Harley–Davidson is hoping to have an answer Tuesday about whether the Federal Deposit Insurance Corp. will designate the company as eligible for federal funding under a bank bailout program.
Sen. Bob Casey, D-Pa., has asked the agency to approve Harley’s request, ideally ahead of the company’s fourth-quarter earnings report due out Friday. H-D employs nearly 3,000 people at its plant in York County, Pa., and another 1,500 work at dealerships in the state.
H-D has asked that Harley-Davidson Credit Corp. and Eaglemark Savings Bank be declared eligible for the Temporary Liquidity Guarantee Program, or TLGP, which guarantees unsecured corporate debt against default. That would cover the bills of Harley-Davidson's internal financial entities if they were unable to pay bills themselves.
Casey told the York Dispatch that without the designation, “it puts their financing company in a much more precarious situation."
Four analysts — Goldman Sachs, Standard & Poor's, RBC and Raymond James — have downgraded Harley shares in as many weeks, and the company’s former HDFS president, Sy Naqvi, left the company early this month. H-D’s stock price has dropped from $80-plus per share in December 2006 to $13.70 today. (Financial markets are closed today in observance of Martin Luther King, Jr. Day.)
Against an industrywide slowdown, analysts expect Harley sales to be down 20 percent for the fourth quarter, and Raymond James analyst Joseph D. Hovorka said in a client note that sales among 55 dealers surveyed were "the softest reading ever for our survey." Sales are expected to slide another 20 percent to 30 percent this year as consumers cut purchases of luxury goods.
— Submitted by Holly Wagner