Raleigh recovers lost ground - BikeBiz

Raleigh recovers lost ground

The UK, Canadian, German, Swiss, and American divisions of Raleigh Cycle Ltd. are in robust financial health, CEO Alan Finden-Crofts announced today. The UK operation is the most improved of the bunch but across the board there's been a 7.3 increase in bicycle sales and a $7m year-on-year uplift in earnings before interest, tax, depreciation and amortization
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EBITDA grew to to $10.5m from $3.8m in 2003. Revenues grew to $285m, up from $259m in 2003.

Raleigh's year end was in September. Alan Finden-Crofts said the results were a "strong improvement."

Raleigh UK made a profit of over £500 000 on a gross revenue of £35m in the year October 2003 to September 2004. In 2001/2, Raleigh made a loss of £9.7m on revenue of £39.3m. The loss was brought down to £3m in 2002-3.

"Crucially, the team installed following a management buyout in 2001 has steered the UK operations into profit this year, whilst significantly improving results in Canada and Germany," said Jersey-based Finden-Crofts.

"We are pleased with the performance of the company in 2004 and believe the figures validate the faith placed in the business by the management team when we secured the management buyout in 2001. The strength of Raleigh Cycle’s distribution chain, brands, products and purchasing power are now adding the value needed in a mature business.

"Several recent senior appointments to the team are demonstrating what can be achieved through experienced and

skilful management. The board looks forward to building on this momentum in 2005.”

Shareholders funds of $51m provide a "solid financial foundation" for Raleigh, said Finden-Crofts.

The company has consolidated assets of $126m (including $22m in cash) against total consolidated liabilities of $75m (including $17m of total debt).

Raleigh employs 800 people worldwide and markets under the Raleigh, Diamondback, Univega, Focus, Kalkhoff, Rixe, Avenir, Cyclepro, Phillips, Triumph, Hercules and BSA brands.

Raleigh was subject to an MBO in August/September 2001, following a successful bid for the assets of former owner, Derby Cycle Corporation, a $500m pa company which filed for Chapter 11 bankruptcy protection in August 2001.

Finden-Croft's buy-out vehicle was Cycle Bid Co, a stalking horse. Trek did due diligence on Derby's assets but failed to progress any deal, leaving Cycle Bid Co. as the sole bidder.

Cycle Bid Co bid $23m for Derby and its bondholders agreed to this figure after having bumped the total up $3 million in an auction that Finden-Crofts said was "just like buying a pig at a market."

The bondholders lost perhaps $50m, despite the $23m final deal and the previous proceeds from the the sale of Gazelle. The shareholders lost their stakes.

Including debts and liabilities, the full purchase price for DCC was $75m. However, the company had $100m in assets and one US industry observer said at the time that Finden-Crofts got a "phenomenal deal".

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