Transition starts after sale of shipyard

FREELAND — Same name, new game.

Officials involved in the sale of Nichols Brothers Boat Builders Inc. indicated this week that Matt and Bryan Nichols will continue to work at the Freeland shipyard but will no longer serve in the roles of company CEO and president.

Ice Floe LLC. bought the Freeland shipyard at auction last week for more than

$9 million.

And while the new owners said they will keep the name of the shipyard as Nichols Brothers, Ice Floe is creating a six-member board of directors to oversee operations. Either Matt or Bryan Nichols may be on the board, Ice Floe officials said. But it is not certain which one will serve.

“There are going to be management changes. We haven’t determined what those will be,” said Len York, Ice Floe’s financial advisor.

“I am in the process of getting a board of directors appointed,” York said.

Ice Floe has also not decided what roles the father-son duo will assume after the sale is closed sometime near Feb 12, York said. Matt Nichols has served as CEO of the shipyard in recent years, while his son Bryan has served as president of the company which is the largest private employer on the South End.

“Both Matt and Bryan will remain as employees of the company and both will remain in leadership roles in the company,” York said. “I just can’t define what those are yet.”

York said the next step this week will be an employee recall of an undetermined number of workers. The new hires will augment the 50 workers currently busy in the yard.

“We are hoping to be at a staff of

150 people within no more than a month and a half to two months,” he said.

“We are not wasting time. We want to get these folks back to work. We bought this yard with the anticipation that we would have the same skilled workforce we had before we filed for bankruptcy,” York said.

He also said there are no ill-effects from the shipyard’s bankruptcy case for business and that he expects the Freeland yard to continue to land ship-building contracts, including one where Nichols Brothers would help build the next set of ferries for the state.

“We’re still looking at the teaming agreement with Todd Pacific Shipyards and J. M. Martinac Shipbuilding Corporation for the Washington State Ferries project,” York said. “And we are also planning to participate in the Port Townsend (car) ferry project, assuming those are approved by the state.”

There is also the existing contract for two 144-car ferries with the San Francisco Bay Area Water Emergency Transit Authority as well as orders for more tugboats.

“We have two new tugboat orders, the first of which will start March 1,” he said.

And Ice Floe will continue to build the kinds of vessels Nichols Brothers is valued for; tugboats, ferry boats, catamarans and fishing vessels.

“Those are the products this company has always excelled at. We have talented people here who know how to build those products,” York said.

Ice Floe is owned by Joseph E. Usibelli Jr. and Treadstone Partners.

York said an eventual sale back to the Nichols family is not being contemplated.

“We are not setting up the company to accommodate their ever being able to buy it back,” York said. “If they choose to, down the road, that is between them and the new owners. It is being set up as a stand-alone new legal entity.”

Usibelli, who also serves as president of Usibelli Coal Mine in Healy, Alaska, has enjoyed a 15- to 20-year relationship with Matt Nichols, having purchased three boats from the company and also serving as a minority share holder of the old Nichols Brothers Boat Builders, York said.

But when Nichols needed help after closing the shipyard in and filing for bankruptcy in U.S. Bankruptcy Court, Usibelli created a bail-out company with the intent of purchasing Nichols Brothers.

“He stepped up to assist Nichols Brothers in getting this all resolved and behind them,” York said.

“The Usibellis have been very supportive through this process and formed Ice Floe specifically for the purchase of this company,” he said.

Usibelli did not return calls for comment.

Those who know Usibelli said the Alaskan could be a good fit for Nichols Brothers.

“I’ve known Joe for quite a while. I served on the Board of Regents of the University of Alaska with him,” said Carl Marrs, an Anchorage businessman.

“He is a straight shooter, easy-going. He has a good presence and portrays himself well,” Marrs said. “He is a smart businessman and must have seen something that he could do OK in (Nichols Brothers).”

It was York who suggested that a friend of his visit Whidbey Island to look at the struggling company.

That friend worked for Treadstone Partners, a Dallas, Texas company that acquires businesses that are broke or going through a bankruptcy proceeding. And his friend liked what he saw, York said.

“They have other companies in their portfolio, which are complimentary to this company,” York said. “They are not shipbuilders, but they build products that can be used on ships.”

Treadstone has bailed out troubled businesses in the past. It bought Unidynamics Inc., near Houston, in 2006. That company had also shut its doors and was later sold to pay off its creditors.

Marc Barreca, Nichols Brothers’ bankruptcy attorney, said that when the sale of the shipyard closes on Feb. 12, the bankruptcy claims process will kick in.

“Notice will be sent to creditors to file claim, we will adjudicate claims and disperse funds,” Barreca said.

Some of those claims might arise from Expoships and Hornbeck Offshore Services, Ltd., Barreca said.

These two companies filed lawsuits against Nichols Brothers for allegedly defaulting on contracts. Matt Nichols cited the company’s legal problems when Nichols Brothers went into bankruptcy in November.

Barreca said the shipyard’s legal troubles were halted because of the bankruptcy filing.

“Once a bankruptcy is filed, it stops any sort of litigation against the company, foreclosures against the company or other adverse actions against the company,” he said.

“The suit with Expoships was close to being settled before the filing, but there was little activity there. More importantly, the Hornbeck lawsuit was quite active and set for trial,” he said.

“Parties other than Nichols Brothers involved in that lawsuit may still be going forward with the trial, but we’re not involved in that litigation. But as to Nichols Brothers Boat Builders, it’s stayed.”

Hornbeck officials have indicated that they will be moving forward with the case.

“We are aware of the sale and are proceeding with the case,” said Hornbeck’s attorney Tim Leyh.

The Hornbeck lawsuit will now focus on the Nichols themselves. Matt Nichols has personal property that is subject to the suit and he hopes he doesn’t lose that.

“The jury is going to have to decide that,” he said. “We’re going to fight, there’s no question about that. They must think they have a strong case, too. We’re going to put up a battle.”

While Nichols and his son will both remain on as employees, he said he was out of the loop on what will happen in the shipyard beyond the new teaming agreement with Washington State Ferries and the upgrade of some equipment at the shipyard.”

“They are not sharing their vision with me that much,” he said.

Ice Floe LLC will set aside $750,000 per year for capital improvements within the shipyard, such as the purchase of updated equipment, York said.

The money will be well-spent, he said.

“In the building of boats industry, Nichols Brothers has a very strong reputation as being a high-quality builder,” he said. “The market for building boats is pretty good at this point. Shipyards throughout the Pacific Northwest are doing well.”

Spencer Webster can be reached at 221-5300 or swebster@southwhidbeyrecord.com.