Finances steal Titan thunder By Max Jarman The Arizona Republic
azcentral.com
Finances steal Titan thunder
By Max Jarman
The Arizona Republic
July 28, 2000
Highflying Titan Motorcycle Co. of America is cruising precariously near the
brink. The company has been unsuccessful in its search for new capital and
may have to file for Chapter 11 bankruptcy protection or liquidate,
according to recent Securities and Exchange Commission filings.
The company, whose $50,000, high-testosterone products have been
featured on the cover of Playboy magazine, is in danger of losing its listing
on the Nasdaq Small Cap Market, not to mention its suppliers and dealer
financing.
The Phoenix company says it plans to lay off 25 percent of its workforce, or
about 50 employees, and sell or close distributorships owned by the Keery
family, which controls Titan. The dealerships owe the company $600,000,
which may be uncorrectable, according to the filings.
Titan had been seeking a replacement for its credit line from Wells Fargo
Bank that expired in April. The company announced July 14 that
negotiations with two possible new lenders had fallen through and the
company had been forced to seek an extension until Sept. 11 on the Wells
Fargo loan. Terms of the extension restrict the company's borrowing; require
it to implement profit improvement and asset reduction plans; and hire an
investment banker to try to sell the company.
If a new credit line can't be arranged, Titan said it will be forced to sell, wind
down its business or file for reorganization. Meanwhile, the company said
that it is being pressured for payments from trade creditors and that it is
becoming increasingly difficult to obtain parts to manufacture its high-end
custom motorcycles.
In addition, two companies that provide dealer financing, Deutsche Financial
services and Transamerica Commercial Finance Corp., are threatening to
cut off the company.
Phone calls requesting comments from company officials were not returned.
Titan was formed in 1994 by 24-year-old Patrick Keery, a
Harley-Davidson customizer, and his father, Frank, a retired electronics
industry executive.
It achieved critical success for its Legacy line of handmade custom
motorcycles that sold for as much as $50,000.
In 1998, the company showed a $237,000 profit on sales of $27.9 million.
In 1999, it succumbed to dealer pressure for a lower-priced product and
geared up to mass-produce a new line of bikes that started at about
$20,000.
But the new Phoenix line and an expansion into Europe proved the
company's undoing. Production delays on the new product combined with
expansion costs to produce an $8.1 million loss for 1999. Titan stock was
unchanged at 50 cents Thursday, down from a 52-week high of $3.75
recorded a year-ago. |
