markets, in a statement Tuesday.

Conder said that while Genmar was “not in the most stellar financial condition,” the bankruptcy was not widely anticipated.

“Genmar’s filing is likely to put additional pressure on the market in the near-term and underscores our belief that the current ’09 selling season will be the most difficult for the industry,” he wrote. “We expect dealer and in turn manufacturer bankruptcies will accelerate during the summer as operators will not want to burn through any remaining financial resources (family wealth) on the hope of making it through the season. We believe ’09 will not only be the peak for this industry downcycle, but also a multi-cycle peak in marine bankruptcies.”

Over the long term, Wachovia expects Genmar’s bankruptcy to benefit Brunswick. It “should result in further gravitation of the best industry dealers to the Brunswick Corp. fold (best in class attracted to the best in class).”

However, because Wachovia anticipates that “near-term industry conditions will remain very challenging … as dealers and manufacturers struggle to clear the significant amount of aged inventory in the U.S. market against a difficult economic and significantly tighter consumer lending backdrop,” Conder said the company is reaffirming its Market Perform rating on Brunswick Corp. shares.

“ …we continue to see minimal material upside catalysts through ’09,” he concluded.

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