MV Agusta has a history of developing some of the most exotic performance motorcycles out there. Unfortunately, the company also has a history of financial instability, constantly struggling to carry a large amount of debt.

Despite reporting 100 million euros (US$111.8 million) of revenue in 2015 and a 30% sales growth over 2014, MV Agusta remains in financial trouble with a reported 40 million euros owed to suppliers and banks. Production out of Varese has slowed to a crawl while MV Agusta looks for a way to continue operating.

As a result, MV Agusta has filed for “concordato in continuità,” an insolvency proceeding under Italian law for the restructuring of debt to allow a company to continue operating. The company’s creditors (as well as its unionized employees) have 90 days to accept the proposal.

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That MV was able to produce a 30% growth in sales last year while claiming a large number of backorders for 2016 means there is some hope of turning things around. To that end, MV Agusta says it has invested 15% of its annual revenue into research and development to expand beyond its core sportbike and naked streetfighter segments. MV is also making inroads with emerging markets, opening four showrooms in India earlier this year. But in order for these investments to pay off down the road, MV Agusta needs to be able to pay the bills today.

Giovanni Castiglioni Interview

The AMG logo is clearly visible next to the windscreen on Leon Camier’s F4 at last month’s WSBK round at Phillip Island. The logo was conspicuously absent at the following route in Thailand.

One possible solution is for Mercedes-AMG, which owns a 25% share in MV Agusta, to increase its stake in the company. Earlier this month, various reports out of Italy had the two sides negotiating terms, with Mercedes-AMG reportedly seeking a majority share. However Giovanni Castiglioni, MV Agusta’s president and 75% owner, is reluctant to give up control over the company.

Oddly, that stands in contrast to his late father, Claudio Castiglioni, who on more than one occasion, sold the company for millions only to buy it back for a nominal fee (the most recent buyer was Harley-Davidson which purchased MV Agusta for $108 million in 2008 only to sell it back two years later for a single euro). It’s a neat trick if you could pull it off, but it looks like Giovanni Castiglioni will have to go a different route.

Giovanni Castiglioni took over MV Agusta's reins after the passing of his father, Claudio.

Giovanni Castiglioni took over MV Agusta’s reins after the passing of his father, Claudio.

Castiglioni may instead turn to other investors, with private-equity firm Investindustrial being a potential partner. Investindustrial, of course, is the former owner of Ducati, and obviously is familiar with owning Italian motorcycle manufacturers. The question is how much of a stake Castiglioni is willing to give up to Investindustrial or any other potential investors.

  • Sayyed Bashir

    I wish them the best of luck. They are big dreamers, but need to keep their feet on the ground. Come up with a scrambler and a adventure bike and make lots of money. Sport bikes are so last century.

  • kenneth_moore

    Maybe they should merge with Erik Buell Racing. The companies appear to have a lot of synergy.

  • Mike Mooney

    A MV Agusta scrambler would be awesome!!

    • DickRuble

      How about an MV moped?

  • JMDonald

    I like MV Agusta. It is hard to respect mismanagement. Whatever the market is for these bikes, if it needs to be expanded for the company to be profitable any savvy investor will know if there is money to be made. I’d need to look at the books but it all smells to me. I doubt that it is in any way too complex for an honest businessmen to figure out.

  • spiff

    What you guys said. They need to get into more lucrative markets. Though, I think they need to continue what they are doing. They should also take the plunge with Mercedes. They complement each other with AMG, performance/luxury. They can cross pollinate their customer base.

    • Michael Mccormick

      Even Ducati was taken over by Audi. MB can’t stand to be in second place. MV is not in Ducatis league. As wonderful as their bikes are they have no budget for racing and have not raced in the big time since Ago rode for them in the 1960s. A large part of Ducatis success is from their domination a while back in WSBK, and their MotoGP bikes this year are going to be very competitive. Then there’s Aprilia. MV has the best history but never had the resources to compete in recent times. It’s a damn shame. Something is wrong with their business model or finances if even Triumph who returned from the dead became a success thanks to a big investment by John Bloor. MV is like a Mom and Pop business using petty cash trying to compete in a new environment.

  • Max Frisson

    They are cutting back on models, good thing.
    Keep with what they know, forget ADV bikes and scramblers, they have no motor that will work well in those configurations.
    Stick with your core.

    • spiff

      Their 600/800 triple would work nicely in many different kind of models.

  • John B.

    Clearly, this is a management problem. MV has a viable business with its current models except debt service exceeds profits. MV will need one or more of the following solutions: 1. Convert some debt to equity to reduce the debt burden; 2. Find an outside equity investor to provide working capital; 3. Seek relief in the Italian equivelant of bankruptcy reorganization; 4. Hire a competent management team. It will be interesting to see who, if anyone, will take a minority interest in MV with the current management team in place. Maybe, the company need to fail. Then, subsequent investors can purchase the intellectual property and other assets to continue the brand in a new company. That, and an unfortunate fire, worked out well for Triumph.

  • DickRuble

    This is possibly why they were sucking up to Harley Davidson.

  • Michael Mccormick

    It’s very hard to turn a profit with production in Italy unless they sell their bikes in much bigger numbers. How can they buy the company for one euro, and have so much debt? My guess is their labor is too high. They definitely need a deal with MB. I hope their dealer network and support is better in Europe than in the USA. I never considered buying one but have owned 2 Ducatis and 2 Guzzi’s but never had a local MV dealer

    • DickRuble

      There is an interview with Giovanni that explains that the price of buying it back was about $80 Million forgone in HD stock by the Castiglioni. There may have been assumed debt as well. You won’t find a loaf of bread for $1 these days. If you think HD will give you a motorcycle company for $1, I have some prime marsh land for sale to you in Florida.

      • Michael Mccormick

        Not interested in any toxic real estate. But I believe what you say about the one euro price tag came with some big amount of debt. Either way, for MV to stay in business, they need to go bankrupt like GM and Chrysler, or get MB to bail them out. Either way, the current management will have to give up some control. You can only keep a unprofitable business running for so long. If you don’t turn a profit , you’re living on borrowed time. I want MV to be successful but it can’t exist the way it is run now. Having an increase of 30% of a low revenue is not enough, apparently

  • Old MOron

    So John Burns wrote a glowing review of the new Brutale. Made me interested in the bike. I wonder if I can use this news to bargain down the purchase price.

  • Starmag

    Maybe they just need a slammed bagger with a 21 inch front wheel to boost their NA sales. sarc/off

    Well, that and dealers. My buddy is selling his Norge which he loves just because it’s had a few problems and it’s a long way to the nearest dealer. On a trailer. Wasting one day each way in transit. Dampened his enthusiasm, it has.