Mitteldeutsche Fahrradwerke AG
(MIFA), a leading bicycle maker based in Germany has not only called off its business
deal with India-based Hero Cycles (part of OP Munjal Group) but has also filed
for insolvency after it reported continued losses in its business.
Also, the District Court of
Halle (Saale) ruled on October 7 to suspend the self-administration of MIFA with
immediate effect. This ruling was communicated to the company. At the same
time, the court decreed a preliminary insolvency administration. Prof. Dr.
Lucas F. Flöther, the administrator of the inso At the same time, the court
decreed a preliminary insolvency administration. Prof. Dr. Lucas F. Flöther,
the administrator of the insolvency proceedings under self-administration that
were approved on September 29, is to be the preliminary administrator with
power of disposal.
Dr. Stefan Weniger, CRO at
MIFA, commented on the court's ruling: "We are looking forward to Continuing
to work together in a trusting and constructive manner with the administrator,
the company's boards, the preliminary creditor committee and all of MIFA's
other stakeholder groups. The instrument of a preliminary insolvency
administration is an appropriate tool to ensure continuity and stability for
our customers and suppliers, too. The district court also based its ruling on
The company maintained that
its production and operating business continue to run on an unaltered basis.
Thomas Mayer, MIFA's CEO since October 1, 2014, commented that his customers as well as our employees are
supporting MIFA. “We are currently receiving extremely positive signals from
important major customers regarding orders for the 2015 cycling season. We have
just won a further important large-scale order over the past days. The positive
trend on the market side forms a good basis for the company's forthcoming
industrial reorganisation," he said.
Late September 2014 the
company had filed an application today to open insolvency proceedings in
self-administration with the relevant district court of Halle (Saale) to enable
it to continue the restructuring process of MIFA itself.
With regard to the agreement
with Hero Cycles, it was observed that “An essential part of the basic
agreement that was concluded on 22 August with OPM Global B.V., a subsidiary of
the Indian bicycle manufacturer Hero Cycles Ltd. .....to financially
restructure MIFA could not be implemented as pledged.” In view of this, the
board of management of MIFA decided to apply for insolvency proceedings in
self-administration to continue the restructuring process of MIFA on its own
and ensure trouble-free continuation of operative business.
MIFA, headquartered in
Sangerhausen (Saxony-Anhalt), is Germany's largest manufacturer of bicycles in
terms of sales. The company offers a comprehensive range of bicycle models
spanning entry price through to premium end. The components included in bicycle
production are sourced from renowned suppliers and assembled at the company's
sole production site in Sangerhausen, Germany. Business in this context focuses
on product-related order production for major retail chains and OEM (Original
Equipment Manufacturer) customers. E-bikes have also been manufactured since
2011. MIFA produces e-bikes for automotive manufacturer smart, manufactures for
the Deutsche Post bicycle fleet, and supplies communal lending systems with
multi-user vehicles, among other customers. In 2012, MIFA acquired Berlin-based
e-bike manufacturer Grace and Bavaria-based cult bicycle forging company
Steppenwolf, thereby intensifying its sales activities via specialist dealers.
MIFA sells its bicycles predominately on its domestic German market. Further
sales markets are located mainly in Western Europe. Both the operating business
and administration and logistics are managed at the company's sole production
location in Sangerhausen.
MIFA has been a listed company
since May 2004. Its shares are traded in the Prime Standard of the Regulated
Market of the Frankfurt Stock Exchange. MIFA’s corporate bond is listed in the
Entry Standard for bonds on the Frankfurt Stock Exchange.
Hero Cycles was to buy a
controlling stake in MIFA and had plans to introduce its products in India and
also acquire the know-how of electric cycles. The Pankaj Munjal controlled Hero
Cycles had been in parleys with the MIFA representatives since early 2014 for a
buy out. The company had signed a basic
agreement relating to the financial restructuring of MIFA a couple of months