Fountain Powerboat Industries Inc. signs $10 million credit agreement with General Electric Capital Corp.

WASHINGTON, N.C.--(BUSINESS WIRE)--Jan. 14, 1997--Mr. R.M. Fountain, Jr., Chairman and Chief Executive Officer of Fountain Powerboat Industries, Inc. (NASDAQ:FPWR) announced that last week the company concluded a $10 million credit agreement with General Electric Capital Corp.

Under the terms of the new credit agreement, the company refinanced its long-term debt and will have substantial additional funds made available to it for expansion. Initially, the company borrowed $7.5 million from GE Capital Services to refinance existing debts. GE Capital Services will make an additional $2.5 million available in 1997 for additional plant and equipment.

Mr. Fountain said that this debt refinancing and the additional funds made available will be necessary as the company prepares for significant future growth. For the fiscal year ended June 30, 1997, the company expects to post a third consecutive year of record growth in sales and earnings. Beyond fiscal 1997, the company plans to introduce new products, including 58' and 65' Super Cruisers. These high performance sport yachts will feature revolutionary new surface drive propulsion systems to be built by the company's new subsidiary, Fountain Power Inc. The Super Cruisers will also incorporate the company's state-of-the-art "positive lift" hull design and will feature many amenities not usually found on boats of this type.

Mr. Fountain and the company's board of directors considered several refinancing options prior to concluding the new agreement with GE Capital Services. Among the options they considered were offers from brokerage firms to underwrite a secondary common stock offering. However, Mr. Fountain and the board concluded that a secondary common stock offering would be too costly to the existing shareholders because of the dilution of their ownership interests, especially considering the company's expected near-term profitable growth. Mr. Fountain and the board also felt that the direct costs of fees charged and expenses incurred in a secondary common stock offering were much too high.

Mr. Fountain praised GE Capital Services for the speed, efficiency, and professionalism with which the new credit agreement was concluded. He said that he never expected a huge company like General Electric to move with the great speed and decisiveness that it did in this transaction.

Fountain Powerboat Industries Inc. is a NASDAQ National Market listed company. It manufactures high performance offshore sport boats, luxury cruisers, sport fishing boats, and racing boats in its efficient, modern plant located on the Pamlico river near Washington, North Carolina. Fountain boats are known internationally for their speed, style, safety, and outstanding quality.

CONTACT: Fountain Powerboat Industries, Inc.

Carol J. Price, 919/975-2000