Info Aqualung Financial Troubles

[BoltSnap]

I hope Aqualung comes out of it, but unfortunately it is also the bed that they made and they have to lay in it whether they like it or not.

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

 

[Badger7]

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.

 

[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.