Published on May 8th, 2016 | by Daniel Sherman Fernandez0
MV Agusta Wants A Divorce From Mercedes-AMG
MV Agusta seems intent on buying back its shares from Mercedes-AMG, and recapitalizing with new investors. MV Agusta CEO Giovanni Castiglioni recently 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.
MV Agusta has seen its revised business plan 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. Time will tell as to whether Castiglioni can find a suitable business partner.