Emergency funding of $750,000 will help a cash-strapped Redline Performance Products Inc., but it’s not enough to put the company completely back on track.
On May 10, officials at Redline announced they had altered the company’s planned delivery schedule for the 800 Revolt model snowmobile and engaged Manchester Companies, Inc., a Minneapolis-based advisory and investment banking firm, to help it evaluate its production plans and business strategies and seek new capital.
Redline delivered 27 of the approximately 400 units in its order backlog as of May 10.
“We are committed to delivering a great product to snowmobile enthusiasts,” said Mark Payne, president and chief financial officer. “At this time, however, we have determined that our inventory of component parts is out of balance with what we will need to complete delivery on our order backlog as originally scheduled. We have the supply chain network in place to complete deliveries, but will require additional capital to secure the needed parts and sustain manufacturing operations to fulfill the orders.
“We are working with Manchester to determine our need for additional financing, primarily for new component parts and manufacturing working capital,” Payne said.
On May 17, Redline announced that it has raised $750,000 in a private placement of shares of common stock and warrants to purchase shares of common stock to several individual investors. The investors received a discount to the current market price in exchange for purchasing shares of restricted stock.
“We have received proceeds from the private placement over the last three weeks and have already put $500,000 to use in production and for operating expenses,” said Payne. “We expect that the remaining $250,000 will enable us to continue limited shipments of snowmobiles during this off-season while we evaluate near-term and longer-term financing strategies.
Under SEC Rule 144, restricted shares may not be resold until one year from the date the shares are sold, unless registered prior to that date. GunnAllen Financial, Inc. acted as placement agent in the transaction.
Blade Made To Order
Blade Inc., based in Eveleth, Minn., began shipping its 2005 lineup to dealers in April. The company, which makes the 1W-X 700 and 800; the Striker the Hylander; the Outlaw; and the HPO, is selling its sleds on a build-to-order basis.
Wight: Snowmobile Business Pioneer
J. Monte Wight, the first snowmobile distributor in the Western U.S. died of a heart attack on May 5. He was 85. Wight started Monte Wight Motors in Rigby, Idaho, and organized the first snowmobile ride through Yellowstone National Park. psb
Copyright 2004 Powersports Business