Derby Gets Loan Reprieve, But Must Sell

NEW YORK, USA (15 February) - According to a report filed February 7 with the US Securities and Exchange Commission, Derby Cycle Corporation has reached an amended agreement with its senior lenders which buys it time to reorganize its businesses. The agreement means that the company's recent failure to honor loan agreements will be overlooked, but it must sell unspecified "non-core" assets in order to pay down its borrowings. The reprieve is temporary, however, and covers only Derby's failure to abide by the terms of its loan agreements in the last quarter of 2000, and a potential breach of its commitments for January. It does not guarantee that senior lenders will not force drastic measures, such as liquidation, on Derby, should it default on its credit obligations in the future. Executive Chairman Alan Finden-Crofts has been working at a furious pace in recent weeks in an effort to bring the Derby group back to financial health: the most recent announcements in the process have been the decision to cease manufacturing in the US, and the closure of Derby's consumer sales site Bikeshop.com. The newly amended credit agreement will allow Derby to draw down on the increased credit facility agreed at the end of last year, giving the company some much-needed breathing space. The quid pro quo of the amended creditor agreement is the sale by Derby of certain "non-core" assets. Although unspecified in the document filed with the SEC, speculation centers on Derby's most profitable European operation, Gazelle in the Netherlands. Much of the company's real estate assets, including its Nottingham plant, have been sold off or are already being used as collateral for loans.(TK)