Cannondale....

[Combat767]

Just saw this on RacerX:

Cannondale Shuts Down

Racer X has learned that the Cannondale motorcycle project may be over. The company closed its Bedford and Bethel plants, in Pennsylvania, today, marking the end of production on motorcycles and quadcycles, as well as the bicycles that come out of those buildings. The ambitious Cannondale motorcycle project had been troubled from the start, though it appeared they were turning a corner recently, especially in the quadcycle market. However, several calls have come in from people close to the company saying that Cannondale did not make the payroll this week and had shut its doors. We will let you know more on this breaking story.

:scream:

 

[Bruce McCrary]

If it is true, they did it at quiting time. I was on the phone with the factory in Bedford at around 4:00 PM checking prices and availablity on some parts for a customer. Heck they even gave me an ETA.

I called back after reading the Racer X post and got the answering machine that told of the winter hours and to call back the following business day.

Checked several other sourses and can confirm nothing.

Bruce McCrary

 

[JimmyD2]

Boy I hope this report is wrong...

 

[yarbonwick]

It's not wrong. Read the General Forum.

 

[Barbarian]

Looks like trouble for Cannondale

JANUARY 24, 2003 -- BEDFORD, PA (BRAIN)--Cannondale officials declined to confirm or deny on Friday reports that the company's bicycle, motorcycle and apparel factories in Bethel had been closed, the locks changed and its employees let go without pay.

Citing Securities and Exchange Commission rules, Scott Montgomery, Cannondale's vice president, declined to comment on the closure or the company's future.

He also declined to comment on an article in the Friday edition of the Bedford Gazette, a local newspaper. It reported that Cannondale was likely headed for bankruptcy, echoing speculation from within the industry since before Christmas.

Montgomery also declined to comment on reports that the company laid off Bill Luca, its vice president of finance, earlier in the week.

All this comes after Cannondale furloughed about 500 of its 650 employees at the Bedford factories in late December then failed to rehire them in mid-January as the company had promised.

At the time, Tom Armstrong, a Cannondale spokesman, said the company traditionally cut back factory operations during December and January, reflecting low consumer demand during the winter months. "It's something we've always done," he said at the time.

It looks as if there are several scenarios for the troubled bicycle and motorcycle maker, all of which would result in drastic changes in the way Cannondale operates.

Besides filing for Chapter 11 bankruptcy protection, the company could split up, selling off the motorsports and bicycle divisions to separate companies; divest its unprofitable motorcycle division; find a white-knight; or be taken over by creditor Pegasus Partners, which has an option to buy an aggregate of nearly 3 million shares of stock.

Several companies have been named as possible buyers of the business among them the American Bicycle Group, K2 and Trek. Officials at K2 admitted taking a look at the company, but said it was common practice to sniff around when a company is looking for a buyer.

One other possibility is that Joe Montgomery, the company's founder, will somehow find a new creditor willing to bankroll the company and its struggling motorsports division. Despite Montgomery's history of pulling the company from the brink of collapse, despite heavy odds, few think he can pull off another miracle.

Cannondale ended its fiscal year last June posting a $15.4 million loss. In the first three months of its 2003 fiscal year (July through September), the company reported a net loss of $8.4 million--a rate almost three times faster than all of last year. And the company's list of creditors is long. Many industry suppliers report that they stopped offering the company credit months ago, shipping everything C.O.D. only.

The motorsports division is at the heart of the company's problems. Last year, the bicycle division generated more than $134 million in sales, compared to $22 million from motorcycles and ATVs. Yet every motorcycle and ATV sold in 2002 was sold at a loss, according to Cannondale's annual report.

Throughout most of last week Cannondale's stock was trading below $1. It closed on Friday at 80 cents, up 3.9 percent.

 

[woodsy]

Personally I wish they could make it but with economic times as they are this dont sound good. I feel sorry for those with C-dales cause I got caught up in the ol "husky scam" and know how it feels!
They had some GREAT ideas going - to bad for all of us :(
Woodsy

 

[70 marlin]

It’s just too bad! I saw it coming. My friendly used bike salesmen steered me away from a couple really sweet used 440's a couple months ago. Saying their history! And the dealer ship is no longer going to carry that line of bikes. To bad I really like that 440. QUESTION? How long will they have to carry replacement parts?

 

[flattire]

We all knew we were taking a chance when we bought them. I ordered mine in 2000,waited 2 years for it ;have had 0 problems. there's a rumor the motorsports has a buyer:)

 

[Garbo]

Well, unfortunatly here is the latest news.

Dow Jones Business News
Cannondale Plans To File Voluntary Chapter 11 Petition
Monday January 27, 3:52 pm ET


BETHEL, Conn. (Dow Jones)--Cannondale Corp. , citing difficulties at its motorsports operations, plans to file for Chapter 11 bankruptcy protection Tuesday, the company said in a press release.
Bike maker Cannondale said it has reached an agreement in principle with its lenders -- CIT/Business Credit Inc. and Pegasus Partners II L.P. -- that, subject to bankruptcy court approval, will provide interim financing to fund post-petition operating expenses and to meet supplier and employee commitments.

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Cannondale also agreed in principle to sell substantially all of its assets to Pegasus Partners II, 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.

Because Cannondale has obtained interim post-petition financing, it will be able to pay vendors for goods and services received after the filing in the ordinary course of business.

Cannondale said the difficulties with its motorsports business made the filing necessary. The company will suspend operations of the motorsports division pending a potential sale, meaning production workers furloughed in December from its motorsports factory in Bedford, Pa., won't be recalled.

Production workers and Cannondale's Bedford bicycle factory, who have been idled during a recent shutdown, are scheduled to return to work in the near future.

For the first quarter ended Sept. 28, the bike company reported pretax income of $628,000 from bicycles and a pretax loss of $7.4 million from its motorsports business.

Cannondale's foreign units aren't included in the filing. Business done through Cannondale's units in Europe, Japan and Australia accounted for about 42% of the company's total sales in fiscal 2002.

-Jenny Park; Dow Jones Newswires; 201-938-5400

 

[woods_rider1]

Hopefully someone can pick up the ball and run with the innovative ideas that Cannondale implemented into their bikes. Anyone who has ridden the E440 knows just how sweet a woods bike can be.

 

[euro gasgas]

Ya know, Honda has assembly and manufacturing plants in the U.S. Starting bid for the motorcycle division of cannondale is 2.5 mil? And the dollar is low right now due to pending iraqi war. A little honda engineering mixed in with all that cool stuff on the cannondale would be nice to see.

On the downside, with an asking price of 2.5 million -> my guess is that one would be assuming a unusually large amount of debt and liability in the acquisition.

jeff
www.gasgasrider.org GasGas Rider's Club

 

[Hick]

Originally posted by euro gasgas
On the downside, with an asking price of 2.5 million -> my guess is that one would be assuming a unusually large amount of debt and liability in the acquisition.

jeff
www.gasgasrider.org GasGas Rider's Club

I dunno, I could be mistaken, but my understanding was that was the asset purchase price. You could probably assume debt as part of the deal, but you aren't buying their books, just the assets (no liabilities). But I’m not really sure.

Whether you would get the Cannondale name and access to the dealer network is another question. If all you get is a few buildings, some tooling, patents, and inventory then you are going to need a lot of jack to be able to make anything out of that.

But the Honda scenario is interesting I would think. That is pocket change to them, what Cannodale has done with that motor (and frame???) alone may be easily worth the 2.5 to a company like Honda. They probably spend that much on R&D before lunch.

I just hope something good comes out of this for us, the dirt bike-buying public.

 

[Hick]

Originally posted by Hick
I just hope something good comes out of this for us, the dirt bike-buying public.

I should have added extra emphasis to those members of the dirt bike-buying public who happen to own a Cannondale. I'm sure they are good bikes but right now I'm glad I didn't buy one (I was thinking about it).

 

[TRexRacing]

What a shame.And I was looking at becoming a dealer a couple years ago.Boy did I get lucky they wanted too much on initial purchase.Guess that literature is a collectable now.