American Motorcycle Dealer AMD 222 January 2018 - Page 48

NEWS BRIEFS MV Agusta CEO Giovanni Castiglioni was slapped with a suspended six- month prison term in November after being accused of stealing some $2.3m of employee taxes. At the time when MV had run out of money, the tax had been deducted from employee salaries by MV in the period 2013-2015, but never paid over to the Italian tax authorities. Castiglioni is also being pursued for personal income tax evasion in a challenge to his Swiss residency status for tax purposes. Meanwhile, Castiglioni’s uncle Gianfranco is being investigated for a suspected Casti Group VAT (sales tax) fraud of up to $1.3Bn. Raleigh, North Carolina’s Ray Price H-D has been sold by Ray’s widow Jean to Arizona based John Morroti - owner of four motorcycle dealerships, three of them Harley stores. For the year through November 2017 Harley is in 6th spot in motorcycle market share terms in Germany, having sold 9,024 units YTD for a reduced 9.5% share (having sold 11,210 units in Germany for a fifth spot, 10.4% share in the same period of 2016). The company remains ahead of Ducati, Triumph and Suzuki. Harley’s best seller there is the XL 1200 C (in 26th place, 975 units) and has three other models in the Top 50 in Germany - Breakout, Dyna Street Bob and XL 883 Iron. Indian Motorcycle is in 14th spot in market share terms for the period January to November 2017 in Germany, having sold 642 units YTD for a 0.65% market share (compared to 785 units for a 0.73% share for the same period in 2016). Zodiac International has been granted TÜV approval on a range of popular Californian-made Freedom Performance exhaust system and slip-on options. Former Harley subsidiary MV Agusta completes acquisition of the share capital held by AMG Mercedes Varese, Italy based “boutique” motorcycle manufacturer and former Harley-Davidson subsidiary MV Agusta has finally completed the last stage of divesting itself from the 25 percent minority stake in MV Agusta Motor S.p.A owned by German car giant Mercedes AMG. With the closing of the transaction, MV Holding owns 100% of MV Agusta Motor S.p.A., bringing an end to the latest chapter in the storied saga of MV’s survival. AMG Mercedes paid € 30m for its 25 percent stake in 2014; however, in March 2016 it was announced that the company had filed a Chapter 11 process equivalent - AMG was no longer prepared to fund the losses the business was incurring, with a reported 40m euro of debt on its books. At that stage the company was also faced with needing to repay a 15m euro loan it took from a consortium of Italian banks in late 2014 to top up its cash flow – having burned through the AMG cash and the $20m dowry Harley- Davidson left it with when the Keith Wandell era response to the 2008 financial crisis saw it return ownership to the prior owners (the Castiglioni family) for the princely sum of $5.00. At that point Harley wrote off the $108m that then CEO Jim Ziemer had agreed to pay for it (following repeated failures to acquire Ducati) in the summer of 2008, just before the financial crisis hit. Present Harley CEO Matt Levatich had been despatched from his role heading up Harley Europe to run MV, and is widely regarded as having done an excellent job. Massive investments were made (an estimated $60m) in R&D and retooling, and when MV got itself back on its feet under the Castiglionis (some $69m of bank debt having been cleared as part of Harley’s acquisition) the company’s engineering and production was in its best shape ever. The company was then able to start producing a range of motorcycl es whose current iterations are still regarded as being among some of the finest performance motorcycles in the world. The timing of Harley’s acquisition could not have been worse, but the state Levatich left MV in could not have been better. Tragically the company’s management was over-ambitious, spending way too much on R&D and Unveiled in the summer of 2017, the limited edition Brutale 800 ‘America’ was a homage to the “glory days” of the brand in America with the 1973 MV Agusta 750 S Giovanni Castiglioni, MV Agusta President: “This transaction with ComSar Invest through a capital increase and the acquisition of the shares previously held by Mercedes represents an important milestone in our recovery plan” failing to meet the unrealistic production targets it had set itself. The new owners are ComSar Invest, an investment fund that is part of Black Ocean Group, owned by Timur Sardarov, a “Russian dynasty key player in the production of oil and gas in Eastern Europe.” Timur Sardarov is the controlling shareholder of ComSar Invest; New York City based asset manager Black Ocean Group is, in turn, part of the Ocean Group, an investment vehicle founded by entrepreneurs Oliver Ripley and Timur Sardarov in 2005. Ocean has interests in a diverse range of sectors including private aviation, agriculture, real estate, corporate finance, banking, services, technology, media and internet, with offices in New York, London, Geneva and Moscow. www.mvagusta.it