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Iron Horse Motorcycles has creditors at the doorSave 25% off all closeouts at RideGear.com! Enter coupon code: 25CLOSEOUT at checkout.
A group of disgruntled creditors have petitioned to have Fort Worth-based American IronHorse Motorcycles forced into involuntary bankruptcy for failing to make any payments since January, their attorney confirmed Tuesday.
Chief Executive R.B. "Buck" Hendrickson declined to comment on the filing but said Fort Worth investors are negotiating to buy the maker of $40,000 V-twin custom bikes. An announcement may be made within three weeks, he said.
"We're just trying to keep jobs in Fort Worth, carry on the name and build a good motorcycle," Hendrickson said. "We are going to find the money, and we're going to get it turned around."
Hendrickson declined to say how much IronHorse owed, how many motorcycles were produced in 2007, how many people were still employed or whether IronHorse was behind on rent to the city of Fort Worth, which owns its Blue Mound Road plant. On Feb. 6, IronHorse Chairman Dwayne Moyers informed note holders that the motorcycle maker had ceased production and would not likely resume until the assets are sold to a new investor.
A Minneapolis research firm, Power Products Marketing, estimated that production dropped from 3,000 in 2005 to 2,000 last year. Employment at the Blue Mound Road plant has dropped to fewer than 30 from a peak of 470 several years ago, according to one source, who declined to be identified because of his involvement with the company. "Unfortunately, our sales of motorcycles to dealers did not reach projections, and our available financing was insufficient to pay interest on your note(s) in January 2008," wrote Moyers, who said that an investment banker had been hired to help find a buyer for the company.
Moyers also said that IronHorse was in breach of its credit agreement with Textron Financial Corp., a unit of Textron Corp., which also owns Bell Helicopter. A spokeswoman for Textron said she was unable to make a comment late Tuesday. Hendrickson declined to say how much Textron was owed.
Troy Phillips, the Dallas attorney representing the individual creditors, said they had invested in notes ranging from $30,000 to $120,000 that could later be converted into stock. His clients lent IronHorse roughly half of the $1.5 million raised from such investors.
Those notes were due on Dec. 31, 2006. But when IronHorse failed to pay them off, the company paid default interest at a rate of 14 percent until this January, Phillips said.
"My clients want to force a reorganization or a liquidation supervised by the court -- and not at the whim of Textron," he told the Star-Telegram.
Joe Delmont, a consultant to Power Products Marketing and a former contributing editor to Dealernews, a motorcycle-industry magazine, said IronHorse and other manufacturers, including industry leader Harley-Davidson, have fallen victim to a shaky economy.
But he said IronHorse has also suffered from poor decision-making resulting from turnover in the executive suite. IronHorse has had four chief executives since investors removed the company's founder, Bill Rucker, in 2003."It's been a revolving door at the CEO's office, and none of those hires were motorcycle guys or even production guys," Delmont said. "Each changed the company 180 degrees. How did these private-equity people think they could succeed? It's just been chaos."
Moreover, the company has been extraordinarily secretive, Delmont said. "They wouldn't disclose warranty claims, so it's hard to know reliability. My feeling is that if the claims were low, they'd tell us."
Although he declined to disclose any figures, Hendrickson asserted that warranty claims have dropped in recent years. "Dealers say it's the least-troublesome bike on the market," he said.
A Utah dealer said he bought 20 IronHorse motorcycles in October but does not dare sell them because no one returns his calls about warranty coverage.
"Not one of them is running. They all came in with dead batteries," said Tony Emanuele of Bikers World US of Hurricane, Utah. "They never came out to show us how to service them.
"I am paying more than $4,500 a month in financing but I won't sell any -- I don't want to rip off a customer."
Hendrickson said Emanuele was a relatively new dealer and that his problems were being handled.
It's not clear whether the situation will change under Jeff Long, the new sales director named Tuesday, said an Arkansas dealer who has been so wary of the company's fortunes that he didn't buy any of the 2007 models.
"Some dealers have had relative success with IronHorse, others are grumbling," said Rodney Roberts, owner of Rodneys' Cycle House of Little Rock. "A lot of them are frustrated because they're in limbo and don't know how it's going to shake down."
But the CEO is certain that IronHorse has a future.
"I was brought 17 months ago to turn IronHorse around," said Hendrickson, who described himself as a former GM and Chrysler executive with 25 years' experience who has worked to revive distressed companies over the past 13 years. "The company is going to be here for a while."
Star Telegram.com
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