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MIFA Readying Corporate Bond

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SANGERHAUSEN, Germany – Mitteldeutsche Fahrradwerke AG, the German-listed bicycle maker also known as MIFA, announced this week that it intends to tap debt capital markets to source medium-term financing. The Sangerhausen-based producer is seeking € 20 – € 25 million.

MIFA Readying Corporate Bond
MIFA is keen to diversify its financing structure and enhance flexibility. - Photo MIFA

The proceeds from which would be applied both to operations and to paying down the debt associated with a recent spate of acquisitions and capital expenditures. The company purchased both Grace – maker of the Smart e-bike for automaker Daimler – and Steppenwolf – a bankrupt maker of high-end mountain bikes – over the last 18 months.

Investments to underwrite costs

As well as spending to relocate production of those brands, the company recently added a production line and an automated warehouse at Sangerhausen. An investment by German financier Carsten Maschmeyer, who purchased almost 30% of the company in October 2011, helped to underwrite some of the costs.

As did a July 2012 capital raising conducted in order to raise free-float minimums necessary for a move of MIFA shares to the Prime Standard, the more tightly regulated platform of Borse Frankfurt — the Frankfurt Stock Exchange.

Assessment of medium-term strategy

According to a release, issued via Wiesbaden-based investor relations consultancy Cometis, MIFA is shopping the idea to potential investors—an exercise aimed at gauging interest and assessing the costs of borrowing. It also is discussing the form and maturity a bond would take with bankers that would structure and sell the securities.

The company says the process is part of a routine assessment of medium-term strategy and the instruments at its disposal to finance execution. The company said it is keen to diversify its financing structure and enhance flexibility.

Move into higher-priced traditional and electric bikes

While production at MIFA was down in 2012 by almost 100,000 units, to 546,000. Revenues were up by nearly 11%, to € 111.3 million, as the company’s move into higher-priced traditional and electric bikes gained traction.

In addition to the Smart e-Bike and Grace and Steppenwolf branded models, MIFA produces a bicycle fleet for the Deutsche Post postal service and supplies municipal bike-lending systems with multi-user vehicles. It also is an original equipment manufacturer, contracting to produce models in white-labeling arrangements.

E-bikes comprised 30% of total revenue in 2012, up from 12.5% in 2011. Pre-tax earnings reached € 2.9 million after adjusting for the costs of acquisitions.

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