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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): June 30, 2000
Commission File Number 0001071113
LYON INVESTMENTS B.V.
(Exact name of registrant as specified in its charter)
THE NETHERLANDS
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Daniel S. Lynch
Lyon Investments B.V.
Wilhelminaweg 8
6951 BP Dieren, The Netherlands
(Address of principal executive offices, including zip code)
Telephone: (31 313) 429 437
(Registrant's telephone number, including area code)
This Report contains 3 pages.
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ITEM 5. OTHER EVENTS
DERBY Q2 RESULTS; NEGOTIATIONS WITH SENIOR LENDERS REGARDING WORKING CAPITAL
FACILITY; SALE OF STURMEY ARCHER
DERBY Q2 RESULTS
Derby Cycle Corporation (the "Company") announced today (Wednesday August 16,
2000) that for the quarter ending July 2, 2000, net revenues, adjusted for
comparable foreign exchange rates, grew 11% over the second quarter, 1999. For
the six months ending July 2, 2000, net revenues, adjusted for comparable
exchange rates, grew 13% over the same period in 1999. For the quarter, EBITDA
was $12.7 million, down from $13.8 million in 1999. However, adjusted for the
impact of foreign exchange translation and strategic investments made at the
group level, EBITDA increased from $13.2 million in 1999 to $14.6 million in
2000, an increase of $1.4 million.
NEGOTIATIONS WITH SENIOR LENDERS REGARDING FACILITY
The Company indicated it is negotiating with lenders under its Credit Agreement
to increase its line of credit and to amend certain financial covenants in the
Credit Agreement. In addition, the Company is exploring other financing options
including raising new equity and/or debt capital. No assurance can be given
that the Company will be successful in meeting these objections. The Company
will defer its regular second quarter analyst call until sufficiently
substantive developments emerge relative to these negotiations. The Company is
seeking to increase its revolving credit facility in order to continue the
Company's recent revenue growth and to support the Company's higher sales
levels.
In related news, the Company announced today that it received a waiver from its
senior lenders of a breach of the Company's aggregate indebtedness covenant and
an amendment of the covenant to exclude subordinated debt from the determination
of aggregate indebtedness permitted under its senior facility. The Company
converted a $7 million bridge loan due August 1, 2000 from its equity sponsors
to a long term junior subordinated note due 2008 in connection with the waiver
and amendment. "The conversion of the sponsors' bridge loan to long-term debt
represents their long-term commitment to the Company and their continued support
of our business plan," said Chief Executive Officer, Gary Matthews.
DERBY SELLS STURMEY-ARCHER BUSINESS
The Company also announced that it completed the sale of Sturmey-Archer, a non-
core brakes and automotive parts business to Lenark Limited . The sale was a
follow-on transaction to the Company's sale of the land underlying Sturmey-
Archer in late 1999 to Nottingham University. "This was an exceptional
transaction for us as we were able to sell an under performing, non-strategic
asset for cash, avoid relocation costs and eliminate negative annual operating
cash flows," said Mr. Matthews.
Sturmey-Archer, which employs over 300 people, manufactures bicycle gears,
brakes, automotive safety components and other engineering components. The sale
is the result of a comprehensive review by Derby of the Sturmey-Archer business.
"Business has been extremely difficult for Sturmey-Archer over recent years,
with sales and profit margins being squeezed, in large part due to the strength
of sterling," commented Mr. Matthews.
"The vast majority of Sturmey-Archer sales have been to the export market, with
just a few per cent going to sister company Raleigh U.K., and the links between
the two U.K. companies have clearly become less significant.
"The component and fabrication business does not fall within our business plan.
So I am delighted for the Sturmey-Archer workforce that Lenark has decided to
buy 100% of the Sturmey-Archer business as a going concern.
"We have no plans to reduce our commitment to Raleigh, which is the U.K.'s
leading bicycle brand, and which we continue to strengthen," said Mr. Matthews.
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Lenark will maintain the Sturmey-Archer brand name, but the gear and brake
manufacturing plant will be moving to a new location which is planned to be in
the Nottingham area. Lenark has advised the Company that the terms and
conditions for employees will be unaffected.
For further information, please contact:
Daniel S. Lynch
Chief Financial Officer
Derby Cycle Corporation
Tel: (203) 356-3681
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned, thereunto duly authorized.
Lyon Investments B.V. Date
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\s\ Simon J. Goddard
By: ______________________________ August 16, 2000
Name: Simon J. Goddard
Title: Managing Director
