Luxury Cars: September 2011

Ferretti Group is one of the world leaders in the design, construction and sale of motor yachts with a unique portfolio of exclusive and prestigious brands of the nautical world: Ferretti Yachts, Ferretti Custom Line, Pershing, Itama, Riva, Bertram, Mochi Craft and CRN. The company initially produced small boats, and in 1971 it produced the first motorsailer. It now focuses on thepowerboat sector, specializing in luxury motoryachts production. The Group is based in Forlì and is one of the leading companies in the world of design and construction of luxury motoryachts and sporting boats measuring from 10 to 85 meters long.

The wide range of yachts offered is designed by highly specialized technicians and engineers at Advanced Yacht Technology, one of the most advanced naval research and design centres in the world, which works with the Centro Stile Ferrettigroup, an experienced team of architects and designers and are built at the Group’s modern production facilities in Italy and the USA. Founded in 1968, Ferretti Group is present in the USA with Ferretti Group North America, in Asia with a representative branch in Shanghai as well as in Brazil with Ferretti Group Brazil based in San Paulo.

Group structur

Ferretti model 68' (2005) cruising at 31 knots.

Pershing 72, European Powerboat of the Year 2008 in the category 50 feet and over

The group consists of the following design and production companies:

Pershing S.p.A. (high performance open cruisers, 11 to 35 meters)
Ferretti Yachts division (flybridge motoryachts, 14 to 27 meters)
Itama Cantieri Navali S.p.A (open motoryachts, 13 to 23 meters)
the American Bertram Yacht, Inc. (sport fisherman motoryachts, 12 to 22 meters)
Riva S.p.A. (open and flybridge motoryachts, 8 to 35 meters)
Mochi Craft division (lobster boats, 13 to 23 meters)
Custom Line division (maxi yachts in composite materials from 30 to 34 meters with two decks) and,
CRN S.p.A., (maxi yachts in composite materials from 39 to 43 meters with 3 decks and steel megayachts from 46 to 120 meters.

Financial data

On August, 31st, 2010, the Ferretti Group registered a turnover of over 500 million euro[1]. On August 31st, 2010, the EBITDA was around 30 million euro, in line with the budget, and an increase compared with the approximately 26 million euro registered during the previous nautical year. The improvement of this result, in a market still characterized by price pressure, was primarily due to the key initiatives taken by the Ferretti Group during the course of the 2009-2010 nautical year, which resulted in a cost reduction of around 50 million euro, and clearly demonstrates the effectiveness of the Group reorganization. As of August, 31st, 2010, the Group’s Net Financial Debt improved compared with the previous year and was reduced to around 590 million euro, basically in line with the Plan.

History

The company was founded in 1968 by Alessandro and Norberto Ferretti and produced its first motor sailer in 1971. During the 1980s, the two brothers decided to specialize in the production of luxury motoryachts. They established a new unit in Forlì, which today houses the company headquarters.

IIn the early 90s, Ferretti started an internationalisation process. In 1993, Ferretti of America, Inc. was founded to market motoryachts in the USA, Canada, Mexico, Venezuela and the Caribbean. Ferretti of America liaised with the sales network that was already present in Greece, France, Spain, Germany and Great Britain, increasing the impact of Ferretti sales abroad.

In 1994, Ferretti began an international marketing process by creating a strategic network of dealers outside Europe.

During the second half of the 90s, after institutional investors acquired a share in the capital, an expansion strategy for external lines was started through the well-targeted acquisition of companies producing top of the range motoryachts.

In 1996, Ferretti began operating in the segment of yachts with fibreglass flybridges, measuring 28 to 40 metres in length, through Custom Line S.p.A.

In 1998, the group purchased Cantieri Navali dell’Adriatico – CNA S.r.l., which specialized in building open type motor boats with the prestigious Pershing brand.

During the same year, Ferretti entered in the sport fisherman craft segment with the aquisition of American company Bertram Yacht, Inc. - the Miami shipyard and owner of one of the most famous brands in the world .

In 1999 Ferretti Group purchased C.R.N. S.p.A., a shipyard specialising in the production of maxiyachts in fibreglass and megayachts with steel hulls and aluminium superstructures, measuring over 30 metres in length.

In the year 2000, Ferretti purchased 100% of the capital of Riva S.p.A., one of the best known and most exclusive shipyards in the world, today producing of luxury fibreglass yachts measuring 10 to 35 metres in length, both flybridge and open.

In June 2000, with the aim of further consolidating its growth and development process, Ferretti Group decided to list on the Official Italian Stock Exchange (MTA). In 2001, the company was admitted to the STAR segment (High Requisite Share Segment) of the Borsa Italiana (Italian Stock Exchange).

In May 2001, head company Ferretti S.p.A. acquired assets of the Oram shipyard in La Spezia, where the new Riva production area would subsequently be built.

In August 2001, Ferretti finalized an agreement for the acquisition of the Apreamare S.p.A. shipyards in Sorrento, market leader in the production of gozzo sorrentino boats measuring 7 to 16 metres in length.

In November 2001, acquisition of the Mochi Craft S.r.l. shipyard in Pesaro was finalized.

In 2002, the Group took over Diesse Arredamenti, in order to acquire new skills in the nautical furnishings sector, complementary to its yacht building activity.

In 2002 the Group also finalized acquisition of Cantiere Navale Mario Morini in Ancona, which enabled CRN to extend its production capacity, Pinmar S.L., a company specialized in yacht painting and refitting, and Zago S.p.A., an Italian company operating in high profile wooden manufactured pieces and furnishings.

Between June 2002 and January 2003, the Ferretti management team and institutional investors present among the shareholders (Permira), decided to launch a Voluntary Public Tender Offer to acquire the entire share capital of the Company, with the aim of further expanding the Group through acquisitions and a precise strategic, national and international plan.

In 2004, through Pershing, Ferretti Group acquired the Itama shipyard, a prestigious brand, which specializes in the construction of open motoryachts, completing the current definition of the Group.

In 2008 Ferretti Group acquired the assets, brands and activities of Allied Marine, an American company specialized in After Sales services and marketing of both new and pre-owned motor yachts, as well as brokerage services on the US market.

In 2009 in order to align its organisational structure to the new market scenario, Ferretti Group changed its structure and undertook a series of strategic and operative actions.

The Group’s equity was divided between Norberto Ferretti and the management (38.2%), Mediobanca (8.8%), and senior and mezzanine lenders (the latter with a total 53% in exit participation rights). Norberto Ferretti, the Group’s management and Mediobanca hold 100% of the Group’s voting rights.

In 2010, with the aim of continuing to focus on its core business, the Ferretti Group sold its 60% share in the capital of Pinmar S.L., a Spanish company specializing in painting mega-yachts, 100% of Apreamare S.p.A. and the nautical pole of Torre Annunziata (Naples).

In 2010 Ferrettigroup Brasil was established.

Customers of the group have included Richard Burton, Brigitte Bardot. and Sophia Loren.

Racing

Motivated by the needs for high tech synergy and greater international recognition, the company entered in 1989, into offshore racing. The sporting results achieved were excellent. Norberto Ferretti won the Class 1 Offshore World Championship title in 1994.

The Ferretti team won the European Offshore Championship in 1995. In 1997 it won both European and World champion titles. The company attributes these winnings to a hi-tech hull designed with a carbon-fiber autoclave.

Ownership

In 1995, after the sudden death of Alessandro Ferretti, 70% of the group was acquired by Permira. In 2000, it was temporarily listed in theItalian Stock Exchange, but decided to be taken private citing concerns for negative financial climate by the September 11, 2001 attacks.Permira had a 54 times return of its original investment from the listing.

In October 2006 the owners reconsidered flotation and filed an application to list its shares on the Milan stock exchange. Due to a high level of interest from private equity buyers, the IPO was postponed. Candover bought 60% of the company in an auction, outbidding the French PAI Partners and leaving the rest 30% to the founder and 10% to Permira. Based on financial data, the group was valued at 1.7 billion euros.

In May 2008, when the full extend of the crisis had not yet hit, rumours circulated indicating Candover was eyeing a second IPO ^[6] for the business which was seeing profits of EUR 158m on a EUR 933m turnover (2007). In September, the Consob granted the authorization ^[7] for the IPO on both the London and Milan bourses.

However, in January 2009 the company appointed Rothschild to advice on talks with its banking syndicate, led by Royal Bank of Scotland (RBS) and Mediobanca to restructure a EUR 1.1bn debt. Initially Candover was expected to participate in a EUR 100m capital injection but by February, it had walked away from the table, writing off its investment;Permira had already done so.

The new Board of Directors is composed of the following members:

- Norberto Ferretti – Chairman

- Giancarlo Galeone – Chief Executive Officer

- Alessandro Foti – Vice Chairman

- Lamberto Tacoli – Director

- Augusto Fantozzi – Director

Since then the company has succeeded in renegotiating its debt, reducing its to EUR 550m against a conversion of credits into exit participation rights, a EUR 85m capital injection underwritten by the founder and CEO, Norberto Ferretti and some of the management team (EUR 70m) and Mediobanca (EUR 15m). RBS has also agreed to grantmedium terms facilities to fund working capital requirements (EUR 65m) and three major financial institutions (already partnering with Ferretti), have extended the short-term facilities (EUR 24m) to medium-term ones.

The Group’s equity is now held by Norberto Ferretti and the Group’s management (38.2%), Mediobanca (8.8%) and senior and mezzanine lenders (for a total of 53% in exit participation rights). In particular, as a result of the agreement, Norberto Ferretti, the Group’s management and Mediobanca hold 100% of the Group’s voting rights.

Technology

Together with Mitsubishi the Ferretti group has developed a system called ARG (anti-rolling gyro), which reduces the effects of the waves on their boats, using a counterweight and a gyroscope.

Shipyards

The Group has one of the most advanced production systems and can rely on highly efficient plants, based in: Forlì, Cattolica, S. Giovanni in Marignano Ancona, Mondolfo, Sarnico and Miami (Florida, USA).

Ferretti Yachts began as two brothers selling other yacht lines and then choosing to begin construction of their own line of yachts. Norberto and Alessandro Ferretti started the company in 1968. Today, Ferretti encompasses a number of companies and yacht brands. Ferretti constructs yachts at three different shipyards in Italy: the original shipyard S. Giovanni in Marignano, the headquarters in Forli, and Cattolica, the most advanced facility where up to 16 yachts can be built at one time. Ferretti also has a research and design center in Forli, where ideas are originated with the latest computer technologies.

Quality and technological innovation have been the two forces driving Ferretti’s production. The company has consolidated skills in combining high performance with design, ergonomics, form and function. A team of over 60 specialists supervises the progress of a Ferretti yacht, from design to construction. Even though manufacturing techniques are continuously updated, the traditional craftsmanship remains unchanged.

The design process is entrusted to the Company’s research office, Ferretti Engineering, where all stages of planning are performed. Ferretti yachts are three-dimensionally modeled and tested long before the vessel actually floats. The meticulous attention to detail, along with a careful study of materials, shows Ferretti shipyards’ penchant for continuous improvement and progress. The same passion for excellence brought Ferretti Yachts to be the first shipbuilder in Europe to receive certification (CE 94/25) for environmental protection against acoustic and atmospheric pollution. In collaboration with Mitsubishi Heavy Industries, the ARG stabilizers (Anti Rolling Gyro) is now integrated into the entire product range, offering the latest advance in yacht stabilization.

The Ferretti Engineering Division works in close cooperation, in what could be described as a symbiotic relationship, with Studio Zuccon, an international design firm, which imparts a discreet but ever-present “Italian touch” to all its projects. This is the reason why in 2004 the Italian Industrial Design Association (ADI) selected Ferretti 880 as part of the general index of products nominated for the prestigious Golden Compass award.

Ferretti Yachts, a fundamental part of the international Ferretti Group holding, which comprises some of the world's most prestigious yacht brands, is now a large company that is undergoing a process of continuous development and expansion. By 2004 Ferretti Yachts yearly sales had reached 160 million Euro and a 500-strong staff. With headquarters in Forlì, a new shipyard in Cattolica, the original works at San Giovanni in Marignano, and the shipyard at Fano, Ferretti's production capability is extensive.