*** Huffy Gos Chapter 11 & Dorel/ Pacific Steps Up To The Plate ***
DAYTON, Ohio (AP) -- 10/20/2004
A Canadian-owned competitor to Huffy Corp. is interested in
buying the maker of one-third of the bicycles sold in the United
States after Huffy filed Wednesday for Chapter 11 bankruptcy
protection.
Chris Hornung, chief executive officer of Pacific Cycle,
said parent company Dorel Industries Inc. of Montreal is
considering acquiring Huffy and would maintain the brand.
"It's a well-known name," Hornung said. "I do not believe
for a second that the Huffy name will go away."
In filing for bankruptcy protection, Huffy cited losses
arising from a Canadian s****ts equipment company.
Huffy lost $7.5 million in 2003 after losing $1.4 million in 2002.
It has yet to file any financial re****ts for 2004 and has not said why.
Its stock plummeted from $6.80 a share last December to 58
cents in August, when the New York Stock Exchange suspended
trading.
Huffy, which has roots dating to the 1890s and is a nostalgic
name among many bike owners, said it will focus on bicycles
and golf products.
"I am confident that Huffy will emerge as a stronger and more
competitive organization, well positioned to succeed," said
John Muskovich, president and chief operating officer.
Huffy recently sold its basketball-backboard unit, its customer
service division and part of Canadian-based Gen-X S****ts,
which makes equipment for golf, snowboarding, inline skating,
skiing and hockey. Huffy also sold the Gen-X name.
Huffy had bought Gen-X in 2002 for $19 million in cash and
five million Huffy shares. In March, the Calgary-based Forzani
Group s****ting-goods store chain paid an undisclosed amount
for the part of Gen-X that purchases excess manufacturing
inventory and sells it to retailers.
Dorel (TSX:DII.B), meanwhile, announced in January that it
was expanding beyond furniture and child-care equipment into
bicycles with the $310-million-US takeover of Pacific Cycle,
whose brands include Schwinn, Mongoose and GT.
Huffy said Wednesday that its reasons for the Chapter 11
filing included Gen-X transitional expenses, increasing costs
of meeting financial re****ting regulations and mounting expenses
from former operations, such as the cleanup of a polluted
California site.
The company has said its bicycle division is performing solidly
and has increased its share of the U.S. market in the past two years.
Michael Gamstetter, editor-in-chief of Bicycle Retailer and
Industry News, said Huffy's filing likely will strengthen Pacific.
"They're the dominant player in the mass market," he said.
"Pacific appears to be able to produce and sell as much as
consumers want to buy."
Gamstetter added that Huffy's purchase of Gen-X was a mistake.
"It was away from their core business," he said.
"It's possible they misunderstood who their customers were."
Huffy, which im****ts bicycles, wagons and tricycles from
Asia and sells them through high-volume retailers, said
operations at its U.S. and Canadian subsidiaries will
continue during the court-administered restructuring.
The company, with 140 workers in Dayton, Ohio, Toronto,
and Carson, Calif., said it has obtained $50 million in financing
for operating, supplier and employee expenses.
CC - The Associated Press (AP) Wire.
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