Troubled Italian motorcycle manufacturer MV Agusta Holding (a major investor in MV Agusta Motor SpA) has announced that it has signed a “binding agreement” (November 17th) for “a capital increase” with New York City based asset manager Black Ocean Group.
|MV Agusta CEO, Giovanni Castiglioni|
The recapitalisation is one stage in a restructuring plan that the company says “has the aim of consolidating its leadership in the production of high-end motorcycles under the MV AGUSTA brand. The closing of the transaction is expected to coincide with the homologation of [the] MV AGUSTA restructuring plan”.
Black Ocean itself is part of an international holding group, the Ocean Group, an investment group founded by entrepreneurs Oliver Ripley and Timur Sardarov in 2005. Ocean Group’s core business is “creating and building businesses” with interests in a diverse range of sectors, including private aviation, agriculture, real estate, corporate finance, banking and services, technology, media and internet, with offices in New York, London, Geneva and Moscow.
Oliver Ripley, CEO of Black Ocean, said of the investment: “We are very pleased to become part of such an iconic Italian company and excited by the opportunity to build this into a truly international brand and industry leader”.
Giovanni Castiglioni, CEO of MV Agusta, is quoted as saying “I am very pleased that we have reached this agreement with Black Ocean. Beyond the strengthening of our capital, which is important for the future growth of MV Agusta, I strongly believe that Mr Sardarov, Mr Ripley and their global team will be able to contribute with their entrepreneurial and managerial skills in the consolidation of MV Agusta as a key player in the super premium motorcycle market”.
The details of the agreement have not been disclosed, with no indication as to how this will affect the 25 percent equity position that AMG Mercedes has in MV Agusta, or Castiglioni’s stated aim of disengaging with AMG – a relationship that he was also fulsome about when it was announced, but which has turned sour in the past year.
In March 2016 it was announced that the company had filed a "Composition" with its creditors – an Italian variation on the theme of what is known in the United States as a Chapter 11 creditor protection filing.
The intention was to allow the company some time in which to restructure its finances - in MV Agustas' case that meant dealing with the 40m euro of debt that was reported on its books at that stage. The filing gave MV Agusta to the end of 2016 to renegotiate its finances, granting them an interim 'payment holiday'.
The company said that in 2015 it achieved 100m euro in sales (some +30 percent up on 2014), with turnover growing from 30m euro in just five years. However, plagued by back orders, MV has had to slow down production from the 8,000 plus units at its peak and accept that its ambitions to see that number grow into the 15,000 to 20,000 bracket were unrealistic.
The restructuring plan will need to see the rationalisation of its 20 plus over-populated offer, massively reduce its 15 percent of turnover R&D spend, generate sufficient capital to allow it to service its debt burden, fund ongoing production and put it in a position to buy back the 25 percent stake it sold to AMG Mercedes for 30m in 2014.
Indeed, the company will also need to repay a 15m loan it took from a consortium of Italian banks in late 2014 to top up its cash flow (having burned through the AMG cash and the $20m dowry Harley-Davidson left it with in order to be able to tackle the AMG 25 percent issue). That loan was conditional on AMG's shareholding not being reduced below 20 percent without it being first repaid in full.