After a series of bad news, the Accell Group finally has some good news to offer: One of Europe’s key bicycle manufacturers has managed to reduce its debt by €600 million through a binding recapitalization support agreement with a majority of its shareholders, brightening its business outlook.
It’s no secret that the last two years have been very challenging for the bicycle industry, with an overstock glut raising operational costs significantly and hard discounting eating into the margins. As one of Europe’s biggest bicycle manufacturers with bicycle brands such as Ghost, Haibike, Lapierre, Koga, Raleigh, Sparta, Babboe and Winora operating under its roof and XLC as its own parts and accessories brand the Accell Group naturally was not spared from these issues. The large-scale recall of Babboe cargobike did not help either, and as a consequence, the debt has run up to a staggering EUR 1.4 billion, according to the company’s press release – more than the annual turnover. No wonder the rating agency Fitch downgraded the Accell Group repeatedly.
As a first step, the Accell Group has taken focused actions to bring down cost levels and increase efficiency, streamlining operations in fewer facilities and cutting staff. Since July, the newly formed top management of the company has been negotiating intensively with relevant stakeholders, including its shareholders, creditors and banks, looking for a deleveraging plan intended to result in a sustainable capital structure for the business. Now, a majority of its financial stakeholders support a binding recapitalization support agreement. This transaction is to be implemented in full by the first quarter of 2025 and provides Accell with a sustainable financial structure, a strengthened liquidity position and an ability to invest in the business’s future.
As part of the plan, the debt is reduced by 40 percent or roughly EUR 600 million to EUR 800 million. The transaction also provides for additional cash funding to the business amounting to approximately EUR 235 million, and the maturity of the group’s recapitalized debt is extended to 2030. According to the press release, inventory levels have been decreasing and the Accell Group expects its stock in e-bikes and bicycles to return to normal levels by the end of the year. As for parts and accessories, this has already been achieved by the end of the third quarter according to the Accell Group. These are some positive signs in terms of overstock, and due to the still positive outlook for cycling and demand for bicycles and e-bikes in particular, Accell Group’s top management is confident they have found a turn for the better.
Tjeerd Jegen, CEO: “The agreement confirms our key stakeholders’ confidence in the business which supports the optimistic long-term outlook of the bicycle market and the role the Accell Group can play in capitalizing on this. To accelerate our business strategy and weather the continued challenging market circumstances, we also needed to adjust our financial structure. Upon successful implementation of the recapitalization, we will have a revised, fit-for-purpose capital structure and increased liquidity, allowing us to further implement and accelerate the One Accell strategy. We can now fully focus on the future as we continue to innovate and look forward to launching new models of our unique and iconic brands together with our suppliers and dealers.”
Gijsbert de Zoeten, CFO: “I am pleased that we can announce this agreement today, leading to a materially deleveraged Accell Group. We are grateful for the constructive approach that our shareholders, debt holders and banks have shown in reaching this agreement. With their support, we will have a sustainable capital structure for Accell for the future. This shows the confidence all parties have in our business and strategy.”
