ANOTHER Auction for EBR!

[heagachongoose]

"Liquid Asset Partners will be seeking investors, or a buyer, for Erik Buell Racing."

"Their (EBR) bikes, out of the box, can go head-to-head with the top Italian race bikes. Our sale process will enable the proper exposure of the company and price flexibility that may better fit a new owner,"

"The next step for Buell could involve crowd-funding, a private investor or another motorcycle manufacturer. Melvin said he hopes that company founder Erik Buell and the rest of the Buell management team will remain part of the process."

"Our hope is that someone will continue to make these amazing motorcycles," Melvin said

This is a good thing. Sadly our own ignorance has delayed progress.

[Hughlysses]

As I speculated what might happen a day or two ago, the results of the auction did nothing to quell our on-going speculation.

The major benefit I see with the current state of EBR compared to pre-auction is that Erik can now become officially involved. The sale has been approved, the receivership is officially over. The new owner is free to hire whoever they want.

This presents the possibility that they can market this as a much more complete package. "We have these designs, this manufacturing facility and equipment, and this (or these) guys to form the core of a new company." That may be a much more marketable thing than some IP and a building full of equipment and a bunch of motorcycles with no assurance that any of the people that were the brains of this operation would be around. Maybe that's what is needed to get companies with DEEP pockets interested in continuing the production of American sport motorcycles.

[Scott]

As I speculated what might happen a day or two ago, the results of the auction did nothing to quell our on-going speculation.

The major benefit I see with the current state of EBR compared to pre-auction is that Erik can now become officially involved. The sale has been approved, the receivership is officially over. The new owner is free to hire whoever they want.

This presents the possibility that they can market this as a much more complete package. "We have these designs, this manufacturing facility and equipment, and this (or these) guys to form the core of a new company." That may be a much more marketable thing than some IP and a building full of equipment and a bunch of motorcycles with no assurance that any of the people that were the brains of this operation would be around. Maybe that's what is needed to get companies with DEEP pockets interested in continuing the production of American sport motorcycles.

I actually think (and I could very easily be wrong) that this is likely the end of motorcycles manufactured in East Troy. When Polaris bought Indian, they did some major re-engineering. When they bought Brammo, the re-design wasn't as major, but they did pause and re-work things.

I can imagine someone like Polaris or Zero being interested in reviving the brand, but if so, I would imagine them starting with CAD drawings and making changes to things they don't like. I can imagine a 2018 Victory sport-bike based on the 1190SX, but with some modified styling, improved fit and finish, exhaust that's more neatly integrated, traditional dual disc brakes etc. I would imagine such a bike being made in an existing Polaris manufacturing facility with existing polaris employees. They might add some equipment and personnel, but I don't imagine it as a stand-alone facility in East Troy.

With that hypothetical (or other similar hypotheticals involving other manufacturers), Polaris would be interested in Erik and his designs . . . but not most of the hard assets. They wouldn't want the existing parts because their bike will be different and they'd start fresh. The specific jigs, fixtures etc. would be designed for the current bike so might not work with a redesigned version. Most of the general tools, machines, computers, office furniture etc. would be redundant for a company like Polaris since they have those things already, so they wouldn't want to bid on the whole thing and get a bunch of junk they don't need and would need to spend time getting rid of.

I'm just using Polaris as an example, but similar things would be true for other potentially interested parties. And while Polaris has always seemed a good fit, we don't have any reason to believe they're really interested (though I do remember that when Liquid Assets name first came up, somebody said there was a rumor that they were working with Polaris, so it is possible that Polaris has been backing LA without wanting to get directly involved.

And that raises another interesting point. If Polaris or a similar company were interested, they would want to tread very carefully and keep a low profile and provide a clean break between their efforts and previous EBR efforts. If Polaris swooped in, bought up the assets and then dismantled everything, they'd be seen as the bad guy. If Liquid Assets buys it and then Polaris purchases key components and makes their own Erik Buell bikes, they'll be the knight in shining armor coming to save the day.

Also by creating that kind of separation between them and EBR, they could leave some of the EBR/Buell baggage behind them. Perceived quality issues, blown Superbike engines etc. would be put behind them as things that belonged to a different company.

[Hellgate]

"Liquid Asset Partners will be seeking investors, or a buyer, for Erik Buell Racing."

"Their (EBR) bikes, out of the box, can go head-to-head with the top Italian race bikes. Our sale process will enable the proper exposure of the company and price flexibility that may better fit a new owner,"

"The next step for Buell could involve crowd-funding, a private investor or another motorcycle manufacturer. Melvin said he hopes that company founder Erik Buell and the rest of the Buell management team will remain part of the process."

"Our hope is that someone will continue to make these amazing motorcycles," Melvin said

This is a good thing. Sadly our own ignorance has delayed progress.

Crowd funding? That's not much of a plan...

[Scott]

Crowd funding? That's not much of a plan...

Nope.

But here's the good news for anyone who's feeling really down now:

It's in Liquid Asset's best interest to sell this as a complete motorcycle manufacturing operation. They have done their research and they understand much better than us the market and potential buyers and the chances this will get going again and I believe they're betting on it being re-sold to someone.

I don't think they would have gone as high as $2 million if they thought it was going to be sold as scrap. We cringe at the images of the Buell bikes in dumpsters, but the harsh reality is it actually costs money to tear these things apart and dispose of things (think about environmental issues and the cost of properly disposing of things like tires, solvents, paints, cleaning solutions etc.). They will get some value from selling off the big-ticket items like CNC machines, but even those will have limited value because they'll have to find someone interested in that specific piece of equipment, and they'll likely be selling them for much less than they cost new.

I suspect that when you subtract the cost of disposing of unwanted things from the revenue they'll get from selling file-cabinets etc., they'll be lucky to come out $1 million on the plus side, so I believe they're betting, based on their knowledge of the industry and potential buyers, that they'll be able to find someone or some group who will be interested in making motorcycles.

They can do things the receiver couldn't do. They can make deals, they can put different parties together, they can find people who are interested in running things and put them in contact with people who are interested in financing things and they can create contracts with complex responsibilities and liabilities. They're likely burning up the phone lines right now wheeling and dealing. The court and receiver couldn't do those sort of things. They could only operate under the very strict guidelines of the sale: "Here it is. What's the highest anyone is willing to pay?" Remember that bid of $3.15 Million that GP Holdings was floating but didn't pan out? Liquid Assets could potentially put them and Erik together. "GP Holdings, If you can raise $2.7 million over the next few months AND acquire the backing capital you'll need to really make this work, we'll sell you 90% of the company and Erik Buell 10% of the company (for $300,000) and we want to see the two of you move forward with this thing. What's that? You don't have the cash and backing right now but you're working on it? Okay, see what you can do. While you do that, I'm going to be talking to S & S, Zero, Polaris and a few others, so let me know what you can do and if nobody beats you to it, the offer will remain on the table."

And if the worst happens and we start seeing those heart-breaking photos of bikes being thrown into dumpsters, we have to keep in mind that the intellectual property can't be destroyed. Someone will have a nice, neat package of CAD drawings, specifications, logos, supplier lists etc. In the case of Buell, Harley owned that IP and they didn't want anybody to have it. In this case, LA owns it and they want to sell it. Maybe they'll sell it to Erik or maybe they'll hold onto it until somebody who's serious will offer them a big check for it, but it won't cease to exist.

I feel somebody, somewhere at some time will give this another go. I just don't know who or when. But we're in a situation now in which time isn't hanging over the whole thing like a sword of Damocles. We don't have to bite our fingernails and hope the right person with the right resources will show up just before the deadline.

Now things can happen in a more methodical way.

There will no longer be any legal barriers holding parts hostage, and we should soon have the opportunity to buy some of those parts that are currently collecting dust in the shuttered factory.

So while things seem grim, we haven't come to a hard, certain end. It may be years before we see another shiny new American sportbike rolling off an assembly line, but I remain optimistic that when it happens, it will be done right by somebody who has the right goals and resources. And when that happens, we'll see things bigger and better than they ever where before.

[zviadi]

Meanwhile, Eric's website is still running.

[crispy]

I thought Erik was the CEO of GP Holdings. Think I saw it somewhere.

[Hughlysses]

I thought Erik was the CEO of GP Holdings. Think I saw it somewhere.

The terms of the receivership forbid anyone who was a principle with either EBR or Hero from bidding on the assets. If GP Holdings intended to place a bid, Erik could not have been their CEO.

[crispy]

Yes, fair enough too.

Google "GP holdings usa equity net"... seems he was indeed CEO at some point. I couldn't see him on their website these days so that relationship may have ended some time back.

[Hughlysses]

Interesting.