GILROY
– Gilroy resident Rey Sotelo’s bid to purchase the Indian
Motorcycle Company was endangered over the weekend when his group
lost one of its most prominent backers.
GILROY – Gilroy resident Rey Sotelo’s bid to purchase the Indian Motorcycle Company was endangered over the weekend when his group lost one of its most prominent backers.
Nevertheless, Sotelo’s group has four more potential investors on the line and is still in the running to buy Indian as long as the motorcycle-maker’s liquidation agent, Credit Managers Association of California, gives them a few more days to line up a replacement.
“If I have until the end of the week, I think I could get all the pieces in place,” David Hunnington, owner of the Matrix Capital investment firm in Newport Beach, said on Tuesday. Sotelo, Hunnington and their associates submitted their bid under the Matrix Capital name.
Their wish has been granted. CMA executive Chuck Klaus does not expect to have a final auction winner this week. He now hopes to announce a winner before Thanksgiving, Nov. 27 – more than a month after the Oct. 24 bid deadline.
“The process is designed to keep the parties competitively bidding against each other,” Klaus said. This raising of offers is still happening, but he also feels pressure to end the auction soon, he added.
If the auction had ended Tuesday, the Matrix group would be “a dead player,” Hunnington said. The backer who backed out wasn’t the Matrix group’s biggest in terms of money, but he was their first and most prominent – as well as bringing a significant amount of money to the table, according to Hunnington.
“We thought he was going to write the check, and he got cold feet at the last minute,” Hunnington said.
Seven companies submitted bids in the Indian auction, but the Matrix group’s only publicly acknowledged competitor is Bill Melvin, a retail liquidator and motorcycle collector from Grand Rapids, Mich. who, like Sotelo, aims to restart production in Gilroy.
The other involved parties are anonymous, but rumors abound that they may include the only two major U.S. motorcycle makers other than Indian.
“We think Harley (-Davidson) was in there and may still be involved, and we think Polaris may be involved,” Hunnington said.
Harley-Davidson officials have not responded to The Dispatch’s inquiries on this matter for more than a month. Polaris spokesman Pat Bourgeois claims his company never submitted a bid on Indian. Polaris, based in Minnesota, makes the Victory line of motorcycles but is best known for snowmobiles, all-terrain vehicles and personal water craft.
Now, Hunnington said, Matrix needs time to go over “due diligence” with its potential investors – essentially, verifying and evaluating what each investor would get and what each has to give.
One of these four possible backers Hunnington is talking to would require that Indian stay in Gilroy. This national community-development agency has applied for a New Market Credit through which the federal government would add 39 percent to the value of the investment if the bidder promises to keep 40 percent of its assets and 50 percent of its revenues in Gilroy, Hunnington said. Gilroy qualifies for the credit by being a “depressed area” in comparison to nearby cities, Hunnington said.
