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Thursday, 10 March 2016

Erik Buell Racing

Erik Buell Racing back in business; production slated to start in March

It’s been one sequence of corporate upheaval after another in recent years for respected chassis and performance engineer Erik Buell. However, whisper it softly, but it may be that his latest cycle of "difficulties" may after all be about to take a turn for the better - for the time being at least. 

After running out of money a year ago, a tortuous on-off process of asset auctions made it unclear (unlikely even) that his EBR business would ever survive an administration process that quickly became liquidation.
EBR is the business that Buell phoenixed from the ashes of Harley's 2009 decision to close Buell Motorcycles, as it reacted drastically to the downturn under the leadership of CEO Keith Wandell. Buell had started the business in 1983; Harley took a 49 percent position in it in 1993, and then took over full ownership 10 years later.
Initially EBR was a race bike business, focused on the 1190RS it launched in 2011. In 2013 EBR sold a 49.2 percent stake to ambitious Indian motorcycle manufacturer Hero Motor Corp as it looked for a northern hemisphere foothold that could be a springboard for entry into the higher value and larger displacement North American and European markets.
Initially that deal looked robust as Hero established a race team, and a European EBR subsidiary was set up with sales underway of its 1190RX production street bike derivative, and the 2013 announcement of plans for an 1190SX streetfighter styled "muscle bike". Indeed there were plans for an adventure bike too, believed to have been designated 1190AX, and work was well underway helping Hero to develop new models, the HX250R among them. Hero is the world's largest single entity motorcycle manufacturer, by unit volume, but efforts to leverage its "strategic alliance" with, and investment in, East Troy, Wisconsin based EBR always looked ambitious, especially in relation to the price it paid for its stake.
That stake was a $25m investment, and it clearly proved inadequate as EBR collapsed with debts put at around $20m when it filed for protection in 2015, leaving some 126 employees with uncertain futures. There still are rumors and uncertainties about the exact role that Hero played (or more to the point did not play) in securing EBR's position.
That uncertainty was only worsened by a liquidation process that saw Hero successfully bid for some assets it claimed as its own, and two failed attempts by at least two other bidders to secure the remaining tooling and parts - one of those bidders had been Belfer, of Atlantic Metals Group in New Jersey, who was also hoping to secure a future for EBR as a viable manufacturer.
However, Bill Melvin's Grand Rapids, Michigan based Liquid Asset Partners (LAP) emerged successful in January at the third time of asking.
No stranger to motorcycle and powersports industry liquidations, from the outset Melvin has made it clear that he wanted to try to secure a future for EBR as a going concern, returning it to production before it could be sold-on as a viable business to owners that would develop it as an American motorcycle manufacturer.
LAP has been one of the 'go-to' liquidation specialists in the motorcycle and powersports industry. Their prior industry involvements have been many and varied. LAP was the company that Harley-Davidson used to sell off the assets of Buell Motorcycles in the first place in 2010, and have previously been involved in several other powersports industry asset disposals - such as "Gilroy" Indian, American Ironhorse and Cannondale. Indeed, LAP is currently conducting the sale of the remaining parts stock of Columbus, Ohio based Dixie Distributing.
At the time of writing LAP was slating March 17th as the day for production to recommence, and inviting the media to go to the factory to witness the latest twist in the Buell story.
The new company, EBR Motorcycles, LLC, will start with production of 2016 1190RX and 1190SX motorcycles. The first bikes are scheduled to roll off the line on March 17th with a Press Day for approved media, with March 18th slated as a day for "the public, Buell Nation, and EBR fans to attend the EBR launch party at the factory."
Bill Melvin Jr., who will be CFO of the new business, is quoted as saying that "this would not be possible without the EBR team. All the credit goes to them for waiting out the storms during the last year. Now the clouds have cleared, EBR is able to shift into gear knowing that it has financial stability, a profitable multi-year plan, and a 5-10 year vision. We feel there is still room for new partnerships or investment, but it is not critical. EBR is on solid ground and moving forward."
Erik Buell, who will serve as Chief Technical Officer, said: "I am really looking forward to the launch and the press day. I have dedicated my life to this and want to get the word out on how great our motorcycles are."