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 resurre
cted 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, Credit Managers Association 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.
CMA 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.
Indian was one of three large-scale American motorcycle makers. The biggest and best-known, Harley-Davidson, did not return weeks’ worth of phone calls by The Dispatch inquiring whether it would bid on Indian.
The other, Victory Motorcycles, had no plans to bid on its West-Coast competitor, Polaris Industries spokesman Pat Bourgeois said Tuesday. Victory is a product of Minnesota-based Polaris, which is better known for snowmobiles, all-terrain vehicles and personal watercraft.
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 guessed might have an interest).
Bill Melvin’s ‘quest’
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.”
Melvin said he wants “to reopen the factory and continue production” in Gilroy, although not without changes to the Tenth Street factory, designed to build 30,000 bikes a year. (In 2002, Indian built less than 4,000.)
“We’d love more than anything to see this company continue on in Gilroy,” Melvin told The Dispatch this morning.
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.
Based in Grand Rapids, Mich., Melvin is CEO of National Retail Equipment Liquidators and has become successful through 25 years in the liquidation business. NREL also makes shopping carts.
“Bill Melvin appreciates the irony of a liquidator like himself trying to rebuild and renew a company – instead of cleaning out and dispersing its assets,” the announcement read.
Rey Sotelo’s Matrix group
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.
“We figure if anyone can make it happen, we have the management team to do it,” Sotelo told The Dispatch Oct. 7.
Sotelo has said Gilroy is his first choice for an Indian headquarters and factory, and he’d like to rehire at least part of the recently laid-off workforce.
Sotelo’s stated plan for Indian is to not spend much on advertising in lifestyle magazines and product placements. As with his pre-Indian custom brand, California Motorcycle Company, he just wants to build motorcycles that motorcycle people want to buy and rely on word of mouth to do the rest. He also wants to cut costs by having a less top-heavy management structure.
In a separate CMA auction, Indian dealers bought all of the company’s remaining 2003 inventory of about 150 bikes, O’Connell said.
For now, the company is withholding the dozen or so 2004 bikes that made it through production and testing before the plant closed. These might be very valuable to Indian’s new owner, O’Connell said.
Indian support ride set
In an unusual move, O’Connell announced Friday a ride and media event Nov. 1 in support of the Indian Motorcycle brand.
O’Connell, an avid motorcycle rider and collector, and his wife, Barbara, are personally funding the “Indian … Ride On!” event. They intend it to “galvanize grassroots support” for the faltering, but iconic, company.
California Gov.-elect Arnold Schwarzenegger, who rode an Indian in the third “Terminator” movie, will receive a special invitation to attend a celebrity press conference and ride in Los Angeles. O’Connell also is pushing Indian dealers to organize rides that day in their areas, especially to “national landmarks, symbolic of American values.”
