On 16th March bikebiz.co.uk carried the story on Derby being “deleveraged” (http://www.bikebiz.co.uk/…/article.php3?id=1258 ). This was printed in the March edition along with a boxout of snippets from the rest of our interview with Alan Finden-Crofts.
So, for the benefit of those who don’t receive the print BicycleBusiness, here are the views of Finden-Crofts…
…on the sale of Sturmey Archer
“I would not have sold that business. It needed more investment in product. It wasn’t growing but it traditionally generated profits [for Derby]. I would have tried to fix it. As you said in [BicycleBusiness] it’s difficult to see why the sale was handled so badly. It was a débâcle.”
…on the sale of Raleigh and Sturmey’s land
“The sale of the land was short-sighted. The money was raised in a hurry but wasn’t sufficient to solve the debt problem. It was a case of the tail wagging the dog. We’ve sold two lots of [Raleigh’s] land before but this was to mainly make the factory more profitable, the cash was reinvested. We did not sell land just to support group finances.”
…on Gary Matthews
“[Gary Matthews] went for centralised control where before each business managed itself. [Derby] became more and more centralised but the culture of the business was decentralised. [His changes] inhibited local managers. This demotivated them.
“He incurred large extra costs. Ten consultants were used. In the previous 12 years, no consultants had been used at all. You can’t pass on all your decisions to consultants.
“[On the Derby board] I was the most vociferous critic of Gary. I voted against his appointment originally. I always thought he was the wrong man for the job. I am sure he could be brilliant in other industries, but he didn’t know enough about the bike trade.”
…on the rumour of an MBO at Gazelle
“If somebody offered a huge price for Gazelle we’d be silly not to consider it. Talk of MBOs by local managers isn’t a weakness, it’s a positive as it confirms the commitment and inherent worth of businesses to their local managements."
…on venture capitalists
“Almost every VC that’s come into the bike business has got their fingers burnt. They think they can quickly go for significant growth and significantly increase the profit margins but it can’t be done that easily in the bike trade.”
…on bicycle trade peccadilloes
“It’s a highly competitive business but if you look back at it over the last 30 to 40 years it’s a very conservative and stable trade with consistent growth, except for spikes such as the Chopper, BMX, mountain bikes.
“The main characteristic of the bike trade is it’s made up of many family businesses, including dealers and suppliers. KMC and Shimano might be large concerns but they are still family dominated. Relationships are very important.”
2nd April 2001: Derby results delayed
The Derby Cycle Corporation should have filed its full annual report with the US Securities and Exhange Commission (SEC) today, but didn’t. However, as expected, headline losses are up from $5m to $51m…
16th March 2001: Derby is to be “deleveraged”; Raleigh UK will have cash to move forward
The shareholders and bondholders will lose out in the forthcoming restructuring of the Derby Cycle Corporation, but the senior lenders and worldwide creditors will all be paid. The ‘deleveraging’ will mean local operating companies – such as Raleigh in Nottingham – will be able to move forward free of Derby’s debt mountain