MV AGUSTA IN CRISIS
CEO and owner, Giovanni Castiglioni reveals streamlined new direction for troubled firm
MV Agusta will have to get smaller in order to survive over the long term, and that process has already started according to boss Giovanni Castiglioni. The Italian marque is to undergo a complete restructuring as it seeks the financial backing it needs to stave off liquidation.
Rumours that production had ceased at the factory first began to surface in February, with local sources and insiders suggesting that much of the workforce had been sent home as management sought increased investment from its current partners, or to find new investment elsewhere. The factory phones went unanswered, and no staff would go on the record to confirm what was happening.
But following the firm’s first public admission this week that all was not completely well at MV, Castiglioni spoke exclusively to MCN about the situation, explaining that the company are involved in a ‘continuity agreement’ with creditors, and that a complete restructuring of the operation would reduce costs and, combined with money from new investors, would enable the company to weather the storm.
In essence, the company has run out of cash and the debt it currently carries is being moved and renegotiated. In the short term MV have been granted a ‘payment holiday’, while the management seeks fresh investors and new repayment terms. A deadline of the end of 2016 has been set for everything to be resolved, but MV boss Castiglioni expects a resolution to come sooner.
Castiglioni told MCN: “We had a plan to increase production volumes at MV Agusta to between 15,000 and 20,000 units a year, and now we have decided that’s not achievable.
“We are going to concentrate on our core business, which is to build premium bikes such as our F4 superbikes, and fast tourers including the Turismo Veloce 800 – but all of this will be with smaller volumes.
“Our current liquidity problems have come from our spending on research and development on new models over the past few years. We have expanded the model range a lot. Our research has now shown customers want a different type of MV and that is at the high end of motorcycles, which we will be focusing on for the future.
“We will be restructuring the debt and seeking new investors. Nothing has been signed at the moment for new investment, but the company will be carrying on while the search continues.”
The rumours surrounding MV over recent weeks suggested production lines had completely stopped and staff had been laid off but Castiglioni poured cold water on these reports, explaining that: “Production has not stopped, but production lines have been slowed down for some months now and we have lost a lot of production because of this. We have been concentrating on selling off the inventory of bikes to raise money.”
German car company AMG - a division of Mercedes-benz and parent company Daimler - is a 25% shareholder in MV Agusta, and there have been unsubstantiated rumours that AMG were willing to either sell off their shares or take a larger stake in MV, on the condition that Castiglioni stepped aside.
“These are not completely true,” says Castiglioni. “I cannot speak for Mercedes or AMG but as far as I know there was no interest in them being a motorcycle producer. Losing them as a minority shareholder is not a problem to me. I want to carry on running MV and I’m not interested in selling the company.”
‘We are going to concentrate on building premium bikes but with smaller volumes’
While Castiglioni won’t be drawn on details over how many bikes the company will aim to sell each year he says it will be fewer than in 2015, which he confirmed totalled 8500 units.
So which models are likely to suffer in this focused restructure? With Castiglioni suggesting that the highend models would form the bedrock of the business going forward, the implication is that the current 20bike range will be reduced to a more streamlined selection, with the F3 675 supersport machine, Brutale 675 naked, and the base models in the rest of the 800 and F4 range likely to be phased out in line with stock running out. Time will tell if a deal can be reached that offers the firm more security, but it seems the MV rollercoaster ride isn’t over yet.