IBDs speak up for Cannondale; potential buyers circle overhead - BikeBiz

IBDs speak up for Cannondale; potential buyers circle overhead

To date there have been no dislocations in supply of Cannondale bikes due to the pre-Christmas staff lay-offs and this week's Chapter 11 filing. The US bike manufacturing plant is soon to again resound to the hum of bikes being built but production won't be back to normal until March. In the meantime, IBDs in the UK and the US have been sticking up for the American firm, whilst US and European bike companies lick their lips ahead of the auction in March when Cannondale, in effect, is offered for sale
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Jay Wolff of Helen's Cycles, a six-store chain in southern California and one of Cannondale's largest US dealers, said: "We believe Cannondale's future will remain strong, and we will continue to support it as we have in years past."

Andy Castle of Alf Jones Cycles in Wrexham, ("a significant part of our business is based around Cannondale,") said:

"The bicycle side of Cannondale has been subsidising the motorbike side for some time. It's good the company will go back to concentrating on what they do best. You've got to remember that no product has failed here, Cannondale bikes are still highly innovative and desirable. The bike division is profitable. I don't foresee any long-term changes thanks to the Chapter 11 filing. Who owns the company is not that important."

John Crandall of Old Town Bike Shop in Colorado Springs is also glad Cannondale will no longer have a motorsports division: "After 19 years with Cannondale, and with the best product line-up ever in 2003, I'm looking forward to Cannondale giving its full attention to bicycles."

Long-time Cannondale dealer George Gatto of Gatto Cycle Shop, a two-store operation in the Pittsburgh area, said: "We'll definitely continue to support them as they work through this challenge. We've been a Cannondale dealer for more than 20 years. I have great relationships with the people there, and they've always treated us well."

A day later than expected, Cannondale Corporation filed a voluntary petition for reorganization under Chapter 11 of the US Bankruptcy Code on Wednesday. The company had announced its plans to file on Monday.

The Bankruptcy Court approved the interim post-petition financing from the Company's lenders, CIT Group/Business Credit and Pegasus Partners. Cannondale's bicycle business will continue; the motorsport division was chopped.

Cannondale can use the interim financing to pay vendors for goods and services received after the filing.

Under the terms of an agreement still subject to court approval, Pegasus has agreed to act as the "stalking horse" in a Section-363 sale of substantially all of Cannondale's assets on a going concern basis. That bid is subject to higher and better offers at an auction anticipated to occur in mid-March.

A top executive at Pacific Cycles, owner of GT, Mongoose and Schwinn, told a US newspaper journalist that Pacific would be interested in bidding, even though it is itself in the throes of a sale: venture capitalist form Wind Point Partners, which owns 43 percent of Pacific, is looking to realise its investment.

John Burke, president of Trek, would neither confirm nor deny that his family-owned company would bid for Cannondale.

Meanwhile, in Europe, the Accell Group NV is said to be lining up a bid. This is according to a report in BikeEurope.

"We are very interested in Cannondale because this company perfectly fits within our current group of brands and our strategic objectives for the longer term," Accell CEO René Takens told BikeEurope.

Accell, former owner of Dawes, is Europe's second biggest bike company, owning the Batavus, Hercules, Koga Miyata, Winora and Staiger brands.

Chris James, of JE James in Sheffield, is concerned, but not too concerned, about who may eventually end up buying Cannondale:

"If production was to stay in the US that would obviously be good for the brand story, and the American workers. But from a global point of view, it wouldn't be the end of the world for production to shift to the Far East, where quality, from Taiwan especially, is top notch."

A first wave of workers is scheduled to return to Cannondale's Bedford, Pennsylvania, bike factory in two weeks. A second wave of workers is slated to return in early March. The workers had been laid off before Christmas. During the shutdown Cannondale has continued to ship bikes and other products from inventory while also assisting IBDs and customers with normal service and warranty issues.

On a positive note, Cannondale learned yesterday that its sponsored road racing team, the Italian Saeco squad, had been invited to compete at the 2003 Tour de France following a two-year absence. The Saeco team is sponsored through Cannondale's European subsidiary.

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