Cycle News

VOL. 53 ISSUE 21 JUNE 1, 2016 P93 is quite another, especially an important brand renowned for its engineering. It's not so easy. I think I have some engineering competence, because I grew up in the company, and I can re- build a small 125cc engine all by myself, but that's not the same as having a full background in engineering. MV Agusta is a complex company; we're not making shirts or shopping carts, but high-tech products. Anyway, we restarted it with a serious re- structuring plan, and we invest- ed the 80 million Euro it needed, part of it with our own cash and part of it I leveraged. So then thanks to the fantastic products our engineers developed, we started growing quite significant- ly, and that led to the second in- jection of cash in October 2014, which was for 20 million Euro when Mercedes-Benz bought 25 percent of the company via their AMG subsidiary. Where did you source that stopgap 80 million Euro in capital from, before Mercedes bought in? Firstly with our own cash and; secondly, by leveraging our sup- pliers who were giving me longer payment terms. If you get 100 days of agreed credit before you pay any invoice for parts, and we then buy eight million Euro of parts per month, that means 24 million Euro has been financed by them, which allows you to build the bike you've developed and launched in the market- place, and get the money for it in from your distributors, which allows you to pay the suppli- ers, and make a profit. With our great range of new models, MV Agusta duly grew from selling 2,000 bikes in 2009 to 7,500 in 2013, but still needed more capital to continue expanding. However, we've now used up our cash, and the leverage with suppliers is maxed out, so now we need fresh cash to make the increased numbers of bikes the market is asking for. That was 2013, but how many bikes did you produce in 2014 and 2015? 7,600 in 2014, and 8,500 in 2015. All sold, or did you have any left in stock? Up to and including 2014, we had zero stock. The problems for the company came in 2015, when we ran into cash flow problems. But for Mercedes-Benz to purchase 25% of the equity in a privately owned Italian compa- ny, when they did so in October 2014, your balance sheet must have looked very good? It did, very much so. Okay, this was a company that still needed cash to keep grow- ing, but it's a capital-intensive manufacturing company, and if you want any such firm to grow, you have to put in capital to get the rewards via the profits that result. I've heard people say yes, but look at Ducati, look at BMW; they don't need cash injections to survive and prosper. But BMW Motorrad is owned by BMW, Ducati is owned by VW Audi, so cash isn't an issue. I own a small company with unique products in each different market seg- ment that we compete in, which is fighting in a marketplace where people shoot at me with a bazooka, and I shoot back with a peashooter. Boom! Ducati shoots a Monster at me with a bazooka, and I shoot back the new Brutale 800, which is actu- ally much better than the new Monster, according to magazine comparison tests, but I'm using a peashooter to fire it. It's very "I MEAN, WHO CARES ABOUT THE DTM? REALLY, IT'S A FINE RACE FOR THE GERMAN MARKET, BUT NOBODY ELSE SEES IT."

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