[Uploaded to BikeBiz.co.uk on 26th October]
It takes a while to trawl through the lengthy documents that American corporations have to file to the Securities and Exchange Commission (SEC), but in amongst all the statutory fluff you often finds gems.
Heres what I stumbled across yesterday. Its a statement from Gary Matthews filed to SEC on 16th August. It shows his mindset at the time of the sale. If not euphoric to get rid of Sturmey Archer, he certainly appeared gleeful.
He even said the company was sold for cash, although we sold it for thirty quid wouldnt have sounded quite as good.
And Derby certainly eliminated negative annual operating cash flows because any propping up of Sturmey in 1999 was more than offset by Derby pocketing the £3.75m for the sale of Sturmeys factory to the University of Nottingham.
Raleigh workers neednt worry though: "We have no plans to reduce our commitment to Raleigh, which is the U.K.’s leading bicycle brand, and which we continue to strengthen."
DERBY SELLS STURMEY-ARCHER BUSINESS
The Company also announced that it completed the sale of Sturmey-Archer, a non-core brakes and automotive parts business to Lenark Limited . The sale was a follow-on transaction to the Company’s sale of the land underlying Sturmey-Archer in late 1999 to Nottingham University. "This was an exceptionaltransaction for us as we were able to sell an under performing, non-strategic asset for cash, avoid relocation costs and eliminate negative annual operating cash flows," said Mr. Matthews.
Sturmey-Archer, which employs over 300 people, manufactures bicycle gears,
brakes, automotive safety components and other engineering components. The sale is the result of a comprehensive review by Derby of the Sturmey-Archer business.
"Business has been extremely difficult for Sturmey-Archer over recent years, with sales and profit margins being squeezed, in large part due to the strength of sterling," commented Mr. Matthews.
"The vast majority of Sturmey-Archer sales have been to the export market, with just a few per cent going to sister company Raleigh U.K., and the links between the two U.K. companies have clearly become less significant.
"The component and fabrication business does not fall within our business plan. So I am delighted for the Sturmey-Archer workforce that Lenark has decided to buy 100% of the Sturmey-Archer business as a going concern.
"We have no plans to reduce our commitment to Raleigh, which is the U.K.’s
leading bicycle brand, and which we continue to strengthen," said Mr. Matthews.
Lenark will maintain the Sturmey-Archer brand name, but the gear and brake
manufacturing plant will be moving to a new location which is planned to be in the Nottingham area. Lenark has advised the Company that the terms and
conditions for employees will be unaffected.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned, thereunto duly authorized.
The Derby Cycle Corporation Date
Simon J. Goddard
By: ______________________________ August 16, 2000
Name: Simon J. Goddard
Title: Vice President and Corporate Controller