Cannondale to file for Chapter 11

[400exNH]

The Bethel, Conn. based company said it has reached an agreement with its lenders that will provide Cannondale (BIKE: news, chart, profile) with interim financing to fund the post-petition operation of its bicycle business.

Cannondale also said its in an agreement with its lender Pegasus Partners for Pegasus to operating the bicycle business as a going concern with the involvement of Cannondale's current management. Pegasus would also purchase Cannondale's motorsports assets in a separate transaction, the companies said.

Cannondale said it was suspending operations of the motorsports division pending a potential sale.

"The motorsports division was threatening the bicycle business," said Cannondale President Joe Montgomery.

"Although we believe in the value of our motorsports products, we did not have sufficient financial resources to make the additional investments necessary," he added.

Production workers who had been furloughed from Cannondale's motorsports factory in Bedford, Penn. Will not be recalled, said the company, adding that production workers at the Bedford bicycle factory will return to work in the near future.

[freakystone]

That is horrible news... For the sake of current Dale owners, I hope the Cannondale story doesnt emulate the Daewoo story. I have read a lot of the feedback about Dale going south and some of you have said that is it law that they have to provide parts for X amount of years. Maybe...

I read a story just a few months ago concerning the now defunct auto manufacturer Daewoo. They of course went belly up and people everyone are left with new, still financed vehicles with no value, no warranty and no extra available parts to speak of. In several cases, simple parts such as door handles and light lens are just not available other than what was already in dealers stock or off of used vehicles. There is talk that GM will step in and buy Daewoo but that is at least a few years away if it does happen. And even if it does, GM hasnt said whether it will honor warranties or if it will make the car and part available in the U.S. at all.

I owned a Dale. Stock for stock it was the best quad made. But go back through the posts and read my view on race-ready quads. I said they cant last because there market is so, so, so small.

Also, do the math about Cannondale. In 2002 C Dale did $22,022,000.00 in motorsport sales. Lets assume that all they sold was atv's. Now lets assume that all they sold was $5000 (dealer cost) Cannibals. That means they sold a mere 4,404 Cannibals. That isnt many. I read where Suzuki makes a Z ever 83 seconds. That means, that it only takes Suzuki 10 1/2 weeks of working 5 day weeks and 8 hours a day to make the 4,404 quads that took Dale a year to make and sell.

Fact is, who will buy a Dale? A rich parent who wants his kid to have the best quad, or a well of adult or a racer. They market is still ever so small. Now you wonder why the ever-so-powerful Yamaha Warrior is the most sold quad of all time...

Long live Dale...

[Extremeracer167]

i think once a company claims bankruptcy all contracts or waranties like that would prob. be junk. They have nothing left, thats the whole point of filing bankruptcy. Thats the whole prob. with our society, ppl can file for bankruptcy and who has to pay for everything that the person or company owes......EVERYONE. That blows doesnt it. And whats the worst that happens to them, they have bad credit?

[Ben]

Chapter 11 bankruptcy is a reorganization bankruptcy proceeding, unlike a Chapter 7 liquidation bankruptcy (where a company must sell off all its assets to pay off its debts - and is basically done as a company). Chapter 11 is used often by huge companies, such as Cannondale, to reorganize their structure - and means that Cannondale is in it for the long haul - and is not caving in. I did learn a thing or too in Bankruptcy class! ;) This is probably the best thing that could have happened to Cannondale Motorsports as it appears that it will be sold off by Cannondale Corp., to a more financially stable entity that will be able to take it to the next level. Very positive news in my opinion!

Ben

WTF am i gonna do with this new moto440 sittin in my garage???:(

[OG350]

Originally posted by Ben
Chapter 11 bankruptcy is a reorganization bankruptcy proceeding, unlike a Chapter 7 liquidation bankruptcy (where a company must sell off all its assets to pay off its debts - and is basically done as a company). Chapter 11 is used often by huge companies, such as Cannondale, to reorganize their structure - and means that Cannondale is in it for the long haul - and is not caving in. I did learn a thing or too in Bankruptcy class! ;) This is probably the best thing that could have happened to Cannondale Motorsports as it appears that it will be sold off by Cannondale Corp., to a more financially stable entity that will be able to take it to the next level. Very positive news in my opinion!

Ben True dat ben but plz I hope they don't move the motorsports division over to jap or somewheer in asia.

[OG350]

Originally posted by Rico
WTF am i gonna do with this new moto440 sittin in my garage???:( Buy a crate and send it to me in Houston .
L8r- Josh

[Guy400]

Like Ben already stated, Chapter 11 is not a "going out of business sale". It is a form of bankruptcy protection and states that Cannondale is going to work to come back (be it selling it's motorsports division or reorganizing itself and start production again). Given Cannondale's present financial situation it is not "horrible news". It is actually some of the best news we could hear given the circumstances.

[freakystone]

Originally posted by Ben
Chapter 11 bankruptcy is a reorganization bankruptcy proceeding, unlike a Chapter 7 liquidation bankruptcy (where a company must sell off all its assets to pay off its debts - and is basically done as a company). Chapter 11 is used often by huge companies, such as Cannondale, to reorganize their structure - and means that Cannondale is in it for the long haul - and is not caving in. I did learn a thing or too in Bankruptcy class! ;) This is probably the best thing that could have happened to Cannondale Motorsports as it appears that it will be sold off by Cannondale Corp., to a more financially stable entity that will be able to take it to the next level. Very positive news in my opinion!

Ben


Oooo, I dont know Ben. Who has the jack to pay for the motorsports division? One of the big three or four? I dont think they will buy it unless they want to bury the project. So who else then? Harley-Davidson? KTM? Redline? Alba? Trinity?

The fact is, Cannondale proved that the profit isnt there because the market/buys arent there. Of course, whoevery buys now doesnt have to pay for the R&D. But if it were that simply, they would keep it and reorganize around it.

He||, I'd buy Dale motorsports if it were just a few Million...

[Guy400]

Originally posted by freakystone
Oooo, I dont know Ben. Who has the jack to pay for the motorsports division? One of the big three or four? I dont think they will buy it unless they want to bury the project. So who else then? Harley-Davidson? KTM? Redline? Alba? Trinity?

The fact is, Cannondale proved that the profit isnt there because the market/buys arent there. Of course, whoevery buys now doesnt have to pay for the R&D. But if it were that simply, they would keep it and reorganize around it.

I heard the entire motorsports division was being sold for a rumored $54 million to a deep pockets company from California. The engine's are going to be manufactured overseas to reduce cost and the assembly plant is going to be made more efficient. I've got this info on very good source but, as usual, nothing's final until Cannondale makes the announcement themselves.

[James70214]

It will definitely help cut cost by making parts overseas. It really does cost tooo much to entirely make the quads in America. We will be fine without the 100%American Made Stickers. Hopefully who ever buys Cannondale will still have the same ambition that they had to be the best, wether it is in customer service or providing a race ready quad.

[ROGERS]

they will come back bigger and stronger.


Or maybe I'll jsut buy a Gas-Gas.

[LapTraffic]

Originally posted by James70214
We will be fine without the 100%American Made Stickers.

Hey, MINE is 100% made in America, maybe I should quit beatin the crap outta it, I got a collectors item now :)