M.A.G I Tucker Rocky | Biker’s Choice Important Announcement

Dear Valued Business Partner,

I wanted to let you know about an important action our parent company, Motorsports Aftermarket Group (MAG), is undertaking. On November 15, 2017, MAG announced that it is implementing a debt restructuring to eliminate approximately $300 million in debt. MAG is using the Chapter 11 process to facilitate this.

First and foremost, we are open for business and are operating just as before. You, our valued customer, will not see any interruption in the flow of merchandise and there will be no change in the way we operate. In other words, we will continue to uphold our obligations to you, just as we always have. Frankly, you will likely not even be aware that the restructuring is happening in the background.

MAG plans to move through this process swiftly, emerging from Chapter 11 a stronger, more viable and competitive Company. We look forward to continuing to providing you with a wide selection of quality products and exceptional service for many years to come.
Best regards,

Kenan M. Ikels
Vice President: Tucker Rocky Distributing

Note from Cyril Huze. In 2014 Tucker Rocky/Biker Choice (LDI LLC) merged with Motorsport Aftermarket Group (MAG) owned by majority shareholder Leonard Green & Partners.aLDI LLC, the sole shareholder of Tucker Rocky / Biker’s Choice, will become the majority shareholder of the combined company. Leonard Green & Partners, L.P., the current majority shareholder of MAG, and other existing MAG shareholders were expected to retain significant minority interest in the combined company.

Zipper's

25 Responses to “M.A.G I Tucker Rocky | Biker’s Choice Important Announcement”


  1. 1 highrpm Nov 16th, 2017 at 9:21 am

    the old saying, an ounce of prevention is worth a pound of cure. “MAG plans to move through this process swiftly,….” i wonder how swiftly one accrues a $300M debt? what value-added products has leonard got in mind to add to the product line, or just more sleight of hand financial trickery?

  2. 2 Gershom Nov 16th, 2017 at 9:47 am

    Hopefully their vendors are paid in full, but in most cases this doesn’t happen.

  3. 3 HD Rider Nov 16th, 2017 at 10:24 am

    Another scumbag shirting their debt — I’d rather see the company sold off to pay the debt.

  4. 4 Don R Nov 16th, 2017 at 1:04 pm

    It sounds like maybe he and Trump went to same school

  5. 5 X-HD Rider Nov 16th, 2017 at 1:04 pm

    All the Mag owners are millionaires so why can’t they pay their bills.

  6. 6 Chief Waldo Nov 16th, 2017 at 1:49 pm

    “we will continue to uphold our obligations to you”
    Right up until they don’t. Then, you’re screwed.

  7. 7 Lee Holmberg Nov 16th, 2017 at 3:25 pm

    Just click your heels Dorothy, and the 300.000.000 dept will just disappear.
    I don’t think so.

  8. 8 calif Phil Nov 16th, 2017 at 4:07 pm

    The Motorcycle Aftermarket Group (MAG) is not a name that motorcycle enthusiasts are usually familiar with, but the family of brands that the company owns certainly is: Performance Machine wheels, Roland Sands Design, Renthal handlebars, Vance & Hines exhausts, Tucker Rocky, J&P Cycles, etc.
    The network of brands has been struggling over the recent years though, and today we learn that many of them will be filing for Chapter 11 bankruptcy, while the overarching MAG Group business restructures its debt and finds new ownership.
    While this is not the sexiest news story to happen in the motorcycle industry this year, it is certainly one of the most important and complicated. As such, we will try to break it down in a digestible way for you.
    Debt and the New Owners of MAG
    The first thing to understand is that MAG itself as company has acquired a massive amount of debt, and through the process that we are about to explain, MAG hopes to eliminate close to $300 million of debt off its books.
    The primary method for MAG to clear its debt is what is called a debt-for-equity swap. This basically means that the lenders that MAG owes money to will take an equity position in MAG. This means they are getting stock in MAG, paying for this equity with the money that MAG owes them.
    However, the amount of money that MAG owns is substantial, and it means that so much equity in MAG must be exchanged in order to pay off the loans that these lenders are effectively becoming the new business owners of MAG.
    As such, these new owners are Monomoy Capital Partners, BlueMountain Capital, and Contrarian Partners, and they will lead the new owners group for MAG and its house of brands, implementing their own new Board of Directors for MAG, which will surely appoint new leadership to MAG and its holdings.
    Chapter 11 for Brands
    Not all of MAGs debt will be converted into equity for the companys lenders, however. This is presumably because the amount of money owed exceeds how much money MAG is worth on paper.
    Therefore, many of MAGs holdings are filing for relief under Chapter 11, Title 11 of the US Code better known as Chapter 11 bankruptcy.
    The companies filing for Chapter 11 are the following: Renthal Americas, Tucker Rocky, Performance Machines (which includes Roland Sands Design), Vance & Hines, J&P Cycles, Velocity Holdings Company, Velocity Pooling Vehicle, DFR Acquisition, Ed Tucker Distributor, Kuryakyn, MAG Creative Group, MAGNET Force, Motorcycle Superstore, Motorcycle USA, Motorcycle Aftermarket Group, Mustang Motorcycle Products, Ralco Holdings, and Rally Holdings.
    Chapter 11 filings give fairly large ranges of debt declaration once you get beyond the million dollar range, and there are several of MAGs holdings filing in the $100 million to $500 million range.
    However, taking the smallest amounts possible into account, the MAG companies are filing for a combined amount in excess of $872,650,000. This means that real figure is likely above the $1 billion mark.
    By having these companies file for protection under Chapter 11, the new owners of MAG will be able to more rapidly turnaround the companys overall business, and return to profitability.
    It is not clear at this time how much of this near-billion dollar debt is owed to MAGs new financial owners, though we imagine it is a considerable amount.
    In the Transition
    In order to finance these companies through their bankruptcy proceedings, MAG has secured $135 million in what is called debtor-in-possession (DIP) financing.
    DIP financing is money lent to a company pre-bankruptcy, and is typically used to continue normal business operations while the bankruptcy works its way through the legal system.
    It should be noted that usually DIP loans like this are given with very strict provisions on how the money can be used. It is important to note too that DIP financing is debt that is senior to any other debt, that is to say, it must be paid back first during any refinancing or bankruptcy arrangement.
    Coming Out the Other Side
    MAG insists that it will be business as usual for the companys employees, customers, and vendors. For the most part, that seems to be true. Undoubtedly, MAGs new owners will change the companys business focus and operations, in order to ensure profitability post-bankruptcy.
    On a more macro scale however, MAGs financial difficulties should be seen as a bellwether on the state of the American motorcycle industry. With only a handful of weeks left in the calendar year, we can surely expect to hear Q4 and annual reports that show motorcycle sales in decline.
    Asphalt & Rubber is predicting an industry contraction of roughly 7% for 2017 in the USA, which is noticeable after the relatively flat past years of 2015 and 2016.
    With sales down, companies struggling, and the motorcycle media landscape completely up for grabs (two titles of which were under MAG ownership), the curse may you live in interesting times certainly seems to apply.
    Obviously this is an evolving situation in the US motorcycle industry. We will file additional reports as more information becomes available

  9. 9 Tim Nov 16th, 2017 at 4:28 pm

    Ok Neigh sayers I cannot let this one slide. All Vendors are paid and will be paid, Mag and TR will have new owners after this is over and will be stronger than ever. The Management have made these a high priority. and for you all that do not understand the different types of bankruptcy I suggest you go to a website and learn about them while you are sitting in your mommy’s basement in your underwear typing about stuff you have no clue
    Good Day

  10. 10 58_pan Nov 16th, 2017 at 6:51 pm

    In the April issue of American Motorcycle Dealer there’s a multi page article in which they state how everything is great, “we have strong cash flow generating abilities”, some 8 months later they file for chapter 11 and say that everyone will get paid. I totally believe them…

  11. 11 GUNK Nov 16th, 2017 at 9:36 pm

    What a shame and perhaps a sham. Some of these companies have had great products and great
    reputations over decades of business. And gradually stock traders have aquired one of them after another as folks retired or sold the bizz due to age, health etc. It appears as though these same
    rich stock market types simply aquire anything They think will make Them rich, while never putting in
    an ounce of work in the bike industry or having much passion for the m.c. industry. Which most of
    these businesses had when They were smaller independent companies.No doubt the employees who
    built these companies to greatness over years and years of passion ,pride and hard work will be the first to lose. probably both jobs and pensions in the so called restructuring. Much like The Sears debacle going on in Canada at present. Never ending growth, aquisitions and general greed at the
    top has an amazing knack for screwing up decades of success. Good luck to all the employees and Their families who have actually made these independent companies what they were before they were aquired by the greedy.

  12. 12 CW Nov 16th, 2017 at 9:54 pm

    Gotta wonder what this means for the future of the industry. The distributor model seems frankly outdated and I wouldn’t be surprised to see fresh mgmt seek to cut down on the overall workforce and possibly expand the inside sales network. I do wonder where $300 million in debt came from, new warehouse and office construction? C-suite salaries?

  13. 13 Industryguy Nov 17th, 2017 at 12:49 am

    They will probably do the same thing Custom chrome did. Not pay their vendors. Or, if the vendors do get paid they will get paid with products that TR has in stock from other vendors that have not been paid for.

  14. 14 David King Nov 17th, 2017 at 9:43 am

    This is a Private Equity business plan in action.

  15. 15 Shanedrives Nov 17th, 2017 at 9:57 am

    Calif Phil, where’d you get that write up/article? I’d like to learn more about the author/company/whoever. They seem to have a good finger on the pulse of the industry and I’d like to start following them much like Cyril’s blog. Thanks. Shane P.s. I’d contact you if I could but have no other way to reach out to you.

  16. 16 Shanedrives Nov 17th, 2017 at 10:01 am

    GUNK–bingo. Spot on. This seems true in any venue of business…….unfortunately.

  17. 17 highrpm Nov 17th, 2017 at 10:04 am

    hey, timmy in the basement,
    it’s called “trickle up economics.” in privatizing the economy the rich get richer while the poor get poorer.

  18. 18 highrpm Nov 17th, 2017 at 11:25 am

    thx califphil for going “beneath still waters.” so the hard cold truth appears some big name after market brands are in real trouble financially. fearing that those brands will suffer even more damage in publicly naming names, the bankster trickery hides the well known names under the umbrella name of the big private equity fund. knowing that most of us isurfers won’t take the time to look further.

    cyril, glad you didn’t sell your brand to the rentiers.

  19. 19 USAYGO Nov 17th, 2017 at 11:30 am

    @ GUNK, well said.

  20. 20 Boss Hawg Nov 18th, 2017 at 10:16 am

    Venture Capitalist (VC) at their best. Buy great companies and run them in the ground financially. File bankruptcy and put it up the wazoo of anybody they can.

    Seen this time after time in the mattress industry whereas perfectly good sub-“S” brands are doing perfectly well making great merchandise and a good profit, so good in fact that the VC’s buy them and then completely run them in the ground sucking -out every last dime they can and then file for bankruptcy protection….Good example…HH Greg and Mattress Giant…both were bought and owned by the same VC….Mitt Romney/Bain Capital ! Same applies the MC industry.

    The top-heavy bean-counting VC’s skim the profits and fatten their pockets while the small guys will never get paid more than ten-cents on the dollar…if that without secured credit lines from groups such as MAG !

    My 2 cents.

    BOSS HAWG

  21. 21 Ken Nov 20th, 2017 at 9:49 am

    As a small vendor of MAG (J&P) for 20+ years I’m watching this very carefully. This seems reminiscent of the Custom Chrome fiasco, but we’ll watch and remain optimistic for now. Such a shame, John Parham must be rolling in his grave to see what has happened to his company since it was acquired by MAG.

  22. 22 larry coleman Nov 20th, 2017 at 10:07 am

    Two scenarios come to mind that give me pause: Custom Chrome and Mister Gasket

  23. 23 Anton Nov 20th, 2017 at 12:12 pm

    @HD Rider You’re an idiot. Way to have compassion for these brands’ employees that could potentially get screwed.

    @califPhil Where did you copy that article from?

    @Ken MAG didn’t steal J&P Cycles from John. It was his decision to $ell.

  24. 24 Pat h Nov 20th, 2017 at 9:50 pm

    For years it’s been a ongoing joke when MAG got hold of a company

  1. 1 flatware set service for 12 Trackback on Nov 19th, 2017 at 4:35 am
S&S
S&S
Thrifty Rent-A-Car System, Inc.
Affliction Holdings, LLC

Socialize

Facebook Google+ Twitter