GILROY
– Seven companies entered bids in an auction for the Indian
Motorcycle Company that ended Friday. Of these, two are known: one
a retail liquidation CEO and motorcycle collector from Michigan and
the other a local motorcycle designer who was Indian’s first
president/CEO when the company was resur
rected in 1998.
GILROY – Seven companies entered bids in an auction for the Indian Motorcycle Company that ended Friday. Of these, two are known: one a retail liquidation CEO and motorcycle collector from Michigan and the other a local motorcycle designer who was Indian’s first president/CEO when the company was resurrected in 1998.
But it’s not that simple. Each of the seven bids was for a different selection of assets, a fact that is complicating the process of figuring which bidder takes the prize. Indian Chairman Frank O’Connell, CMA executive Chuck Klaus and several CMA lawyers reviewed the bids over the weekend but provided no updates Monday morning.
And what is the prize? The trademarks and factory of America’s first motorcycle company, begun in 1901 in Springfield, Mass., and a popular icon despite 45 years of nonexistence (1953 to 1998). After five years of building high-end cruisers in Gilroy, Indian shut its doors without warning Sept. 19, leaving about 380 employees out of work. Despite rising sales, the company wasn’t making money and didn’t expect to any time soon.
Credit Managers Association of California has guaranteed bidders confidentiality, but two – Bill Melvin, of Grand Rapids, Mich., and Rey Sotelo, of the Gilroy area – opted to reveal themselves. Indian hired CMA to handle its liquidation process instead of going through bankruptcy court.
CMA Estate Manager Michael Joncich described the bid discrepancies as “a problem” Friday after the 5 p.m. deadline.
“None of them are for the same thing,” Joncich said of the bids. “Some include the real property in Gilroy, and some don’t. … Some of this is for equipment only.”
Indian and CMA officials had expected (publicly, at least) companies to bid on a package deal of its factory and trademarks. Some of the seven bidders did this, Joncich said, although he did not say how many.
CMA’s plan had been to take the five highest offers (if they got five on both trademarks and factory) and invite them to bid against each other in a second round of auction, Joncich said.
The focus, Joncich said, will be on the bottom line – whatever maximizes the sale price of all Indian’s assets so that total can be passed on to Indian’s long list of creditors. Unless the company goes for far more than expected, however, CMA officials don’t expect the revenues to fully pay off Indian’s enormous debts. In that case, creditors would get a percentage of what they’re owed, depending on how much money there is to distribute.
CMA and Indian gave tours of the Gilroy plant to at least 10 interested companies in recent weeks, Joncich said. CMA signed 47 confidentiality agreements with companies to discuss Indian’s finances (although some were with agents acting on behalf of bidders, not bidders themselves) and sent out 90 auction information packages (although some were unsolicited, to parties CMA thought might have an interest).
In his extensive personal collection of motorcycles old and new, Melvin has many antique Indians. Now he’s jumping at the chance to return the brand to its pre-World War I glory days.
“I want to return Indian Motorcycle to its top position in the industry,” Melvin said in a press release Friday. “I envision a line of revamped and revitalized Indian motorcycles built for riders by riders – and to very exacting standards.”
Despite the fact that Melvin’s announcement was titled, “One man’s quest to keep the legend alive,” he is joined by several financial partners, including the Great American Group, a name matching a national asset-management corporation.
Sotelo’s group of investors now has a name – Matrix Capital – and an ambition to restart motorcycle production within 30 days of being chosen as the winning bid.
Both of these Sotelo announced on the American Cycle Talk Web site Oct. 17.
