Cannondale file for bankruptcy

28-01.-2003, 10:33 AM

steve

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Join Date: Aug 2001

Location: Below Australia -20 years

Posts: 1,993

Cannondale file for bankruptcy

The story below was posted on cyclingnews.com a few minutes ago.

Quote:

Cannondale file for bankruptcy

The Cannondale Corporation has announced that it will file for bankruptcy on January 28 under Chapter 11 of the U.S. Bankruptcy Code. The bicycle and motorsports company issued a press release stating that "Cannondale and its lenders, The CIT/Business Credit, Inc. and Pegasus Partners II, L.P. have reached an agreement in principle that, subject to Bankruptcy Court approval, will provide the Company with interim financing to fund post-petition operating expenses and to meet supplier and employee commitments."

"The interim financing will be used to continue the operation of our bicycle business," said Cannondale Founder and President Joe Montgomery.

"Cannondale has also reached an agreement in principle with Pegasus Partners II, L.P. to sell substantially all of its assets to Pegasus Partners, subject to better and higher offers and court approval. Pegasus would operate the bicycle business with the involvement of current management and would purchase separately the Company's motorsports assets, including the intellectual property related to the design of Cannondale's motorsports products."

Cannondale stated that due to the interim financing, it will "be able to pay vendors for goods and services received after the filing in the ordinary course of business."

The main reason for the company filing for bankruptcy was due to the losses incurred by its motorsports division. Although the bicycle business was still profitable, the company's huge investment into motorcycles, combined with its lack of success competing against the established Japanese giants was too much.

"Although we believe in the value of our motorsports products, we did not have sufficient financial resources to make the additional investments necessary," said Montgomery. "We look forward to bringing a renewed focus to our core bicycle business and to working through this present challenge with the greatest possible speed."

It's expected that while production workers who were laid off from Cannondale's motorsports factory in Bedford, Pennsylvania in December will not be recalled, production workers at Cannondale's Bedford bicycle factory, were temporarily suspended from work, are scheduled to return to work in the near future.

The company's foreign subsidiaries will not be included in the filing. Business done through Cannondale subsidiaries in Europe, Japan and Australia accounted for approximately 42% of the company's total sales in the 2002 fiscal year.

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Steve

CyclingForums.com

28-01.-2003, 07:43 PM	#2
Mampara Registered User Join Date: May 2002 Location: Johannesburg, South Africa Posts: 233	NNNOOOOO!!!!!!

28-01.-2003, 11:41 PM	#3
rek Registered User Join Date: Sep 2002 Location: Melbourne, Australia Posts: 1,200	Why was it that they branched into the motorsport products in the first place? If I remember correctly, I hear that their bicycle division was quite profitable.. __________________ Peter Cannondale Synapse Carbon Scalpel Cyclocross Ultra

29-01.-2003, 09:28 AM	#4
ant evans Member Join Date: Jan 2003 Location: Cardiff, Wales Posts: 95	Maybe I'd have treated my little black baby better if I'd known she was going to be a collectors' piece. I would like to apologise to her publicly for hauling her through mud, rivers and fences, pedalling hub-deep in cow shit, falling on top of her, using the road to scrape the corners off her, dropping her, squashing her into cars, banging her beautiful tubes against lesser metal objects, using the wrong tools on her, and leaving her out in the rain with strangers around. But just in case, I might go out and get another one. :-( __________________ drivers = smokers

29-01.-2003, 02:40 PM	#5
rek Registered User Join Date: Sep 2002 Location: Melbourne, Australia Posts: 1,200	I don't think the bicycle part of the company is going to disappear -- it's not exactly a no-name brand with little recognition. The press release also says the bicycle half of the business is still a profitable entity, so it'll be worth something to someone. It'll probably end up being bought by another company(maybe Trek, they own a lot of bicycle companies, one more wouldn't hurt now would it ) __________________ Peter Cannondale Synapse Carbon Scalpel Cyclocross Ultra

30-01.-2003, 10:50 AM

rek

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Join Date: Sep 2002

Location: Melbourne, Australia

Posts: 1,200

FYI, here's a letter from the Cannondale boss to bicycle dealers explaining the situation and how it is going to affect their bike division.

I found it floating on the internet on a Yahoo group, so make of it what you will.. (ZIPped up Word document)

Attached Files

dealer letter.zip (3.8 KB, 96 views)

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Peter
Cannondale

Synapse Carbon

Scalpel

Cyclocross Ultra

30-01.-2003, 10:59 AM