| Author | Message | ||
     Hybridmomentspass |
"How would EBR suddenly become significantly lower in price simply by being owned 100% by HERO? sell at a loss? use cheaper quality parts? pay the employees less?" Id say that their buying power would likely be much higher than EBR due to their size | ||
| Zac4mac |
I just went to my old dealership and ordered a bunch of 1125 parts. No snags, parts in the warehouse, be here in a week. We'll see. Ordered a kickstand ass'y and had it in a week. Z | ||
| Stevel |
Buell will not be selling Buell parts . . . unless the owner, Harley-Davidson, Inc. . . . decides to. EBR will not be selling Buell parts. Hero will not be selling Buell parts. Court, I know we have butted heads on this very subject multiple times in the past. I still contend that Erik's decision to not support the 1125 community and trusted followers effectively trashing his existing customer base. In doing so, he did great harm to his new bike endeavor. When Erik launched EBR right after his demise with HD in 2009, his promise was that 1125 and tuber support and he reneged right after he got in bed with Hero. I believe Erik surrounded himself with yes men and personal worshipers that deprived him of objective criticism. There can be no other reason for his poor showing and preparation for his debacle in WSB. So, at the end of the day, Erik has personally F@#$%ED not only the 1125 community, but his 1190 customers and all his loyal elves. Come on Court, lets hear your criticism of my opinion and defend this upstanding man for his outstanding brilliance! | ||
| Ruprecht |
Just got an interesting teaser emailed from AMCN (Australian Motorcycle News). I wonder what they know? They don't usually go for baseless speculation.
http://www.amcn.com.au/news/1504/ebr-receivership- is-part-of-the-plan! | ||
| Hughlysses |
^ It'll be interesting to see what they have to say. Of course, if the story is true, this all may even be settled by next week. Any lawyers/financial experts on Badweb that could speculate why EBR would declare receivership to facilitate the Hero takeover? | ||
| Steveford |
Regarding the press blurb from the Australian magazine, I suspect it involves a list of verbal agreements which one party had no intention of following through on. (Message edited by SteveFord on April 22, 2015) | ||
| Fresnobuell |
I don't recall Erik promising support to any legacy Buell bikes. What exactly is your definition of support? For initial success, EB had to sell to the mainstream sportbike crowd, not the 1125R owners. Unfortunately, it appears this didn't materialize. | ||
| Hughlysses |
Now here's an interesting article on the closure. A layman's level legal explanation of the receivership process and what it could mean for EBR: http://www.asphaltandrubber.com/oped/erik-buell-ra cing-receivership-explained/ | ||
| Reepicheep |
Stevel... You are letting some kind of anger cloud your objectivity. Erik and many other Elves wanted to keep supporting the 1125. They had a killer new version of the bike (Barracuda) ready to build. Harley ***FIRED*** all of them and scrapped the completed design. Harley could have sold the Buell division, or the completed design, but they elected to shut it down completely instead. Erik didn't own it. Your beef is with Harley. And later, EBR seems to have done exactly the thing you are complaining about them not doing, which is prying the rights for the 1125 motor from Harley, and continuing to develop it into a pretty stout engine. A killer streetbike engine for sure, but about 30 HP down from what is needed for WSBK wins. Now EBR tanked. Maybe because the whole business model doesn't work (it was a stretch goal from the start), maybe because of some kind of complicated corporate chess game (and don't kid yourself, every corporation is constantly in many multidimensional chess games both internally and externally). Well the good news for the haters is that the company is currently in a forced sale. So you, SteveL, can go buy the company right now, and tomorrow you can start producing every last 1125 part you seem so bitter about not being able to buy (except, inexplicably, you probably can buy them from Al or your local HD dealer with some work). Except wait... you can't buy that company, because it is freaking expensive and you can't afford it. Well, neither can Erik or any of the other Elves, or they would have bought the corporation already. And wait, even if you could afford it, you still don't own the rights to the 1125, so you would basically have to redesign the parts from scratch, but not improved, just duplicates of what was there before. So of course you wouldn't. You would take that time and money and energy to build a new improved model. You could call it the 1190RX or 1190SX or something. Which is exactly what EBR did, but that you seem to be claiming is dumping on the whole community. So go buy the company and do what you think Erik should have done. And if you can't or won't, then don't be surprised to get negative responses when you criticize others who also can't. The reason there aren't a million companies building motorcycles is because it is freaking expensive to build and operate a company building motorcycles. If you want to do it, save your pennies until you have $100 million, and hope you get damn lucky and make very few mistakes so that you can at least get to a break even return before you burn through that $100 million getting the company established and operating. | ||
| Davegess |
++1 | ||
| Hughlysses |
Don't forget that EBR did provide Buell legacy support for racers, and up last Wednesday still sold products for 1125's and XB's. So, no comments on the pending AMCN article or the Asphalt and Rubber article explaining receivership? AMCN says receivership was planned so Hero could take over; Asphalt and Rubber says Hero would have tried to avoid it.  Hopefully we'll eventually find out the real story. | ||
| Reepicheep |
Hugh's article was a useful read if you don't already have a sense of the differences between the various default scenarios... Here is how I am thinking of it in an oversimplified nutshell... 1) Total default. In this case, you just walk away from everything and default on everything. If you are an LLC, the people you owe money to are just screwed. They can sue an entity that is already in debt, but they are wasting their time and money. They can try and sue the principals of that entity, but they won't get far there either, as the entity probably owes those principals also (on paper). It was a risk you took extending credit to an LLC, and you are pretty much in a situation where you just write it off as a loss. Very common for failing small businesses. The downside to the principals is that if they ever go and ask a bank for credit for another venture, that default will come back to haunt them. And they will probably get harassed a lot by creditors who can't actually collect, but will try and bully and berate to see if they can get anything. 2) Bankruptcy. Thats when you know you are toast, but there are assets left of value, and you want an orderly dismantling of the business. The business is done, and creditors will probably get something, but not everything. 3) Receivership. You can't pay current obligations, but you believe the company has enough value that it might be considered for purchase. You hand the keys to a neutral lawyer, who accepts all the bids for the company, and that lawyer takes the one they think best. The buyer can buy to operate, or buy to dismantle, or buy it to throw a massive kegger and trash the place. Their business, they bought it and they own it. Creditors still have full claims to the ongoing entity, but the receivership process puts some rules in place over how they can try and collect. | ||
| Ljm |
My read of the tea leaves suggests some mixed scenario, i.e. some culpability on EBR's part for biting off more than they could chew and perhaps either alienating Hero or discouraging them from further investment, some emnity on Hero's part and a desire to recoup their money either via corporate raiding or outright purchase and operations. Where it will land will be interesting, and at some very close point, if the company is to have value as an operating entity, some outreach MUST happen soon to the profit-making arm, i.e. the dealers. Otherwise, the intellectual property and bricks and mortar are all that have value and likely not together. As for Stevel's comments above, I would have preferred his scenario. It would have made a natural progression to EBR bikes from Buells. Unfortunately, as frustrating as it may be, those rights and those designs belong to HD. As I understand it, they gave leave to EBR to design race specific parts only and not to go into full production on Buell parts. It would have been great for Buell owners, but nowhere near HD's objectives. They want people riding harleys, as evidenced in their designing entry-level bikes. They don't want people keeping their Buells into perpetuity and being maintained and serviced by another manufacturer and dealer network. Even if someone had the 20 to 100 million to buy EBR outright, they still couldn't go into production with Buell parts and services other than the limited area that EBR has been allowed. For my part, I have never given a $hit about WSBK other than the fact that EBR is in it. In my silly-a$$ed world, I would have rather seen EBR's at every level of competition from club level to AMA/MotoAmerica with contingencies and subsidized bikes and parts. THAT race on Sunday, buy on Monday might have borne some fruit, and honestly, cost a lot less. | ||
| Ron_luning |
Being a minority stakeholder in a closely held (private) company is basically a powerless position unless there is specific power given to those minority stakeholders in the llc's operating agreement. From what I remember back when EBR first took money from Hero, the point was for them to be a minority stakeholder so Erik would not lose control as he did with HD. So for Hero to gain control, all they have to do is withhold further financing. That works in this case because where else could EBR turn to for more money? If EBR was turning a profit, or at least on a clear path to doing so, there would be many sources of funding. They weren't so Hero is basically it. Hero buys the rest of EBR for nothing and owns all of it: EBR is not only worth nothing to an outside investor, it is actually worth something like negative millions of dollars based on debt obligations vs. what can be assumed to be less than stellar revenue. Now why Hero would want it is a mystery to me, so regardless of what the Australian article says they may not buy the rest. Could be some Indian tax laws that let them do a huge write down on their losses with EBR. Who knows though? Time will tell. Bottom line is that with Hero in there and the massive debt, EBR is toxic to investment from any other company. | ||
| Strokizator |
On the upside of all this, I'm getting a great education on the workings of the business world here. I have my opinions on why things went the way they did, what should have been differently and/or why it may have been doomed from the start, but I'll keep them to myself. If you look back to the Excelsior-Henderson failure of the late 90's, they burned through $100 million building a bike in a class that had a seemingly unlimited market potential. If Victory hadn't had the backing of Polaris they wouldn't have lasted long either. What chance does a guy have building a bike for what is, in reality, a niche market? Yamaha's R1, Ducati's 1299 Pinagale, BMW's S1000RR, etc. are more a showcase of a company's talent than they are profit generating product lines, used to attract customers to the showroom where they can steer the buyer into a more profitable, and probably sensible, model. The fact that the EBR motorcycles were sold alongside other brands likely meant that while a customer came into the showroom to drool over the RX or SX, they most often left with another brand as EBR had nothing else to offer. Perhaps I was misguided to have been waiting for EBR to build a bike I could ride (I can't fold myself up into an origami shape anymore). After all, the "R" in EBR stands for racing; it's not like it was a secret. | ||
| Reepicheep |
I wonder what the net debt is, in $$, and how that $$ figure compares to the "normal" cost of developing a brand new motorcycle and motor package that can place 15th in WSBK, and associated manufacturing tooling, facilities, and supplier chains. It might be a bargain, but as the french knights said in the holy grail movie... "No thanks, we already have one..." | ||
| Wolfridgerider |
they also said they would fart in your general direction... what that has to do with anything... ya got me, but it made me laugh... | ||
| Hootowl |
What's worse is they called your door opening request a silly thing. | ||
| Hughlysses |
They also said Erik's mother was a hamster and his father smelled of elderberries. | ||
| Sifo |
I don't know what Hero would want with EBR at this point. The whole point of Hero investing in EBR was to have access to their engineering, wasn't it? That asset has been lost as of the first day of this announcement. I don't know how many of them could be rehired as an Indian owned company. No doubt many will quickly move on with no loyalty to Hero if they were made an offer. I would think there are easier ways of hiring talented engineers. Surely they have little need for the 1190 EBR models as they stand, especially given what's just been done to the dealer network. What else does EBR have to offer Hero at this point? I just don't see them having interest. I'm still waiting to see how this all shakes out and hear the story of how all of this went down. I think it's going to all be academic though. The reality is that this really has very little effect on me personally. I hate hearing of this happening to Erik and all the employees, but I was never going to pay that kind of cash for a bike that is beyond the abilities of 98% or more of the riders out there... Myself included. As a best case scenario, how long until EBR was planning to have real mainstream bikes? Simply put, I just wasn't part of their short to medium term business plan. | ||
| Mr_grumpy |
Hugh thanks for the article, very helpful. I do feel very sorry for all those whose livelihoods are on the line, but I have to say in all honesty that I'm not entirely surprised. Buell & Badweb changed my life, that's not an overstatement just plain fact. Actually I'd probably not be where I am now otherwise. I've owned 2, one bought new & still have (most of) my first one the M2, the Super TT got totalled or I'd probably still have it too. Now all that said, neither Buell nor EBR have produced a motorcycle I'd imagine buying since the end of the XB series, not even if I won the lottery. I had a tuber pin-up til I bought the M2 then my FJ1200 languished gathering dust til I sold it. A few years later the STT became my computer wallpaper, until that itch was scratched. Maybe I'm not the target demographic, I don't know, all I can say is I'm a Buell fan but sadly there's been nothing for me to dream about for quite a while. As for WSBK & AMA, & others have also pointed out, I couldn't give a rat's a**. To quote a favourite film "If you build it he will come." Well I'm sorry but they didn't & not many came, with the inevitable consequences. | ||
| Hughlysses |
I don't know what Hero would want with EBR at this point. That is the $20M question, isn't it? The AMCN teaser says all this is part of a plan for Hero to acquire EBR. Asphalt & Rubber says if Hero wanted EBR, they would have tried hard to avoid this situation. Hero has at least $25M (their price for 49.2% of EBR) tied up in EBR at present. It seems doubtful they'd just walk away from that kind of investment. Hero might be able to acquire the entire company for the $20M it would take to pay off their outstanding debts. OTOH, it sure doesn't seem like Hero would be in this situation if they intended to get EBR. | ||
| Sifo |
Hero might be able to acquire the entire company for the $20M I just see why they would want to though. The engineering department has been scattered to the wind. The dealer network has been shattered. The bikes are night and day different from their normal fair, and just aren't where they need to be to compete with others in their class. I just don't see what's in it for them. | ||
| Hootowl |
"The whole point of Hero investing in EBR was to have access to their engineering, wasn't it?" I don't know that that's true. Didn't EBR start a separate engineering consulting company? Wasn't it that company that was doing work with Hero on their new motorcycles? That company may not be in receivership. And that company would have been free to do consulting services regardless of what Hero was investing in the motorcycle company. This set of slides, which we've seen before, appears to indicate that EBR engineering and EBR motorcycles are not the same company. http://c.ymcdn.com/sites/www.weda.org/resource/res mgr/gov_pp/ebr_marketing_us_expertise_t.pdf | ||
| Buewulf |
Any lawyers/financial experts on Badweb that could speculate why EBR would declare receivership to facilitate the Hero takeover? I used to do M&A work, and receivership is basically just a way for putting a company up for sale while keeping creditors at bay during the process. The appointed receiver actually has full management authority of the business and has a legal obligation to operate it in a way that will maximize the value. Priority 1 would be to sell the company whole and intact. Failing that, the receiver will start auctioning off the different business units of the company (not really an option with EBR), and as a last course of action just selling off any assets of value. Unless Hero acquires it, I can't imagine anyone would buy EBR as a whole. With $20M in payables, they are obviously burning through cash way faster than they are bringing it in. With the brand name itself practically in ruin, there isn't any intangible property of any value. The tangible assets can't have much value to Hero ( who has much more substantial manufacturing facilities and lower production costs in India) than the intangible assets do, so I can't really put my finger on what they would want with EBR. Anyone else with the muscle to get into the motorcycle manufacturing business wouldn't want the inventories or facilities either unless they intended to keep producing EBRs which is extremely unlikely. We just don't have enough info to make sense of it at this point. It will be interesting to see how this turns out. My gut tells me that Hero just decided EBR was not going to be viable and decided to cut their losses, but then there is that recent interview with the Hero chief where he expressed he would want to obtain 100% of EBR which flies against a cut and run hypothesis. Whatever the story is behind the scenes, I bet it is an interesting one. | ||
| Sifo |
This set of slides, which we've seen before, appears to indicate that EBR engineering and EBR motorcycles are not the same company. They had slides showing "EBR Racing", "EBR Motorcycles", and "EBR Engineering". I have doubts that these are any kind of legal definition. Even if it were a separate legal entity, they have likely killed it if there is any connection to EBR, which no doubt there is. | ||
| Sifo |
The appointed receiver actually has full management authority of the business and has a legal obligation to operate it in a way that will maximize the value. If letting go all the employees, locking the doors, and cutting off your dealership network is "maximizing the value" of EBR, then I just don't see a return route. | ||
| Ferris_von_bueller |
The smoking gun? http://www.dnaindia.com/money/report-hero-motocorp -may-hike-stake-in-erik-buell-1865341 | ||
| Hughlysses |
They had slides showing "EBR Racing", "EBR Motorcycles", and "EBR Engineering". I have doubts that these are any kind of legal definition. Even if it were a separate legal entity, they have likely killed it if there is any connection to EBR, which no doubt there is. The only legal designations I've seen (in one of the recent articles) is there are two companies: Erik Buell Racing, Inc., and Erik Buell Racing, LLC. IIRC, EBR, LLC is wholly owned by EBR, Inc., but I could have that backwards. | ||
| Ferris_von_bueller |
The program used by HERO when they invested in EBR...EB-5 Visa http://en.wikipedia.org/wiki/EB-5_visa |
