REVISED: Ive been writing reports all week about the Sturmey Archer collapse. This is the latest version of events. It might be best to print out all these Sturmey articles because itll take you for ever to read them online

Sturmey Archer: what went wrong?

Heart on sleeve time. Ive done deep research on the Sturmey Archer story because the Nottingham hubgear and saddle maker is an intrinsic part of the UK cycle trade with a 98-year old pedigree (Brooks is 30 years older). And such a pedigree should not be allowed to flounder. Without a speedy sale, production will be terminally interrupted and important customers will be forced to switch supply, possibly for good.

Its important to get the facts out into the open as soon as possible. This debacle was not of Sturmey Archers making. It may not be the most profitable company in the world; it may not have been saddled with a costly move until Derby sold Sturmeys key asset: the factory; and it may not have products that have changed all that much from 1936 but, in its own traditionally-English way, it was successful.

Sure, it has suffered from the strong pound, especially in the last two years but at the end of the day strip out the Derby-induced moving costs (and the planned for redundancies) and Sturmey is just about profitable. It has full order books, now and well into the future.

There was even a new product on the way, an 8-speed hub expandable in fours, with patents applied for. And, of course, Brooks saddles are known throughout the world, inside and outside the bike trade.

Yet Sturmey Archer was sold to a company with a poor credit rating for thirty quid. In the process up to £5m was taken off Derby Cycle Corporations group balance sheet. Derby is the second biggest bicycle group in the world, and the largest in Europe. It is headquartered in Conneticut, USA.

Were Derby some faceless conglomerate with multiple industrial interests there would be few eyebrows raised by selling a company like Sturmey down the river (as Sturmey staff put it). But Derby is the biggest bicycle group in Europe and the fall-out from the mess Derby now finds itself in will take months, if not years, to clean up.

Companies like Raleigh relied on Sturmeys spoke and nipple supplies, and Dutch roadster maker Gazelle of Holland sells a great many bikes equipped with Sturmey Archer hub gears. Derby MD Gary Matthews admits that Derby will suffer from the Sturmey collapse. There was always a lot riding on Sturmey staying successful. Which is why the actions of Derby Cycle Corporation in this sale are so puzzling.

Was judgement clouded by the necesity of a quick sale (the move to a new factory had to be expedited speedily) and the juicy prospect of £5m wiped off Derbys balance sheet?

To sell Sturmey Archer to a company with a poor credit rating, is, at best, careless. It takes very little digging to find out that Lenark Ltd appears to have no cash.

Insolvency practioners working on the forensic aftermath of other Lenark collapses may soon call for a DTI investigation into Lenark.

To the very important question of whether the legal advisors to Derby on the sale made Derby aware of the risk of going with Lenark, Derbys Gary Matthews pleads no comment.

In the event that Derbys legal eagles didnt spot any irregularities they could be accused of gross negligence.

However, if Derbys lawyers did find blemishes on Lenarks character but Derby went ahead anyway that would call into question Derbys managerial competence.

This wouldnt be the first time Derby management has had a rap on the knuckles. Three months ago market analysts Standard & Poor downgraded Derbys investment rating, citing inexperienced management. To prove this assessment wrong in the Sturmey case, Derby USA MD Gary Matthews needs to quickly and fully explain the full motives and reasonings behind the sale to Lenark.

Matthews is a man under pressure. Derby isnt exactly awash with cash. Only Gazelle of Holland is performing above expectations. To give just one example: Raleigh USA is 26 percent down on last year (and 31 percent down on accessories).

[It should be stressed here that Raleigh Industries Ltd had nothing to do with the Sturmey Archer sale. The Sturmey sale was handled wholly by the Derby Cycle Corporation, with Lenark execs inking the deal with Gary Matthews on one his regular visits to the UK. Sturmey execs played only a bit part role in the sale and certainly had no veto].

This is a sad tale, where the human costs are great, and the full reason why Derby sold to Lenark, when there were other offers on the table, remains a mystery. The official answer is that due diligence research was carried out and that Lenark had other light engineering interests.

Yet Lenark isnt your normal pukka investment house. One of the prime movers of the operation Simon Allso is a recently discharged bankrupt with a criminal record.

Many high-ups in Lenark looked like anything but bods from an investment house. They dressed in floral shirts, were dripping with gold jewellry, and wore sandals to important business meetings (although not with Matthews). Nothing illegal about any of that, but add to the equation their easily traceable track record of multiple limited companies some with impressively large debts and a ramshackle London office that was knee-deep in unopened mail, you wouldnt need to be an expert to realise Lenark might not actually have the long-term wherewithal to fund the £5m Sturmey debt.

Was Derby shown a track record of successful Lenark investments?

When a company is paying just a token amount of money to complete the sale of a manufacturer with a turnover of £12m, the company selling surely has a moral right to make sure the buyer is squeaky clean?

Hopefully a buyer can be found quickly for Sturmey Archer (Tandem is said to be interested) and it can put this sorry episode behind it. The best deal for Sturmey employees would be a pre-bankruptcy buyer who would take on the moving expenses and the redundancy payments.

Without such a deal, Raleigh Industries Ltd will no doubt be left with the break down job to make sure the Triumph Road site of Sturmey Archer is clean as stipulated in the contract with the University of Nottingham. Because of the complexity of the dismantling much of the machinery is enbedded in concrete it will cost in excess of £1.5m, a debt Raleigh can ill afford.


Readers who have been following the Sturmey collapse from the start of my coverage will be aware of the twists and turns of the story. All the facts gleaned to date can be found below and in the other stories posted today.

Ive included everything but the kitchen sink so you can come to your own conclusions. Yours may be more lurid than mine but Im a believer in the cock-up theory of history rather than the everything-is cynically-planned theory of history.

Many of the details given below have come from off-the-record chats with many industry players as well as interviews with bankers, solicitors and the insolvency practioner dealing with some of Lenarks other collapsed businesses.


Sturmey Archer was sold by Derby Cycle Corporation on 1st July to Lenark Ltd. of Heathfield in East Sussex for just £30. For its part Lenark was meant to invest in Sturmey Archer to the tune of up to £5m, to include re-location expenses and redundancy packages

Before Sturmey was put up for sale by Derby, a move to a new factory was on the cards because Derby had sold Sturmeys (and Raleighs) factory site to the University of Nottingham for student accomodation (for c. £4m?)

Throughout its 98 year history Sturmey Archer has made 98 percent of the component parts of its hubgears. The tolerances on the parts are very tight and Sturmeys extrusion and sintering (jelly mould) machinery is both expensive and specialised.

One third of the workforce was due to be made redundant as Sturmey moved from all in house production to two-thirds outsourced in the new factory. The staff earmarked for redundancy will not now receive the lump sums due to them for their long service. And the staff who were to be kept on will not receive severence pay. Many of the Sturmey workers joined the company from school and have worked there for 30-40 years. Gary Matthews of Derby says all staff pensions will still be honoured.

Some of the assembly plant had already moved into the new factory which is a typical 1970s factory unit on an industrial estate in Calverton, near Nottingham. The lease had been signed on the new factory and work had started to extricate the Sturmey machinery. The first bills for the extrication were presented to Lenark but Lenark would not/could not pay.

Derby put Sturmey Archer up for sale via an intermediary and Lenark came on the scene along with at least two other companies, believed to be from the bike trade. Sturmey Archer executives were not party to any sale negotiations. Ditto for Raleigh staff and directors. The sale was handled wholly by Derby Cycle Corporation of the USA. In 1997 Derby was recapitalized by Thayer Capital Partners, the kind of company which usually wants to see a quick return on investment. Quick being 18-24 months.

Sturmey Archers biggest customer is Derby, including Raleigh and Gazelle.

Early in his reign Derby MD Gary Matthews (career: Harvard, McKinsey, Pepsi, Guiness US, Guiness UK) gave Derby group execs paperweights engraved with 61 01, representing his target of $61m profit in 2001. This target must now seem a long way off, although £5m off the balance sheet would have helped. However, with the collapse of Sturmey, many Derby companies will now be forced to search for alternative product supplies and Raleigh Industries Ltd. will be landed with at least a £1.5m cleaning up debt, to make sure the Sturmey site is fit to hand over to the University of Nottingham on 17th December.

A quick and easy credit check on Lenark Ltd reveals it has GX classification which means any companies wanting to do business with Lenark should seek a directors guarantee before starting dealing with them. In other words, GX is a credit worthiness warning.

Lenark Ltd has inter-connections with 11 other companies, many of which have been put into receivership. In a Flap Ltd, and Curvegold Ltd. and others shared a director: Barry Robinson, British but with a Las Vegas address. He is also a director of Lenark Ltd and is said to be a "professional gambler". He is reported to have a fortune of £25m.

Credit rating firm Experian describes Lenark’s financial position as ‘weak’ with current assets of just £48,000 at the end of the year to May 1999 and liabilities of £600,000. A credit alert is attached to Experian’s report on the company.

Lenarks inter-connected companies which have been put into receivership are being dealt with by Tony Murphy of Smith and Williamson of London (020 76375377). Because he is investigating Curvegold etc he is the perfect person to assist the directors of Sturmey Archer in their researches.

Matthews told the Mail on Sunday that Clive Walton, Barry Robinson and Simon Allso conducted negotiations ‘ as a team’ on behalf of Lenark, even though Allso was not a


Sturmey Archer has a creditors meeting on 2nd October in Birmingham but is not yet in receivership.

Sturmey Archer (turnover 1999, £12m) paid Lenark Ltd £62 000 a month for two months for management fees. Only two board meetings were ever held.

Lenark had two directors appointed to the Sturmey Archer board (Mary Waring and Eugene McElhatton) they immediately tried to oust the existing directors (Bateman and FD Paul Smith). Stated reason? Smiths cashflow forecasts were said to be wrong.

A cash transfer of £52 000 was made from Sturmey Archers bank account without Sturmeys MD or FD knowing about it because the two Lenark directors on Sturmeys board were made cheque signatories. Some of the management charges were paid to Curvegold Ltd, which Lenark owned. Curvegold has since been put into liquidation. To date Lenark is still believed to be trading.

According to Sturmey MD Colin Bateman, Sturmey Archer has full order books and, if the relocation is taken out of the equation, is profitable.

On Monday 11th Sept Bateman presented Clive Walton, MD of Lenark, with bills referring dismantling of the Triumph road factory and the move to the Calverton factory. Bateman says Walton refused to sign off the bills, making Sturmey Archer technically insolvent. Walton left the board meeting via the fire escape, says Bateman, without informing the others present he was leaving. He has not been tracked down yet.

On the Thursday Clive Walton resigned from the Lenark board via a letter backdated to the Monday. No Lenark executives have since answered the telephone calls and faxes from Bateman.

Business analyst Simon Allso works for Lenark and advised on topics relating to Sturmey Archer. The DTI states he was a bankrupt and was discharged on 26th June of this year.

Quinborne Ltd owns 5 percent of Lenark and has had county court judgements against it of £5700 and £1100. In a Flap Envelopes Ltd has many CCJs against it (see company report) as well as other debts.

Sturmeys workforce of 300 (Brooks = 20 workers) were told about the insolvency at midday last Friday. 28 volunteers are currently shipping out existing orders on the cycle and automotive fronts.

Sturmey Archer exports 85 percent of its cycle products (via Sturmey Archer Europa, which trades in gilders which continue to weaken against the pound). The cycle side of Sturmey Archer accounts for 60 percent of the business with the engineering side accounting for 40 percent.

Sturmey Archer has to move from its Triumph Road premises by 17th December.

There are currently offers on the table for buying Sturmey Archer but Colin Bateman said no comment to (a) are these UK or overseas offers and (b) would any purchaser take on the £5m investment commitment. The company may be sold in four lots. One of the on-the-table offers is believed to be from one of the companies originally in the running for buying Sturmey Archer before Derby sold it to Lenark. The Tandem Group is also expected to bid for one or more of the Sturmey businesses.

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