Viper cools engines
Motorcycle firm calls off IPO, works to retool financing
BY SHERYL JEAN
Pioneer Press
Viper Motorcycle Co. has just about run out of gas, but it plans to refuel and get back on track.
The small company last week withdrew a planned $9 million initial public offering of its stock and has stopped manufacturing its Diablo cruiser just months after starting production at its New Hope headquarters.
Instead, Viper is lining up private financing with new investors that it hopes will kick-start the company by securing production resources and erasing most of its debt, said John Lai, chief financial officer and co-founder of Viper. The details are still being worked out, but he plans to make an announcement within 30 days.
The deal likely will include an outside manufacturing contract for most production, with new protoypes to be made in New Hope, said sources close to the company who did not want to be named.
The company must do something fast to stay in business. Viper's debt level and losses have accelerated, while the IPO and production have screeched to a halt.
Viper ran up net losses of nearly $7 million — about equal to its total assets — from its inception in November 2002 through Sept. 30, 2004, according to filings with the Securities and Exchange Commission. It shipped 30 Diablo cruisers in late 2004 and sales totaled about $750,000 last year, Lai said.
Viper's struggles show the difficulties facing start-up companies trying to compete against well-known brands such as Milwaukee-based Harley-Davidson Inc. for a piece of the growing U.S. market for high-priced, powerful motorcycles. Upstarts need a lot of capital to cover high manufacturing costs and generate the sales volume needed to compete, say analysts who follow the industry.
"It's tough to think of many successful motorcycle manufacturers, with the exception of Harley-Davidson, in the past 50 years," said Ed Aaron, an analyst who follows Harley-Davidson for RBC Capital Markets.
Another local motorcycle maker, Excelsior-Henderson Motorcycle Manufacturing Co. in Belle Plaine, sped through about $100 million before going bankrupt in 1999. California-based Indian Motorcycle Co. went bankrupt in 2003.
Viper's private financing deal is "vital" to the company's future, Lai said. The financing would eliminate about 90 percent of Viper's $4 million of debt, he said.
The company also plans to name a new chief executive within 30 days to replace Clyde Fessler, who left in January.
"The company is going in a positive direction," said Chairman James Kramer, who's also an investor. He declined to detail the company's plans.
Back in June, Viper filed plans to sell 1.8 million shares of its common stock at $5 per share and 1.4 million warrants at 10 cents apiece. Viper planned to use the proceeds to repay more than $1.7 million in debt and to buy new production equipment.
The company scrapped the IPO because a new financial filing with the SEC would have delayed it 90 days, Lai said.
"By the time it approached Wall Street, the bloom was off the IPO," said Robert Van Den Berg, a company director and part owner of a motorcycle shop in Elk River. Trying to meet new financial and accounting disclosure requirements under the Sarbanes-Oxley law caused a number of delays, he said.
In addition to Viper, Integris Metals in Coon Rapids and Empi Inc., a St. Paul-based medical company, scuttled IPO plans in the past six months in favor of sweeter private deals.
Viper still faces a rough road.
"They're beautiful bikes," but they're pricey, said analyst Tony Gikas, who follows Harley-Davidson for Piper Jaffray in Minneapolis. Viper expected to put price tags of $20,000 to $30,000 on its motorcycles, compared with $20,000 or less for most Harley-Davidson bikes.
Viper has received about 300 Diablo cruiser orders since mid-2003, Lai said. It began manufacturing the cruiser last fall but stopped in January because of money problems, he said. None of its 16 employees were laid off.
The company continues to look ahead. It hopes to restart production of the Diablo cruiser and start making a chopper-style cruiser later this year, Lai said. Viper plans to introduce the chopper in March at the Donnie Smith Invitational Bike Show at St. Paul's Xcel Center.
Thursday, February 10, 2005
Friday, February 04, 2005
PORTLAND, Maine -- Mike Cullinan made a midlife course correction, breaking up with his girlfriend and buying himself a big Harley-Davidson motorcycle: a 620-pound Dyna Low Rider with a 1,450-cc fuel-injected engine.
Lots of Americans like 38-year-old Mr. Cullinan are getting motorcycles, whether to recapture their lost youth or pull through some kind of midlife crisis.
But the trend has its troubling aspects. Now, riders 40 and older are accounting for an alarming number of motorcycling deaths.
Safety experts suspect older riders with a lot of disposable income are buying more machine than their aging, out-of-practice bodies can handle.
Across the country, the annual number of motorcycle fatalities among 40-plus riders tripled over the past decade to 1,674 in 2003, while deaths among riders less than 30 dropped slightly to 1,161, according to the National Highway Traffic Safety Administration.
According to NHTSA, the average age of motorcyclists killed in accidents rose from 32 in 1994 to 38 in 2003.
"It's really kind of astonishing. The ages of these fatalities are so high. You would think it would be all of the young kids on those fast bikes, but it's not," said Carl Hallman, highway safety coordinator with the Maine Department of Public Safety.
The surge in deaths among older riders helped to push motorcycle fatalities higher overall. They jumped by nearly half during the past five years, from 2,483 in 1999 to 3,661 in 2003.
In Maine, 22 persons were killed on motorcycles in 2004, the highest number in a decade. In New Hampshire, 29 died, versus nine the previous year. In Vermont, there were 11 fatal crashes, more than in the three previous years combined. In all three states, riders in their 30s and older accounted for the most crashes.
"From a career standpoint, they have a little extra time and a little extra disposable income. The kids have grown up, so they're looking for hobbies," said Rae Tyson, a NHTSA spokesman who specializes in motorcycle safety.
As for why so many riders in their 40s, 50s and beyond are dying, big, powerful bikes appear to be part of the explanation. NHTSA data show that both engine size and deaths among riders with the largest class of engines rose during the past decade.
NHTSA figures also show that riders in their 30s and 40s who died were more likely than their younger counterparts to have been drinking.
In addition, safety experts say many older riders either are returning to motorcycling after many years or are trying it for the first time.
"They haven't ridden in 20 or 30 years, so their skills are rusty. Motorcycles have changed, and they're getting bigger motorcycles. And they're getting on without a refresher course," said Cathy Rimm, program director for Motorcycle Rider Education of Maine, a nonprofit organization that offers safety training.
Finally, safety officials point out that older riders' eyesight and reflexes are not what they once were.
"In our experienced-rider courses, we do take into account the way your body changes, that your reaction time will change and that your eyesight will change. There are changes older riders should make," said Mike Mount, spokesman for the Motorcycle Safety Foundation in Irvine, Calif.
Mr. Cullinan, a repair shop manager from Standish, had not ridden for 15 years, and his life underwent a big change when he broke off a relationship. He spent more than $18,000 on his black lowrider with chrome.
"I went for the largest bike I could handle, or that I hope I can handle," he said.
Though Maine and many other states require classes for new riders to get motorcycle licenses, there are no such requirements for a license holder who decides to get on a bike for the first time in decades. No state requires continuing periodic education, said Kathy Van Kleeck of the Motorcycle Safety Foundation.
Mr. Cullinan said his eyes were opened by the statistics. He has bought a helmet, which is not legally required in Maine, and is taking a refresher course this winter.
"I'm hoping I will learn something that'll make me safer," he said. "I'll be riding this spring and summer with my eyes open."
Lots of Americans like 38-year-old Mr. Cullinan are getting motorcycles, whether to recapture their lost youth or pull through some kind of midlife crisis.
But the trend has its troubling aspects. Now, riders 40 and older are accounting for an alarming number of motorcycling deaths.
Safety experts suspect older riders with a lot of disposable income are buying more machine than their aging, out-of-practice bodies can handle.
Across the country, the annual number of motorcycle fatalities among 40-plus riders tripled over the past decade to 1,674 in 2003, while deaths among riders less than 30 dropped slightly to 1,161, according to the National Highway Traffic Safety Administration.
According to NHTSA, the average age of motorcyclists killed in accidents rose from 32 in 1994 to 38 in 2003.
"It's really kind of astonishing. The ages of these fatalities are so high. You would think it would be all of the young kids on those fast bikes, but it's not," said Carl Hallman, highway safety coordinator with the Maine Department of Public Safety.
The surge in deaths among older riders helped to push motorcycle fatalities higher overall. They jumped by nearly half during the past five years, from 2,483 in 1999 to 3,661 in 2003.
In Maine, 22 persons were killed on motorcycles in 2004, the highest number in a decade. In New Hampshire, 29 died, versus nine the previous year. In Vermont, there were 11 fatal crashes, more than in the three previous years combined. In all three states, riders in their 30s and older accounted for the most crashes.
"From a career standpoint, they have a little extra time and a little extra disposable income. The kids have grown up, so they're looking for hobbies," said Rae Tyson, a NHTSA spokesman who specializes in motorcycle safety.
As for why so many riders in their 40s, 50s and beyond are dying, big, powerful bikes appear to be part of the explanation. NHTSA data show that both engine size and deaths among riders with the largest class of engines rose during the past decade.
NHTSA figures also show that riders in their 30s and 40s who died were more likely than their younger counterparts to have been drinking.
In addition, safety experts say many older riders either are returning to motorcycling after many years or are trying it for the first time.
"They haven't ridden in 20 or 30 years, so their skills are rusty. Motorcycles have changed, and they're getting bigger motorcycles. And they're getting on without a refresher course," said Cathy Rimm, program director for Motorcycle Rider Education of Maine, a nonprofit organization that offers safety training.
Finally, safety officials point out that older riders' eyesight and reflexes are not what they once were.
"In our experienced-rider courses, we do take into account the way your body changes, that your reaction time will change and that your eyesight will change. There are changes older riders should make," said Mike Mount, spokesman for the Motorcycle Safety Foundation in Irvine, Calif.
Mr. Cullinan, a repair shop manager from Standish, had not ridden for 15 years, and his life underwent a big change when he broke off a relationship. He spent more than $18,000 on his black lowrider with chrome.
"I went for the largest bike I could handle, or that I hope I can handle," he said.
Though Maine and many other states require classes for new riders to get motorcycle licenses, there are no such requirements for a license holder who decides to get on a bike for the first time in decades. No state requires continuing periodic education, said Kathy Van Kleeck of the Motorcycle Safety Foundation.
Mr. Cullinan said his eyes were opened by the statistics. He has bought a helmet, which is not legally required in Maine, and is taking a refresher course this winter.
"I'm hoping I will learn something that'll make me safer," he said. "I'll be riding this spring and summer with my eyes open."
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