Cannondale Gets New Life-For Now
Cannondale filed for Chapter 11 bankruptcy protection in U.S. Court last week, pointing to losses in its motor- sports division that inhibited the company’s ability to make future investments.
BIKE reported a pretax income of $628,000 for the cycling division in its fiscal Q1 ended September 28, 2002, but a loss of $7.4 million on its motorsports group.
The company’s foreign subsidiaries are not included in the bankruptcy. Europe, Japan and Australia accounted for approximately 42% total sales in fiscal 2002.
The Bankruptcy Court on Thursday approved the interim post-petition financing from the company’s lenders, The CIT Group/Business Credit, Inc. and Pegasus Partners II, L.P. BIKE will use the financing to pay vendors for goods and services received after the filing in the ordinary course of business.
Cannondale will focus all energy on the core bicycle business and the motorsports division will not restart.
Subject to court approval, Pegasus has agreed to act as the “stalking horse” in a Section 363 sale of substantially all of the company’s assets on a going concern basis. The bid is subject to higher and better offers at an auction anticipated to occur in mid-March.
Pacific Cycle, K2 Sports and the American Bicycle Group reportedly have interest in acquiring the bicycle group.
