Cannondale Corp., a bicycle and motorcycle maker that reported 11 straight quarterly losses, said Monday that it will seek bankruptcy protection and sell assets to a Connecticut private equity firm.
Bethel, Conn.-based Cannondale said difficulties with its motor sports business made the Chapter 11 filing necessary. The company sells motorcycles such as the MX400 off-road motorcycle and all-terrain vehicles, which were added in 2000.
"The motor sports division was threatening the bicycle division," said Joe Montgomery, the company's founder and president. "Although we believe in the value of our motor sports products, we did not have sufficient financial resources to make the additional investments necessary."
The company said it plans to shut down the motor sports division until completing a sale to Pegasus Partners II, a fund run by Pegasus Capital Advisors, a Greenwich, Conn.-based private equity firm that manages $800 million.
Cannondale said its fiscal first-quarter earnings declined because suppliers in overseas markets failed to deliver bicycle parts on time.
The company said it would ask the Bankruptcy Court to approve a loan from CIT/Business Credit Inc. and Pegasus to finance operations during bankruptcy. The asset sale would be subject to Bankruptcy Court approval.
Cannondale said its foreign subsidiaries aren't included in the Chapter 11 filing, expected today.
The company's motor sports division contributed about 15% of the company's $37.3 million in sales for the quarter ended Sept. 28, according to a Securities and Exchange Commission filing.
Shares of Cannondale, which also makes bicycle-related products such as clothing, shoes and bags, fell 29 cents to 51 cents on Nasdaq. The shares have fallen 83% in the last year.