Info Aqualung Financial Troubles

[Eric Sedletzky]

What "bed" did they make that got them into trouble? Not selling parts to end users or what? Please enlighten us.

Right, Aqualung went broke because they wouldn’t sell parts to the .0001% of divers that work on their own gear

 

[BoltSnap]

Right, Aqualung went broke because they wouldn’t sell parts to the .0001% of divers that work on their own gear

I'm trying to control my laughter, there are people around me.

Hahahahaha

 

[lowwall]

Their "bed" was stumbling into a period of increased interest rates and lower industry sales volume with high corporate debt when their closest competitors were carrying almost no debt whatsoever.

This has nothing to at all to do with parts, quality, right to repair or anything scuba related at all. Their owners (now largest debtor) is stuck holding extremely leveraged ownership in a company during an industry downturn.

Exactly. Aqualung was doing just fine until its corporate parent Air Liquide decided to sell it off to private equity firm Montagu in 2016. It wasn't sold because Air Liquide was unhappy with the results from the division. Quite the contrary, Air Liquide needed cash to pay down debts resulting from its $13.4 billion dollar takeover of a competitor and Aqualung was a steadily performing asset that could quickly find a buyer.

The problems started with the purchase. As is often the case for PE firms, most of the purchase price was financed by loans on Aqualung itself. Meanwhile the PE firm sold off Aqualung's real estate and a couple of minor subsidiaries and pocketed the money. The also fired a bunch of people and pocketed the cost savings instead of paying down debt or reinvesting in the company. When the pandemic hit and there was no longer enough revenue to meet its ballooning debt obligations, Montagu decided to let Aqualung default. Eventually Aqualung was handed over to its largest creditor, but meanwhile with its stripped down capabilities it basically missed out on the post-pandemic resurgence in consumer spending.

Right, Aqualung went broke because they wouldn’t sell parts to the .0001% of divers that work on their own gear

Decimal point abuse! .0001% = a ten thousandth of a percent = 1 in a million. (1% is one in a hundred, .1% is one in a thousand, .01% is one in ten thousand, and so on). My guess is the real number is somewhere between 1% and .1%. Still isn't why Aqualung went broke though.

 

[Eric Sedletzky]

Exactly. Aqualung was doing just fine until its corporate parent Air Liquide decided to sell it off to private equity firm Montagu in 2016. It wasn't sold because Air Liquide was unhappy with the results from the division. Quite the contrary, Air Liquide needed cash to pay down debts resulting from its $13.4 billion dollar takeover of a competitor and Aqualung was a steadily performing asset that could quickly find a buyer.

The problems started with the purchase. As is often the case for PE firms, most of the purchase price was financed by loans on Aqualung itself. Meanwhile the PE firm sold off Aqualung's real estate and a couple of minor subsidiaries and pocketed the money. The also fired a bunch of people and pocketed the cost savings instead of paying down debt or reinvesting in the company. When the pandemic hit and there was no longer enough revenue to meet its ballooning debt obligations, Montagu decided to let Aqualung default. Eventually Aqualung was handed over to its largest creditor, but meanwhile with its stripped down capabilities it basically missed out on the post-pandemic resurgence in consumer spending.


Decimal point abuse! .0001% = a ten thousandth of a percent = 1 in a million. (1% is one in a hundred, .1% is one in a thousand, .01% is one in ten thousand, and so on). My guess is the real number is somewhere between 1% and .1%. Still isn't why Aqualung went broke though.

I’m going to have to remember that one, “Decimal point abuse” hahaha
But still, the percentage of people servicing their own stuff is very low.

 

[tbone1004]

What "bed" did they make that got them into trouble? Not selling parts to end users or what? Please enlighten us.

Right, Aqualung went broke because they wouldn’t sell parts to the .0001% of divers that work on their own gear

not selling parts is unique to the North American market and has nothing to do with the "bed" that I was referring to. You sell off to private equity who's one job is to make enough money to sell and flip a company, you end up getting highly leveraged, no long term investments, no innovation to speak of, etc. That's the bed that was made going to PE and it shows.

 

[runsongas]

that supposes the staff at Aqualung had a choice in the matter, when it was a decision made by the parent company

its like saying Americans had an individual choice whether we wanted to invade Iraq or Afghanistan

 

[scubadada]

not selling parts is unique to the North American market and has nothing to do with the "bed" that I was referring to. You sell off to private equity who's one job is to make enough money to sell and flip a company, you end up getting highly leveraged, no long term investments, no innovation to speak of, etc. That's the bed that was made going to PE and it shows.

Air Liquide acquired Airgas in May 2016 and divested Aqua Lung to Montagu Private Equity in December. Aqualung has been owned by Barings LLC since December 2023.

 

[lowwall]

that supposes the staff at Aqualung had a choice in the matter, when it was a decision made by the parent company

True. The sale was done to Aqualung rather than by Aqualung.

 

[lowwall]

Air Liquide acquired Airgas in May 2016 and divested Aqua Lung to Montagu Private Equity in December. Aqualung has been owned by Barings LLC since December 2023.

Nice job on the trade names. The company officially changed its name from Aqua Lung International to Aqualung Group in 2021.

I've always been unsure whether it is Aqua Lung or Aqualung, so I did a little googling.

Here's a summary of the company names over its history.

1943-1945 - Jacques-Yves Cousteau and Air Liquide engineer Emile Gagnan create and patent a self contained open circuit demand regulator for underwater use.

1945 - Air Liquide - starts commercial production of this regulator which is named CG-45 after the names of its inventors and year of first production.

1946 - La Spirotechnique - company created as a division of Air Liquide to sell the CG-45. Cousteau is named as an executive and later given 1% of its shares, the rest are retained by Air Liquide. The company also uses "La Spiro" or just "Spiro" as a shorthand, including on regulator labels.

194? - Cousteau coins the term "Aqua-Lung" and "Aqualung" (he uses both at different times) to refer to a scuba regset as part of La Spiro's push to sell the regulator in English speaking countries. The original French term was scaphandre autonome ("autonomous diving set"). I couldn't find the exact year he did this, but ads using the term appeared as early as 1949.

1950 - Rene Bussoz of Rene Sports in Los Angeles, California negotiates a deal to become the exclusive distributor for La Spirotechnique in the United States. Rene later changes the name of his company to U.S. Divers Co. and also trademarks the term "Aqua-Lung" and "Aqua Lung" in the US. The regulator becomes so popular that Rene negotiates a royalty deal with La Spiro and begins manufacturing them in the US.

1956 - U. S. Divers - Air Liquide purchases U.S. Divers from Rene Bussoz. It decides to keep it as a separate company handling sales in English-speaking countries - and later Japan - rather than combine it with La Spirotechnique. Over time, both companies will produce new products which will normally be adopted in the other's product line, although product names may differ.

1986 - La Spiro introduces a regulator called the "Aqualung".

198? (maybe 1990) - Aqua Lung International - The corporate name "La Spirotechnique" is changed to "Aqua Lung International", although the product line continues to be sold under the La Spiro brand.

1998 - Aqua Lung - all of the Air Liquide scuba product lines - including La Spiro, U.S. Divers, Technicsub, and Sea Quest - are consolidated into one Aqua Lung International. All brand names are also consolidated under the "Aqua Lung" brand.

2021 - Aqualung Group - "Aqua Lung International" renamed as "Aqualung Group". Brand name follows suit.

main sources for the above:

Aqualung: History of a leading Scuba Diving Brand

Explore the rich history of our dive brand, pioneers in scuba diving products since 1943, and our journey of innovation and excellence in diving gear.

us.aqualung.com

Aqua-Lung - Wikipedia

en.wikipedia.org

Aqua Lung/La Spirotechnique - Wikipedia

en.wikipedia.org

Double Hose Regulators - US Divers

REGULATORS SINGLE HOSE | spiro-vintage

Chronologie et typologie des détendeurs simple tuyau de la spirotechnique

en.spiro-vintage.com

 

[scubadada]

Hi @lowwall

Ha, I didn't think anyone would notice. You and I have some things in common other than having played water polo