By Dave McMahon, Editor in Chief
The company’s receiver announced that the sale of Erik Buell Racing assets will occur at an auction expected in the next few weeks. EBR, based in East Troy, Wis., announced in April that it was closing after anticipated funding failed to materialize. In addition to launching the EBR 1190RS, 1190RX and 1190SX super bikes, Buell’s business designed bikes for India-based Hero Moto Corp., which owned a 49 percent share in EBR.
I spoke with Erik Buell last week about the pending sale of the assets, and he’s hopeful that whichever investor purchases the company will make it an ongoing business, picking up the production line where it ended in April when the company filed for receivership.
“Fundamentally it’s turnkey,” Buell said. “We could literally be shipping bikes out of the building the same day somebody turns the switch back on. Bikes and engines are lined up on the production line, sitting there with plastic covers over them.
“We have great motorcycles that have gotten really good reviews. The SX we hoped to get out quicker, but we had a lot on our hands. We were doing so many projects for Hero plus our stuff that we were just overwhelmed with work and cash needs. We had this big business, but without cash, you can’t operate it. It had to go through this reset. That’s where it is. We have a lot inventory material and finished bikes and lots of parts to make more.”
EBR is currently housed in a 54,000 square-foot manufacturing facility in East Troy, Wisconsin. The entire business, including a substantial inventory of components and completed bikes, will be up for auction in a bidding process between a number of potential buyers at an event managed by the receiver. All bids are subject to court approval, which will be scheduled within a few days after the auction.
“We have this motorcycle company that was shut down in mid-stream, just due to a complete gap in cash. We thought we were on top of the cash, and where the money was coming from. But the funds did not come through, and it was at a moment where we literally had to shut down to avoid not being able to pay our employees for a payroll period,” said Buell, who launched EBR in 2009, weeks after Harley-Davidson shut down Buell Motorcycle Company. “In 2013, Hero had an equity investment of $25 million into EBR, but the next round of funding we had been working on didn’t come through, which was a shocking disappointment for us. About 15 years ago at Excelsior-Henderson, they went through $110 million trying to get a motorcycle company going. All we needed was $10 million more, and we would’ve been able to pull this off for $35 million. But without that, we were done. So we had done an epic job of getting it going in my mind, but close wasn’t enough to pull it off, so it needs a reset.”
Buell is looking forward to what the coming weeks bring for his former company. There are a number of companies that have contacted the receiver and are anticipated to be prospective bidders. The assembly line, a machine shop for prototyping, MTS machines for vibration testing and dynamometers are among the other assets that will be acquired.
“The objective of the receiver and the courts is to sell the company assets for the maximum amount of value,” Buell said. “The consulting business may be split off as a separate sale from the motorcycle business. Other than that, we’re hopeful that the successful bidder will want to resume operations. We’re looking forward to it and looking forward to having a new investor. The amount they’re going to be able to buy this for is going to be incredibly small compared to the value of what we’re bringing — not on only the assets and the bikes themselves, but the brand and the tooling to make the bikes, which is worth tens of millions of dollars.”
Buell said many of the 50-60 existing EBR dealers are doing what they can to support customers.
“Nobody wanted this to happen, but on the other hand, it’s a good motorcycle, and they care about their customers,” he said. “We just want to get back and be able to support the dealers as quickly as we can. We were doing our parts distribution fulfillment as an OE through Parts Unlimited, which is the first time anybody had done that. I’ve known [Parts Unlimited founder] Fred Fox for a long time and have a lot of faith in him, and I just wanted to make sure our parts got to the customers, the dealers, really fast. I was willing to give away margin for that, and it was working really well. With the EBR dealer support site shut down, Parts Unlimited also has stepped up to work with us and bridge the gap by giving EBR dealers a way to purchase parts directly from the Parts Unlimited site.”
The EBR staff had grown to nearly 120 employees, mostly working on the consulting side of the business, Buell added.
The sale was scheduled for July 21 in Milwaukee, but we have learned it has been postponed for a bit longer for completion of some legal diligence. Interested parties can contact Steve Nerger at Silverman Consulting of Skokie, Illinois, at 847/470-0200 for details.