PxPixel
Private equity investment firm digs Cannondale out of hole - BikeBiz

Private equity investment firm digs Cannondale out of hole

Cannondale Corporation and Pegasus Capital Advisors, L.P. announced today that the trendy US bike maker has secured a new financing facility. The new package also includes an amended credit facility with Cannondale's existing lender, The CIT Group/Business Credit.
Author:
Publish date:

Cannondale's new financing facility eliminates any defaults under its prior facility and will permit Cannondale to reclassify its debt to long term on its balance sheet.

"We are very pleased to obtain this new financing from Pegasus and to continue our financing relationship with CIT," said Cannondale founder and CEO, Joe Montgomery.

"This financing facility will help the company maintain its leadership position as bicycling's top innovator."

Gregory Gatta, vice president of Pegasus explained what attracted the firm to Cannondale.

"The company has a premium global brand in its core bicycle business, with stable historical performance and we believe that it has upside value that today's market is not recognizing. This stable platform, combined with the potential in their high-growth motorsports business make an attractive combination for an investor. We're extremely excited to be working with Cannondale through this funding package and stand ready to consider future investment in the company, should it be needed to help Cannondale realize its long-term goals."

Cannondale has sold to Pegasus $25 million of senior notes and warrants to purchase an aggregate of 2,944,552 shares of Cannondale's common stock. Net proceeds will be used to pay down approximately $10,320,000 in term debt and the remaining net proceeds of approximately $11,719,000 will be available for working capital needs.

The senior notes are due on July 25, 2007. Cannondale may prepay the senior notes without penalty at any time. Payments of interest at the rate of 7.5 percent per annum are payable in cash and payments of interest at the rate of 12.5 percent per annum are payable in additional senior notes, or at Cannondale's option, in cash.

The warrants are exercisable through July 26, 2012 at an exercise price of $2.05 per share. If Cannondale repays the senior notes in full by January 26, 2004, warrants to purchase 1,972,849 shares will be cancelled. If the senior notes are not repaid in full by that date, but are repaid in full by July 26, 2004, warrants to purchase 1,472,276 shares will be cancelled. The warrants subject to cancellation are not exercisable.

In addition, Cannondale has amended its existing revolving credit facility with CIT. The amended facility provides Cannondale with a five year revolving line of credit. The amount of the revolving line of credit is the lesser of $35 million or a percentage of eligible receivables and inventories.

Pegasus Capital Advisors, L.P., based in Greenwich, Connecticut, is a private equity investment firm with approximately $800 million under management.

Featured Jobs

the cycle hub

Showroom Manager

The Cycle Hub I Dubai, United Arab Emirates I Competitive Package & Bonus I Date Published Tuesday 26th June 2018

Giant St Paul Logo

Bike Fitter / Sales Person

Giant St Pauls I City of London I Salary: Negotiable Dependent on Experience I Date Published Thursday 21st June 2018

CRC_Logo_620x349-1

Bike Technician

Chain Reaction Cycles I Ballyclare I Competitive Salary & Benefits Package I Date Published Monday 2nd July 2018

Canyon_Logo_1(1)

Brand Content Writer

Canyon Bicycles GmbH I Koblenz, Germany I Salary: Up to €38,000 I Date Published Tuesday 3rd July 2018

CRC_Logo_620x349-1

Retail Sales Advisor

Chain Reaction Cycles I Belfast I Competitive Salary & Benefits Package I Date Published Monday 2nd July 2018