In line with Autocar Professional’s assessment report (April 17, 2015) on Eric Buell Racing’s (EBR) bankruptcy and its subsequent consequences for both the parties (India’s largest two-wheeler company Hero MotoCorp and Eric Buell Racing), the latest official communication from Hero MotoCorp clarifies that the Indian firm will acquire ‘certain tangible and intangible assets’ of the insolvent North American motorcycle company under a new buyout of close to Rs 17.68 crore (US$ 2.8 million).
It can be recalled that Autocar Professional’s report over three months ago had quoted a senior industry veteran, who requested anonymity, as saying “Hero MotoCorp is expected to be quick enough in drawing up new plans of pursuing its growth in the international markets. It cannot be ruled out that the cash-rich company may step up and purchase 100 percent stake in Eric Buell Racing.”
Hero MotoCorp subsidiaries HMCL NA Inc and HMCL Americas Inc have entered into a settlement agreement with the receiver appointed by the Circuit Court, Wisconsin, USA for Chapter 128 Receivership filed by Erik Buell Racing Inc and Erik Buell LLC (EBR).
The official communication from Hero MotoCorp today states that “as per the settlement agreement, HMCL Americas Inc has agreed to acquire the ownership of certain tangible and intangible assets of EBR for a consideration of US$ 2.8 million (Rs 17.68 crore).”
The Hero MotoCorp statement continues, “The settlement agreement is, inter alia, contingent upon the approval by the Circuit Court; and the approval of the board of directors of Hero MotoCorp, authorising its joinder as a direct party to the Settlement Agreement on or before August 10, 2015.”
The performance of the Settlement Agreement will help Hero MotoCorp’s in-house research and development teams to accelerate development of certain consulting projects, including the projects EBR was executing for the company at the time of filing of the Chapter 128 Receivership. It is expected that the fully-finished yet delayed projects such as the 250cc sportsbike, the HX250R and the hybrid scooter model, the Leap will be the first two projects that would be pushed in their run-to-market process.
It is known that EBR was involved in 17 projects that were given by the Indian company. While it managed to deliver 12 of them (mainly facelifts of existing models), developments on the front of five crucial projects (all showcased at the 2014 Delhi Auto Expo) remained incomplete at the time when EBR had declared its insolvency. After completion of the deal, these projects will come under the proprietorship of Hero MotoCorp.
EBR Inc, in which the company has an equity investment, and EBR Inc’s subsidiary EBR LLC had ceased their operations with effect from April 15, 2015 and had filed for the Chapter 128 Receivership before the Circuit Court.