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José_Quiñones
| Posted on Thursday, January 30, 2003 - 08:28 pm: |
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From www.cannondale.com:
Quote:Cannondale Announces Plans To File Voluntary Chapter 11 Petition (Bethel, CT - 1/27/03) Cannondale Corporation (Nasdaq: BIKE), has announced that it intends to file a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on January 28th. Cannondale and its lenders, The CIT/Business Credit, Inc. and Pegasus Partners II, L.P. have reached an agreement in principle that, subject to Bankruptcy Court approval, will provide the Company with interim financing to fund post-petition operating expenses and to meet supplier and employee commitments. "The interim financing will be used to continue the operation of our bicycle business," said Cannondale Founder and President Joe Montgomery. Cannondale has also reached an agreement in principle with Pegasus Partners II, L.P. to sell substantially all of its assets to Pegasus Partners II, L.P. pursuant to Section 363 of the Bankruptcy Code, subject to better and higher offers and court approval. Pegasus would operate the bicycle business as a going concern with the involvement of current management and would purchase separately the Company's motorsports assets, including the intellectual property related to the design of Cannondale's motorsports products. In the meantime, management continues to work with other potential interested buyers for either or both of these businesses. Because the Company has obtained interim post-petition financing, Cannondale will be able to pay vendors for goods and services received after the filing in the ordinary course of business. Montgomery explained that difficulties with Cannondale's motorsports business made the filing necessary, and that the Company has determined to suspend operations of the motorsports division pending a potential sale. "The motorsports division was threatening the bicycle division," explained Montgomery. "Although we believe in the value of our motorsports products, we did not have sufficient financial resources to make the additional investments necessary. We look forward to bringing a renewed focus to our core bicycle business and to working through this present challenge with the greatest possible speed." The suspension of operations of the motorsports division will mean that production workers who had been furloughed from Cannondale's motorsports factory in Bedford, Pennsylvania in December will not be recalled. Production workers at Cannondale's Bedford bicycle factory, who have been idled during a recent shutdown, are scheduled to return to work in the near future. The Company's foreign subsidiaries are not included in the filing. Business done through Cannondale subsidiaries in Europe, Japan and Australia accounted for approximately 42% of the Company's total sales in fiscal 2002. This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of various risks and uncertainties, including, but not limited to, the following: the ability of the Company to continue as a going concern; the ability of the Company to maintain sufficient debtor-in-possession financing to fund its operations and the expenses of the Chapter 11 process; the outcome and timing of the Company's efforts to restructure and/or sell certain of its assets, including the ability of the Company to execute and close a definitive agreement with Pegasus Partners II, L.P. or any other purchaser; the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; the ability of the Company to develop, prosecute, confirm and consummate a plan of reorganization with respect to the Chapter 11 proceeding; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm a plan of reorganization, to appoint a Chapter 11 trustee or to convert the case to a Chapter 7 proceeding; the ability of the Company to obtain and maintain normal terms with its vendors and dealers; the Company's ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 proceeding on the Company's liquidity or results of operations; the ability of the Company to fund and execute its business plan; the ability of the Company to attract, motivate and/or retain key executives and employees; the ability of the Company to attract and retain customers; risks and uncertainties relating to market acceptance of the Company's products; competition; the effectiveness of the Company's dealer networks and sales teams; changes in the level of discretionary consumer spending; the timing of future parts receipts, which may impact the Company's ability to fill orders; as well as those risks and uncertainties discussed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
What do you all think? Doable? Desirable? |
Dynarider
| Posted on Friday, January 31, 2003 - 02:40 am: |
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No. I think they would have done better to buy KTM or Ducati when they had the chance. |
Blake
| Posted on Friday, January 31, 2003 - 02:53 am: |
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Heck yes if it makes good business sense. (if the price is right) There's that impeccable Dyna logic again. You like Duc or KTM "better", so no don't consider buying another troubled moto company up for sale. HD=American We don't need a factory in Milan or Austria. |
Dynarider
| Posted on Friday, January 31, 2003 - 03:39 am: |
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Actually Blake I dont care for Ducs or KTM's. I think the KTMs are ugly & the Ducs just dont do anything for me. But both have a viable dealership network & a loyal following. Cannondale cant do anything for Harley that KTM couldnt & yet Harley passed on them. Thats my impeccable Dyna logic. And why dont we need a factory in milan or austria? We have one in Brazil, whats the difference? |
Benm2
| Posted on Friday, January 31, 2003 - 08:01 am: |
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I've braced myself already, so here goes. I like that engine! They've already got the rear cylinder figured out...now, just add the front one. OR, stick it the WAY IT IS in the XB9 chassis, for a new "Blast"... Ben |
Court
| Posted on Friday, January 31, 2003 - 08:29 am: |
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This conversation makes good chat over a beer, but let's face it, if Harley-Davidson wanted to "buy" ANY of these companies it would require (from one of America's cash-richest companies) less $$$ than HD nets on t-shirt sales in the period between store opening and noon on any weekday. The question is akin to asking "if Bill Gates could afford a Porsche". Harley-Davidson neither wants nor needs any of these companies. If you have no problems, it rarely makes stategic sense to go in search of them. My Father, in a board meeting one day, shocked some in attendence with his keen sense of observation. The board was collectively mulling over why we'd spent $871M acquiring stores on the verge of bankruptcy, absolutely sure that under our "umbrella of sage wisdom" that we'd have to do nothing and the resulting "automatic economies of scale" would be as if Midas had waved the magic wand of commerce. Dad, as all the MBA's pontificated, sat his coffee down and, in his best uneducated tone said...."If I walk around the yard, scoop up all the turds and place them in one pile...guess what I have?" We divested. Court |
Mikej
| Posted on Friday, January 31, 2003 - 09:47 am: |
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Many lament the apparent universal lack of H-D corporate understanding the Buell customer base. How well do you think the H-D corporate mindset understands dirt bikes? In other words, how well do you think axle covers and highway pegs will sell to a motocross bike owner. "Nice bike there buddy, but you need a backrest and luggage rack and throttle lock for that puppy." Next someone will say Harley should have bought the Scorpion snowmobile startup company when they went under last year to get into (back into) snowmobiling. And what about those golf carts? Lots of baby boomers are starting to retire and the golf industry is booming. Bring back the Harley golf carts, "golfin golfin golfin rawhide". No, I don't think they'll buy into Cannondale. |
Court
| Posted on Friday, January 31, 2003 - 10:34 am: |
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>>>Next someone will say Harley should have bought the Scorpion snowmobile startup company when they went under last year to get into (back into) snowmobiling. And what about those golf carts? Lots of baby boomers are starting to retire and the golf industry is booming. Bring back the Harley golf carts, "golfin golfin golfin rawhide". You forgot one of Harley's major sidelines (and a damn good one at present) Military Bomb Casings. Court |
Mikej
| Posted on Friday, January 31, 2003 - 10:49 am: |
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I didn't forget it, but am hoping they don't get back into it for if they do then it will mean we will then have far greater things to be worrying about than gasket leaks and wheelbearings. And this has no editorial intent implied as to the quality of their construction, just what going back into production would mean. |
Blake
| Posted on Friday, January 31, 2003 - 10:58 am: |
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"But both have a viable dealership network & a loyal following." HD doesn't? "And why dont we need a factory in milan or austria? We have one in Brazil, whats the difference?" Labor rate. "Many lament the apparent universal lack of H-D corporate understanding the Buell customer base. How well do you think the H-D corporate mindset understands dirt bikes?" Actually I think the lament is that the dealers don't understand the sport bike (Buell) customer base. I know a lot of Harley riders who have dirt bike experience. It is enough of a difference, dirt from street, that I don't see a problem. No salesman when confronted with a customer interested in a dirt bike is going to suggest he instead go for the "big twin." Whether the deal makes sense business wise, I don't know. If the aim of HDI is to expand market share and grow the business, dirt bikes are certainly one very good way to do it. |
Mikej
| Posted on Friday, January 31, 2003 - 11:32 am: |
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"No salesman when confronted with a customer interested in a dirt bike is going to suggest he instead go for the "big twin." " Sure he/she will: ===== Shopper: I'm looking for a dirt bike and heard Harley-Cannondale has one out now. Clerk: Sure, it's over here next to these small bikes (the Buells). Shopper: Looks interesting. Clerk: Yeah, it is, but how often are you really going to ride it? Now, over here we have a full line of bikes with a great heritage and tradition and large lifestyle following, and with one of these you can ride to work, to the store, take a vacation, and party with 100,000 of your best friends. With that dirt bike you'll have to get a trailer or a truck to carry it to the dirt, and we both know places to ride one of those things are getting harder and harder to find. But with one of these Big Twins here you can just walk out to the garage and go for a ride. Shoot, in this state you don't even have to wear a helmet, how great is that? The wind in your hair, the sound of your well tuned throaty engine filling the breeze, cranking out the tunes on a 4-speaker sound system like on this RoadKing over here .... ===== Just try to tell me that isn't what's likely to happen. It already does in dealerships that have some of the military-style dirt bikes in their shops. Many, if not most, sales people care second about what the customer wants, and first about what the shop is trying to move. Think about it and tell me if it isn't so. |
99buellx1
| Posted on Friday, January 31, 2003 - 11:54 am: |
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I think the main problem that you would have is the same as the Harley salesmen being forced to sell Buell. They dont know anything about the bikes and they dont want to. Some of them would just look at them like something that they dont want any part of. Which is sad, Cannondale had a really good product, their 4wheelers were really cool. Craig HD/Buell Cycle Center Waterloo, Iowa |
José_Quiñones
| Posted on Friday, January 31, 2003 - 12:09 pm: |
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HD dabbled in offroad bikes, scooters and small single cylinder bikes in the past. These attempts were not very succesfull. However, I think the market is different now and people would be more accepting of Cannondale Designed, HD labeled, offroad, supermotard and ATV products available at your local HD/Buell dealer and raced in AMA offroad and supermotard events around the country. If they kept the Cannondale dealers separate, it could give Buell another avenue to try to see if Buell does better in a non HD dealer environment. It would give HD access to Cannondale's engineering expertise, which has done some very interesting and different things in the off road world. In many ways, they are the Buell of the off road market. As Blake mentioned, it would keep Cannondale in the US, designing and producing bikes here in the US and owned by a US corporation. Another reason I could think of to do this has to do with the average age of HD and Buell owners. Face it, young people are not buying HD's and Buells. The XB and the Blast are probably doing better at this, based on the people I have seen on XB's, but the average age of a Buell owner is still much older than a typical sport bike buyer. HD/Buell need to get into the kids heads as early as they can. Most kids start on dirt bikes and they love to watch and attend motorcross events, so when the time comes to buy a streetbike, there are certain brands already burned into their memory. This is why I think KTM will be very succesful when their streetbikes hit the street. This is also why Buell is a sponsor of the Clear Channel Arenacross series and has a Firebolt giveaway contest to sign up for at each event, and has a Buell T-shirt air cannon shooting into the crowds between rounds. So they are trying, but having a bike out there racing would probably do better with the kids. The other option would be Polaris. They already offer offroad ATV products, so adding Cannondale to their product line and dealer network would make sense for them too. |
Dynarider
| Posted on Friday, January 31, 2003 - 02:35 pm: |
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"But both have a viable dealership network & a loyal following." HD doesn't? Umm Blake, that was in reference to cannondale. Im sure there are a few dealerships out there, have never seen one yet, but I have seen quite a few Duc & KTM shops. My thinking on this was Harley could buy KTM & Duc & keep them separate from the Harley tassle shops & avoid the screwup of having chrome salesman attempt to sell a Dirtbike or a Monster. But then you knew what I meant & love to argue just as much as Court does. |
Grndskpr
| Posted on Friday, January 31, 2003 - 03:48 pm: |
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Actually, think about it in terms of the bigger picture, if(more than likely it will not happen,but if it did) HD bought cannondale, setup SEPERATE shops, had buell/cannondale dealers, it could work, i mean it worked for honda, no big twins to look at, just Cannondale's and Buells, it could work, look at ukes, they opened a KTM dealer, and cannondales are over priced so the whole thing might work (just kidding about the over priced deal) Yea and Dyna is right about the arguing thing, sometime you guys stop reading just to make a point that was never brought up, of course that is my opinion |
Blake
| Posted on Friday, January 31, 2003 - 06:57 pm: |
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nyanyanya. Actually I totally missed Dyna's point. Good point though. |
Stormfool
| Posted on Friday, January 31, 2003 - 07:29 pm: |
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Regardless of whether or not HD buys Cannondale I think the supermotard direction for HD/Buell makes sense in light of the relative popularity of battletrax type events. Close call, as soccer never really caught on here, hence supermotard might be too euro for us yet... From what I've read in the bike mags that Cannondale is/was a sweet American Supermotard. |
Imonabuss
| Posted on Friday, January 31, 2003 - 07:48 pm: |
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All of this might have some meaning if the Cannondale product was worth a darn. Which it isn't. Last year Cycle News had a comparo of all the MX four strokes, including small ones like Gas Gas, Vertameti and VOR. Guess which one had all the problems? You may find some Cannondale fanatics, but you'll also find Ossa fanatics. |
Buckinfubba
| Posted on Friday, January 31, 2003 - 08:37 pm: |
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I wish harley would buy miller brewing company so I could get employee discounts.....mmmmmm |
Ray_Maines
| Posted on Friday, January 31, 2003 - 09:59 pm: |
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If HD bought Miller it would taste like Rainier, cost $3.00 a can and wouldn't have a pop top. If you could get the salesmans attention, he would want you to pay $4.00 and put up a non refundable $2.00 per can deposit. You could pick it up whenever the factory got around to making it and it would come in a leather bag with conchos and fringe. You'd be expected to wear a black Miller t-shirt and rank on people who drink wine. |
Ray_Maines
| Posted on Friday, January 31, 2003 - 10:03 pm: |
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Actually, I like the idea of HD buying Cannondale and putting Buells and Cannondales together in a separate store. |
Two_Buells
| Posted on Friday, January 31, 2003 - 11:27 pm: |
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I'd love it! I have Three Buells and One Cannondale Mt Bike now. (employee discount on Mt. Bikes would be cool!) Court, my first job at H-D was a Bomb test operator on the casing line. |
Blake
| Posted on Saturday, February 01, 2003 - 12:36 am: |
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Imonabus, Ouch, that's harsh. Don't tell me . . . Their Showa shocks fell apart? |
Dynarider
| Posted on Saturday, February 01, 2003 - 01:44 am: |
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Blake, what does the labor rate have to with not wanting a factory in milan or austria but brazil is just fine?? Have you taken notice of what line workers at Harley make? Not exactly chump change. |
Blake
| Posted on Saturday, February 01, 2003 - 02:20 am: |
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Why do you think they opened a plant in Brazil. |
Court
| Posted on Saturday, February 01, 2003 - 07:09 am: |
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>>>Why do you think they opened a plant in Brazil. Nuts? Ossa? . . and I thought the makers of high heels had coined the term Stiletto. Ossa always reminds me of the doctrine of building the wrong thing, for the wrong market at the wrong time....to wit: By the way the Harley-Davdions 250MX, while you couldn't call it a "good" dirt bike, was a frickin' hoot to ride. Henry Patterson in Topeka, had the good sense to keep two of them in crates (where they live to this day) and the rest of the unsold ones became "play bikes" at Dennis' farm. The things were good looking with their orange paint and leather tank hold-down strap and had a fabulous powerband ......about 52rpm wide. Currently on display in the Topeka Harley-Davidson Museum are a host of neat bikes, including a1975 250 MX prototype (4 forker) and 1978 MX 250. No, I think HD will prefer to FOCUS. Just my $0.02. |
Imonabuss
| Posted on Saturday, February 01, 2003 - 11:40 am: |
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They opened the plant in Brazil because Brazil has a 400% tariff on imported motorcycles!!!!! So, even if you paid the Harley workers $0.50 an hour you couldn't sell American made H-Ds there! |
Dynarider
| Posted on Saturday, February 01, 2003 - 01:40 pm: |
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Does anyone have the info on how many harleys are actually sold in Brazil? I seriously doubt they opened an entire plant to produce bikes to sell just for Brazil. |
Imonabuss
| Posted on Saturday, February 01, 2003 - 02:04 pm: |
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Well, Dyna, you are wrong. That's why they built the plant. It is a tiny KD plant (KD stands for KnockDown), which means they ship the bike in in pre-made sections, just small enough to get under the tariff, then use local labor to assemble. They don't sell a whole lot, but it was a way to get started. Brazil is a large country, and a lot of cars and motorcycles get sold there. Mostly smaller ones, but it is growing. |
Dynarider
| Posted on Saturday, February 01, 2003 - 03:19 pm: |
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And how many are "produced" & sold? Any actual numbers? |
Two_Buells
| Posted on Saturday, February 01, 2003 - 09:14 pm: |
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Don't knock that H-D MX bike. I think it won two National Championships. I think the rider was Rex Staton |
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