The story of MV Agusta continues with even more interesting developments, as the Italian motorcycle manufacturer seems intent on buying back its shares from Mercedes-AMG, and recapitalizing with new investors.
Talking this week to Italy’s Il Giorno, MV Agusta CEO Giovanni Castiglioni said that he is “negotiating a buy-back of shares,” though that might be a task easier said than done for the Italian CEO
This is because MV Agusta’s current financial predicament is due primarily from the company’s massive debt accumulation, which now totals over €40 million.
To complicate matters further, some of that debt was secured by the involvement of AMG, and its investment contract stipulates that if AMG doesn’t own 20% or more of MV Agusta then the loaned sum is due immediately.
Thus, in order for Giovanni Castiglioni to fullfil his promise to buy back AMG’s shares in MV Agusta, he will need to find investors who are willing to cover the €15 million loan amount, and then invest the necessary capital to keep MV Agusta afloat.
Rumors from Italy and Germany suggest that Mercedes-AMG would prefer to buyout Castiglioni’s position in MV Agusta, owning it outright in the same way that Audi owns Ducati, but that Giovanni Castiglioni has deemed that a non-option.
The power struggle aside, MV Agusta has seen its revised business plan agreed to in Italian legal proceedings, which means that MV Agusta will massively reduce its business operations in order to return to profitable growth.
Under the new plan, MV Agusta will reduce its unit volume output from 9,000 units a year to a number between 6,000 and 7,000 motorcycles. It will also dramatically cut its R&D spending roughly in half, from €15 million to €7 million.
The racing budget from MV Agusta will also be cut, €4 million to €600,000, though that difference in spending will reportedly be covered by a third party, likely a team sponsor.
As you expect, all these reductions in production and racing budget means that MV Agusta will have to reduce its staffing size, to the tune of roughly 200 jobs. That, in itself, is an undertaking in Italy, with the way their labor laws work.
Time will tell as to whether Castiglioni can find a suitable business partner. The concern right now for brand enthusiasts is that the young CEO will be able to find not only an investing partner that is willing to take on MV Agusta’s financial needs, but also one that fits in with the brand’s ideals and long-term goals.
To that end, Castiglioni told Il Giorno that “we are interested in the quality of sales, immediately cash out the money to have liquidity. We want to go back to being the Ferrari of motorcycles.”
Source: Il Giorno