Production is underway and a new lender, Capitol Bay Management, Inc., is in place at Westbeach in Salem, Oregon.

The snowboard apparel brand, which is preparing to move to Portland from its old location at the former Morrow factory, was in the middle of designing the ’00/01 line when SNOWboarding Business visited June 1.

“We want dealers to know that production is underway and we don’t anticipate any problems with delivering on time,” say Marketing Director Georell Bracelin, noting that orders of Westbeach product were up this year in the United States.

The brand is also planning to open up a fourth retail store in the Portland area. The other retail locations are located near Vancouver, British Columbia.

However, although the company is positioned to move forward, CEO Blair Mullin is actively looking to divest Morrow Innovations (which owns Westbeach) of its remaining assets.

Morrow Snowboards, Inc. and K2, Inc. announced March 26, 1999 that the Morrow snowboard brand had been acquired by K2 for 3.2-million dollars in cash. However, K2 did not buy the Westbeach apparel brand, retail stores, or assume any of the brand’s debt.

The Westbeach brand, the Westbeach Open snowboard contest held in Whistler, and the four Westbeach retail stores are all included in the new package, which is being offered for six-million dollars.

If the sale of the remaining assets proceeds as the brand hopes, and if the former factory building is sold, Bracelin says that not only will the 2.5-million dollars owed to the remaining unsecured debtors be paid in full, but that Capitol Bay will see a profit on the sale.

According to an 8-K filed with the Securities and Exchange Commission on April 27, “It is the intention of Capitol Bay Management to secure and fund a loan in the principal amount of one-million dollars to be secured by the Company’s real estate, with the net proceeds to be available as working capital.”

Because of this agreement, Bracelin points out that the Westbeach brand is in position to continue its operations even if no buyer materializes.

The wording of the Morrow/K2 acquisition contract states that K2 has first right of refusal for the Westbeach brand. However, K2′s own outerwear line, now in its second year, is exceeding expectations by most accounts, so it’s unclear why K2 would need another apparel line at this point.

Another potential buyer could be Intrawest. After all there’s a great deal of synergy between Intrawest’s Whistler/Blackcomb resorts and the Westbeach ClassicÐthe largest snowboard event of the year for Intrawest.

But Sandy Black, vice president of retail operations for Intrawest, says just because Intrawest has been sent a proposal from Westbeach doesn’t mean it’s going buy it. “Yes, we do value the Westbeach Classic, but taking on the task of becoming an apparel manufacturer would most likely divert our attention from our core business,” he says.

So, if a sale does occur, what will happen to the Morrow/Westbeach public company if it has no remaining assets in the wake of divestiture?

The remaining “shell” company, as public companies without an active business are refereed to, would provide Capitol Bay Management with an easy and relatively inexpensive way to make a private company public.

Scott Sibley, vice president of global sales for the Westbeach brand, says that if the Westbeach brand is sold, he would consider continuing staying on with Westbeach under the new ownershipÐdepending on who it is and what the new owners planned to do with the brand. He said other longtime Westbeach employees have voiced similar hopes.

However Bracelin says she will not be one those employees making the transition and plans to move back to Bend, Oregon where she will continue to work for Westbeach on a contract basis while soliciting new business.

“Some people outside the company have said that it’s terrible that I had to move away from Bend last year only to move back again thhis year,” she says. “Nothing could be further from the truth. My time at Morrow/Westbeach has been an amazing. I’ve learned a great deal. It’s an experience I wouldn’t trade.”

Meanwhile, On Vashon Island.

After some rumors that the production of Morrow snowboards would take place in a location other than K2′s Vashon Island, Washington location, that factory is up and running and actively producing Morrow boards, according to K2 Marketing Manager Heidi McCory. Sanders Nye, former product manager of hardgoods for Morrow, has been hired on as product manager for both the K2 and Morrow brands. Greg Hughes will continue in his capacity as Morrow sales manager, and Rebecca Herath, former marketing and communications director of Santa Cruz Snowboards, has been hired to handle Morrow marketing.

One of the remaining question marks as we go to press, however, is whether Morrow co-founder Rob Morrow will make the move to K2. McCory says K2 is actively pursuing him, and an offer is on the table, but negotiations are still underway.