Global Motorsport Group Inc. (GMG), Morgan Hill, Calif., today filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code and announced that it was selling its assets to Dae-Il USA Inc. Dae Il USA's president is Nace Panzika, founder of Custom Chrome.
The sale includes all of GMG's U.S. operations including its Custom Chrome, Motorcycle Stuff, and Jammer divisions, and the stock of Global Motorsport Group GmbH, which manages all of GMG's European operations.
The filing, made in the U.S. bankruptcy court for the district of Delaware, states that GMG had assets of $40.9 million and liabilities of $189.7 million as of Nov. 24. A company spokesperson said the bankruptcy filing allows GMG to restructure its debt so it can increase the company's working capital and make the company stronger as it moves forward. Generally, a reduction of burdensome liabilities would make a company more attractive to potential buyers.
The spokesperson said GMG "does not foresee any changes in employee numbers or facility locations" as a result of the sale.
Plans call for GMG to be run as a "standalone business," Panzika said. "We are committed to investing in GMG's product lines and outstanding customer service."
The purchase agreement announced today is subject to the approval of the bankruptcy court. GMG said it will file bidding procedures with the court, noting that qualified bidders will be provided an opportunity to make higher and better offers for its purchase. The company said in a prepared statement that the sale is expected to be completed within 45 days, and the change of control could be wrapped up by March.
Details of the bankruptcy filing were not immediately available. GMG management said the bankruptcy filing was made "to facilitate the sale process." At the same time, the company said it has reached an agreement with its lender to provide debtor-in-possession financing, subject to Bankruptcy Court approval, to fund GMG's business operations while it completes the sale process. This financing will provide it with the necessary funds to continue operations in the normal course of business, enabling the company to keep all of its distribution facilities open on normal schedules, and fulfilling customer orders.
Dae-Il USA is a wholly owned subsidiary of Dae-Il Corp, a Korean manufacturer of parts for automobiles and motorcycles. Dae-Il has been a supplier of GMG and its predecessors since 1982 and manufactures the company's Rev-Tech engines, transmissions and related driveline components. Other customers of Dae-Il include Polaris, Hyundai, Kia Motors, Daewoo, Mitsubishi, Clark Forklift, John Deere and Caterpillar.
Founded in 1972, Dae-Il had 2006 sales of $223 million, with most of that coming from auto parts ($117 million). While 2007 sales figures are not available, the company's plans called for it to generate sales of $257 million last year, with $135 million of that coming from auto parts. It operates three manufacturing plants in Korea. The company went public in October and its stock is traded on the Korea Stock Exchange.
Dealernews reported exclusively on Nov. 12, 2007, on its website, www.dealernews.com, that Global's owner, the New York-based international investment group Cerberus Capital Management LP, had retained a Chicago mergers and acquisitions specialist to explore sales and restructuring options.