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NOW IN OU
26 EA t R h
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T H E L E A D I N G B U S I N E S S M A G A Z I N E F O R T H E I N T E R N AT I O N A L C U S T O M M O T O R C Y C L E A N D PA RT S I N D U S T RY
DEC 2017
MAG’s debt recapitalization designed
ISSUE #221
to allow it to “exploit growth
FREE WITH
opportunities” - Andy Graves, CEO
THIS ISSUE
he news that the
Motorsport Aftermarket
Group
(MAG)
was
eliminating approximately $300
million in debt through the
Chapter 11 process (November
15, 2017) sent shockwaves
around an already nervous
industry. The company’s release
that announced the news was
quite detailed and transparent,
but that didn’t stop the rumor
mill going into overdrive, with
some online media outlets
rushing to “false and dramatic
conclusions rather than reporting
the facts,” said MAG CEO Andy
Graves when AMD Magazine
interviewed him a week after the
news had become public.
Back in February 2017 when we
interviewed him at the Tucker
Rocky/Biker’s Choice/MAG Brands
Dealer Expo in Texas, we did so in the
context of industry rumors about the
Group’s viability at that time, following
a round of cost control measures in the
late summer of 2016.
In February one of the first questions I
put to him was whether or not the
T
company was trading profitably. He
assured me that business was
profitable at that time. So, after the
initial industry noise about the recent
Filings had calmed down somewhat,
that was again one of the first
questions I put to him.
“Absolutely,” was Graves’ immediate
response. “In fact, if we were not, then
we wouldn’t have been able to put
we believe
we are well
structured
together this kind of capital
restructuring plan at all.
“When Lacy Diversified Industries
(LDI) bought MAG and merged it with
Tucker Rocky/Biker’s Choice in early
2014, the motorcycle parts and
accessory market had two or three
years of growth under its belt. At that
stage the motorcycle industry was one
of many specialty leisure based
consumer markets to have seen some
recovery, and the widespread
Destiny Cycles’
“Gold Rush”
expectation at that stage was that,
even if modest, there would continue
to be at least some form of growth in
the years ahead.
“Based on those judgements LDI
financed the transaction with a fairly
high leverage. It is only ever with the
benefit of hindsight that such
judgements can themselves be
judged. As everybody now knows, the
three years since then simply have not
seen that growth sustain.
“The company could have continued
to manage through to the 2020 and
2021 due dates on its long-term debt,
but given what we have all been
seeing in the market in 2017, the
decision was taken to use the off-
season to act now and restructure that
debt in such a way that the company
could continue to meet whatever
market conditions lie ahead.
“This recapitalization of our balance
sheet is designed to make sure that we
are sufficiently well financed to ensure
job security for our valued team
members, and that the business can
continue to pay its way and to exploit
Continues on page 6 >>>
Congratulations to Vic and
Lin Jefford of Destiny Cycles,
UK - ‘Best in Show’ at the
recent Bigtwin Bikeshow &
Expo with ‘Gold Rush’,
see pages 32-33
SHOW
REVIEW
Motorcycle Storehouse
catalog V.13