MONTREAL, Quebec (BRAIN)—Dorel Industries purchase of Iron Horse Bicycle Company for $5.2 million "brings depth to our mountain bike offerings," according to Robert Baird, president of Dorel's Recreational/Leisure segment.
Dorel already owns Cannondale, GT, Mongoose and Schwinn brands.
"With growing interest in mountain biking and racing, the addition makes Dorel better suited to reach new retailers and, in turn, consumers," Baird said.
The sale includes existing Iron Horse inventory, as well as any trademarks and patents owned by the company. According to the purchase agreement, Dorel will also pay CIT Group, Iron Horse’s secured lender, $220,000 on the first anniversary of the closing date of the sale. CIT Group will pay a carve-out of at least $150,000 to the Iron Horse’s unsecured creditors.
Iron Horse was forced into bankruptcy in March by three Asian suppliers who were due more than $5 million in back debt. The company owes another $17 million to dozens of other unsecured creditors, as well as about $4 million to CIT Group.
"This latest purchase is in line with the strategic road map we have developed to build our bicycle business into the leading global bicycle company," said Dorel president and chief executive officer Martin Schwartz. "While their 2008 sales were $25 million (US), we are confident we can significantly grow this number. Iron Horse is another excellent brand that we will be able to leverage through our vast resources. The purchase price was most favorable and we look forward to an excellent return on this investment."