Cannondale Chapter 11
Published: January 28th, 2003
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The management of Cannondale announced today that they intend to file a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code tomorrow, according to VeloNews.
The rest of VeloNews' story is as follows...
Cannondale has also reached an agreement in principle with to sell nearly all of its assets to one of its two largest creditors, Pegasus Partners. That aagreement, too, is subject to bankruptcy court approval and could be rejected in favor of higher offers from other parties.
If approved, Pegasus would operate the bicycle business as a going concern with the involvement of current management and would purchase separately Cannondale's motorsports assets, including the intellectual property related to the design of Cannondale's motorsports products.
In the meantime, management continues to work with other potential interested buyers for either or both of these businesses.
Montgomery explained that difficulties with Cannondale's motorsports business made the filing necessary, and that the company has determined to suspend operations of the motorsports division pending a potential sale.
"The motorsports division was threatening the bicycle division," Montgomery said. "Although we believe in the value of our motorsports products, we did not have sufficient financial resources to make the additional investments necessary. 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."
The suspension of operations of the motorsports division will mean that production workers who had been furloughed from Cannondale's motorsports factory in Bedford, Pennsylvania in December will not be recalled. Production workers at Cannondale's Bedford bicycle factory, who have been idled during a recent shutdown, are scheduled to return to work in the near future. Cannondale's foreign subsidiaries are not included in the filing. Business done through Cannondale subsidiaries in Europe, Japan and Australia accounted for approximately 42 percent of the company's total sales in fiscal 2002.
One company manager contacted by VeloNews said the company "recognizes the value of our sponsorship programs," and said he expects those relationships to continue. "It's a big part of what we do and what makes the bicycle business here a success," the official, who declined to be identified, said.
Get Motorcycle.com in your InboxThe rest of VeloNews' story is as follows...
Cannondale has also reached an agreement in principle with to sell nearly all of its assets to one of its two largest creditors, Pegasus Partners. That aagreement, too, is subject to bankruptcy court approval and could be rejected in favor of higher offers from other parties.
If approved, Pegasus would operate the bicycle business as a going concern with the involvement of current management and would purchase separately Cannondale's motorsports assets, including the intellectual property related to the design of Cannondale's motorsports products.
In the meantime, management continues to work with other potential interested buyers for either or both of these businesses.
Montgomery explained that difficulties with Cannondale's motorsports business made the filing necessary, and that the company has determined to suspend operations of the motorsports division pending a potential sale.
"The motorsports division was threatening the bicycle division," Montgomery said. "Although we believe in the value of our motorsports products, we did not have sufficient financial resources to make the additional investments necessary. 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."
The suspension of operations of the motorsports division will mean that production workers who had been furloughed from Cannondale's motorsports factory in Bedford, Pennsylvania in December will not be recalled. Production workers at Cannondale's Bedford bicycle factory, who have been idled during a recent shutdown, are scheduled to return to work in the near future. Cannondale's foreign subsidiaries are not included in the filing. Business done through Cannondale subsidiaries in Europe, Japan and Australia accounted for approximately 42 percent of the company's total sales in fiscal 2002.
One company manager contacted by VeloNews said the company "recognizes the value of our sponsorship programs," and said he expects those relationships to continue. "It's a big part of what we do and what makes the bicycle business here a success," the official, who declined to be identified, said.
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