Cannondale Up for Auction mid-March

BETHEL/CT, USA (January 31) - Cannondale filed for bankruptcy protection after its commitment to close the ailing motorsports division and sell its assets valued at $114.8 million. Its debt burden totaled $105.2 million in its Chapter 11 file at a Bankruptcy Court in Bridgeport, Connecticut. An auction of the company is scheduled for mid-March. Cannondale plans to close down its motorsports division, which contributed 15% to its last quarter sales of $37.3 million. The unfortunate bike maker had big problems with its motorsports adventure, critized by many industry observers. Cannondale plans to sell its assets to its major investor and shareholder, the Pegasus Partners II fund from Pegasus Capital Advisors. This is subject to approval of the bankruptcy court, as is a new loan from CIT/Business Credit and Pegasus to finance operations. Last July Cannondale sold $25 million in senior notes and issued warrants to Pegasus to repurchase more than 2.9 million shares. Cannondale appointed Legg Mason Wood Walker as its financial adviser and sales agent in the coming auction procedure. Alvarez & Marsal consultants will act as its chief restructuring officer. The company's largest unsecured creditor owes $2 million from the company. Cannondale shares closed at $0.23 at the Nasdaq stock market yesterday. Concerning Cannondale's Factory at Bedford/CT, the bicycle production ceased operations since late December, although the company went on shipping its bike products all over the world, while providing service and warranty items to its consumers and dealers. However, the first workers will restart bicycle production mid-February, to be followed by the remainder begin March. (FN)