Nichols Brothers Gets New Owners

Treadstone Capital Management and Drum Capital Management have acquired a controlling interest in the assets of Nichols Brothers Boat Builders, a Freeland, Wash.-based manufacturer of steel and aluminum boats. Nichols had filed for bankruptcy protection last November, and the buyers have committed to invest up to $15 million in new working capital.

PRESS RELEASE

Treadstone Capital Management, L.P. (“Treadstone”) announced today its purchase of a controlling interest in the assets of Nichols Brothers Boat Builders, Inc. (“Nichols Brothers”) of Freeland, Wash.  Treadstone, a private equity fund that invests in the debt and equity of distressed operating companies, acquired the assets through a 363 bankruptcy sale. Including turnaround working capital, Treadstone and its co-investor, Drum Capital Management LLC, (“Drum”) expect to invest up to $15 million.
 
Nichols Brothers, a leading manufacturer of steel and aluminum boats, filed for Chapter 11 bankruptcy protection in November 2007, and initiated a sale process at year-end.  Through its sourcing network, Treadstone identified the opportunity and acquired the senior secured debt and the “stalking horse” position.  The Jan. 28 auction took place in Seattle, Wash. with the Treadstone-led group emerging as the successful bidder.

“This was a complex, fast-moving deal.  The ownership of critical assets outside of the bankruptcy and a convoluted debt structure created an array of challenges,” commented Michael Donohoe, a principal of Treadstone's general partner, who will serve as chairman of the new Nichols Brothers board.  “We were able to quickly identify and assess the various risks and underwrite real value for our investors.  The turnaround is already underway.  We are highly confident that Nichols Brothers will return to peak production and profitability in the near future.”
 
Gary Thomason, a Treadstone co-founder, noted, “Our investment provides not only much needed jobs, but allows one of Whidbey Island's historic companies to maintain its unique profile in the community.  This is of real benefit to both Washington State and Whidbey Island's strong nautical history.”

“Nichols Brothers is another example of a quality co-investment with the Treadstone team,” said Scott Vollmer, chief executive officer of Drum. “They are one of the most seasoned groups in the industry, with a 'hands-on' approach to management. Their breadth of industry contacts provides good access to a quality deal flow.”   
 
About Nichols Brothers Boat Builders, Inc.

Based in Freeland, Wash., Nichols Brothers Boat Builders has been a leading manufacturer of tug boats, high speed ferries, aluminum vessels and commercial fishing boats for more than 40 years.  See www.nicholsboats.com

About Treadstone Capital Management, L.P.
 
Treadstone Capital Management is a private equity fund headquartered in Dallas.  The members of its management company, Treadstone Management, LLC, have been investing in distressed and special situation companies since 1993.  See www.treadstone.com