Huffy Poised To Snap Up Schwinn/GT
BOULDER, CO (BRAIN)Schwinn/GT voluntarily filed for Chapter 11 bankruptcy July 16 in a deal that could leave Huffy owner of Schwinn/GT's cycling divisions. Huffy is bidding $60 million for the division, which will be auctioned in late August or early September.
"As part of the selling process we had to seek the protection of the courts to lessen our debt load because Schwinn/GT's debt is greater than the market value of its assets," said Jeff Sinclair, Schwinn/GT's chief executive officer.
While Huffyís early bid gives the company an advantage, other companies could outbid Huffy and wind up owning one or more of the brands. Sinclair called Huffyís early bid a "stalking horse." In other words, if no one bids higher, Huffy gets the company.
"There could be some interesting maneuvering in the final six weeks of this sale," Sinclair said. If Huffy gets Schwinn, it could spark cutthroat competition between mass merchant suppliers Huffy, Pacific and Dynacraft.
Any money from the sale of Schwinn/GT's assets goes to pay off creditors. The companyís only secured creditors are the banks. It is unlikely anyone in the industry will get much, if any money. Schwinn/GT will not purchase any more products until the sale is final. Schwinn/GT has no space booked at Interbike.
Pending court approval, which Sinclair expected to get Tuesday morning, Schwinn/GT will have $30 million in financing to cover operating costs through the sale. Schwinnís 300 employees will stay on the payroll through Sept. 15.
Huffyís bid would cover the remaining assets--including accounts receivable, inventory and intellectual property rights--of the Schwinn Cycling, GT, Riteway, Dyno and Powerlite brands in the United States. It also would have rights to the Schwinn brand name.
The Schwinn fitness division will be sold separately. The cycling division buyer will license the name to the fitness buyer in perpetuity.
Bicycle Retailer Editorial Staff July 17, 2001 ------------------------------------------------------------------------
Schwinn/GT's $260 Million Debt Revealed
BOULDER, CO (BRAIN)Schwinn/GT officials, in the company's bankruptcy filings, revealed the company's debt to be more than $260 million as of May 31. The company's assets total $200 million and include accounts receivables, brand names and inventory.
Schwinn also gave termination notices to its more than 300 employees. Employees will continue on the payroll until Sept. 15, when the sale of the company should be completed.
"Everyone here is reacting incredibly well," said Larry Pizzi, Schwinn's general manager and vice president of sales and marketing. "They are disappointed of course--these are somber times--but they have a great attitude," Pizzi said.
In the interim, Schwinn/GT received $30 million of high-interest financing to cover its overhead costs through the sale. Some of that money will be used to buy products for Schwinn's fitness division.
Sinclair also said that as many as 20 employees in the cycling division may be offered jobs within the fitness division.
Schwinn/GT separated the operations of the fitness and cycling divisions. It also put the sale of the fitness division on hold until sale of the cycling division was complete. Bike retailers who also purchase fitness equipment from Schwinn/GT will be given separate accounts for those orders.
Bicycle Retailer Editorial Staff July 19, 2001 ------------------------------------------------------------------------
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Steven L. Sheffield stevens at veloworks dot com veloworks at earthlink dot net aitch tee tea pea colon [for word] slash [four ward] slash double-you double-yew double-ewe dot veloworks dot com [four word] slash
> From: OROBOYZ@aol.com
> Date: Fri, 20 Jul 2001 09:37:47 EDT
> To: rabbitman@mindspring.com, classicrendezvous@bikelist.org
> Subject: [CR]Re: Schwinn heritage & future
>
> I was never a Schwinn dealer but always had a respect for their standards and
> the fact that the Total Concept Schwinn Stores of the 1950s & 60s set the
> stage for modern, non-lawnmower repair & scissors sharpening bikes shops of
> earlier years..
>
> That tradition has been pretty much defunct for 10 years or more now... and
> the Huffy purchase is just another episode in the decline of the Marque,
> which is paralleled by the decline of Raleigh in the UK.
>
> Question though.. I called Schwinn-GT yesterday to find the whereabouts of a
> warranty frame and was told by the warranty guy that he couldn't ship
> anything out because Schwinn-GT had just declared Chapter 11 Bankruptcy on
> Monday, July 16... How could that be? How can a company be sold and be
> bankrupt?
>
> Dale Brown
> Greensboro, North Carolina