Exhibit 99.1
NEWS RELEASE Contact: Tom Armstrong
For Immediate Release 203/749-7174
or ta@cannondale.com
CANNONDALE COMPLETES AUCTION OF
BICYCLE AND MOTORSPORTS DIVISIONS
(BETHEL, CT -- March 21, 2003) Cannondale (BIKEQ.PK) today announced the results
of yesterday's separate auctions of its bicycle and motorsports divisions. The
auctions for the assets of both divisions were conducted under Section 363 of
the United States Bankruptcy Code at the Company's Bethel, Connecticut
headquarters, pursuant to the March 3rd, 2003 order by the Bankruptcy Court.
Cannondale filed a voluntary petition for chapter 11 protection in the U.S.
Bankruptcy Court in the District of Connecticut (Bridgeport Division) on January
29th, 2003.
After a vigorous auction, the assets of the Company's bicycle and motorsports
divisions are to be purchased by an affiliate of Pegasus Partners II, L.P.
("Pegasus"), subject to the approval of the Bankruptcy Court. The terms of the
winning bids were not disclosed. Cannondale's largest secured creditor, Pegasus
had agreed in late January to act as the "stalking horse" bidder in the sale. At
that time, Pegasus stated its commitment to working with current management and
operating the bicycle business as a going concern. Pegasus has indicated that it
does not intend to operate the motorsports division.
Cannondale's founder Joe Montgomery was pleased with the outcome of the auction.
"This is a huge step toward successfully realizing our three key objectives:
ensuring a quick emergence from chapter 11, restoring focus and adding resources
to the bike division so it can continue to thrive and prosper, and preserving
our employees' jobs in Connecticut and Pennsylvania." Besides its Connecticut
and Pennsylvania locations, the Company also operates subsidiaries in Europe,
Japan and Australia. Although included in the sale, the subsidiaries had not
been included in or affected by the chapter 11 filing.
Montgomery was also eager to thank the many groups who have supported Cannondale
through the chapter 11 process. "Our dealers, suppliers, customers and employees
have really stood by us, and we're extremely grateful." said Montgomery. "I'd
also like to thank the many state officials in Pennsylvania who have been so
cooperative and supportive, particularly the Governor's Action Team and the
Department Of Community And Economic Development. I'm confident that the senior
management team, led by Dan Alloway and Scott Montgomery, will continue to
uphold the culture and values that have made Cannondale a great company."
Scott Montgomery and Alloway voiced their eagerness to move forward as
Cannondale begins to emerge from bankruptcy. "The successful auction and the
speedy resolution now enables us to focus on bicycle delivery and service as we
enter the busy spring selling season," said Alloway, Cannondale's Vice President
of Sales and European Operations. Scott Montgomery,
Cannondale's Vice President of Marketing, concurred. "We're happy to be able to
concentrate on the bike business again, and we're feeling great about the future
with Pegasus as our partner," said Montgomery. "We're producing and shipping
2003 product every day, and the 2004 line is loaded with new innovations."
David Uri, a Partner at Pegasus explained its bid for Cannondale. "Cannondale is
one of the world's premium bicycle brands," said Uri. "The fact that the bike
division has remained profitable despite the distraction and costs of its now
closed motorsports business clearly demonstrates the strength of the brand. Our
job now is to let Cannondale concentrate on what Cannondale does best -
designing, manufacturing and marketing lightweight, high-performance bicycles
for the specialty retail market."
Jeffrey R. Manning of Legg Mason Wood Walker, Inc, the Baltimore, Maryland-based
financial firm that assisted Cannondale in the sale process, stated that there
was a great deal of interest in the Company, despite the uncertain economy and
events in the Middle East. "Cannondale is an internationally recognized brand,
the bike business is profitable, and has always been profitable," Manning added.
"With the ability to focus exclusively on its bike business, the Company should
do very well as it emerges from bankruptcy."
The auction marks Cannondale's continued rapid progression through the chapter
11 process. Earlier this month workers returned to the Company's Bedford,
Pennsylvania bike factory to resume production of bicycles and cycling
accessories, ending a temporary work furlough. It is expected that Cannondale
will officially emerge from chapter 11 within the next several weeks, following
the Court's anticipated approval of yesterday's auction and the subsequent
closing of the sale. Elizabeth Fox of Fox Racing Shox, Chairperson of the
Official Committee of Unsecured Creditors, stated that in connection with the
auction process, the Committee reached a favorable agreement with Pegasus and
fully supports the sale to Pegasus. Fox commented that she hoped this agreement
would pave the way for the continuation of the supportive relationship between
Cannondale and its vendors.
Cannondale is the world's leading manufacturer of innovative, high-performance,
lightweight aluminum bicycles, successfully marketing its bicycles and cycling
accessories in more than 70 countries worldwide.
Pegasus Capital Advisors, L.P., based in Greenwich, Connecticut, is a private
equity investment firm with approximately $800 million under management.
ABOUT LEGG MASON WOOD WALKER, INCORPORATED.
Legg Mason Wood Walker, Incorporated is a wholly-owned subsidiary of Legg Mason,
Inc. (NYSE: LM), a Baltimore, Maryland-based holding company that provides asset
management, securities brokerage, investment banking, and related financial
services through its subsidiaries.
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