From an American Suzuki Motor Corporation press release:
AMERICAN SUZUKI MOTOR CORPORATION (“ASMC”) ANNOUNCES RESTRUCTURING
AND REALIGNMENT TO FOCUS ON MOTORCYCLES/ATV AND MARINE DIVISIONS
ASMC to wind down and discontinue new automobile sales in continental U.S.
Consumers will be protected and all warranties will continue to be fully honored
BREA, Calif., Nov. 5, 2012 – American Suzuki Motor Corporation
(“ASMC” or “the Company”), the sole distributor in the continental
United States of Suzuki Motor Corporation (“SMC”) automobiles,
motorcycles, all-terrain vehicles and marine outboard engines, today
announced that it plans to realign its business to focus on the longterm
growth of its Motorcycles/ATV and Marine divisions. Following a
thorough review of its current position and future opportunities in the
U.S. automotive market, ASMC will wind down and discontinue new
automobile sales in the continental U.S. The Company has determined the
best path to achieve this realignment in an efficient and orderly manner
is to restructure its operations under chapter 11. The case will be
filed in the United States Bankruptcy Court, Central District of
California in Santa Ana.
Consistent with ASMC’s long history of standing by its products,
owners of Suzuki automobiles will be protected. All warranties will
continue to be fully honored and automobile parts and service will be
provided to consumers without interruption through ASMC’s parts and
service dealer network.
ASMC remains firmly committed to Motorcycles/ATV and Marine products,
and these divisions are competitively positioned in their respective
markets, allowing for long-term growth as economic conditions improve.
The realignment is intended to better position ASMC for long-term
success and is a return to the Company’s roots in the U.S. market, which
began with motorcycles and has grown to include ATV and marine
products. ASMC remains very proud of its high quality, high performance
motorcycle, ATV and Marine products. The Company will continue to bring
ASMC products to market, including its full lineup of sportbike,
cruiser, touring, scooter, dualsport, motocross, off-road motorcycles
and KingQuad ATV line, as well as its flagship DF300AP, state-of-theart
DF20A, and DF15A, among other models. Additionally, ASMC is working to
further build its market share through continued investment in
additional support for dealers through marketing and advertising
activities and sales promotion. Suzuki will continue to have a strong
presence as a sponsor of teams in supercross, outdoor motocross and road
racing.
In evaluating its position in the highly regulated and competitive
U.S. automotive industry, ASMC determined that its Automotive division
was facing a number of serious challenges. These challenges include low
sales volumes, a limited number of models in its line-up, unfavorable
foreign exchange rates, the high costs associated with growing and
maintaining an automotive distribution system in the continental U.S.
and the disproportionally high and increasing costs associated with
stringent state and federal regulatory requirements unique to the
U.S. market. While the decision to discontinue new automobile sales in
the U.S. was difficult to make, today’s actions were inevitable under
these circumstances. ASMC is dedicated to honoring its commitments to
Automotive customers through and after the wind down of new automobile
sales in the continental U.S.
An Orderly Process to Serve Consumers
ASMC intends to work within its current U.S. Automotive dealer network
to help structure a smooth transition from new automobile sales to
exclusively parts and service operations, or, in some instances, an
orderly wind down of dealership operations. ASMC intends to market and
sell its remaining U.S. automobile inventory through its Automotive
dealer network. Through and after the restructuring, all warranties will
be fully honored and automobile parts and services will be provided to
consumers through the dealer network. ASMC intends to honor any
automobile buyback agreements that are currently in place with financial
institutions.
As part of its chapter 11 filings, ASMC will submit a proposed Plan
of Reorganization and Disclosure Statement that specifies how the
Motorcycle, ATV and Marine divisions will be maintained and enhanced,
and how its relationship with Automotive dealers will be largely
transitioned to support consumers and dealers through continued parts
and service operations. SMC or its nominee intends to purchase ASMC’s
Motorcycle, ATV and Page 2 of 2Marine businesses, as well as the
Automotive service operation responsible for parts and warranties,
through a new U.S. subsidiary that will retain the ASMC brand name.
ASMC believes it has sufficient cash on hand to operate its
businesses during the restructuring. If necessary, ASMC will request
permission from the Court to borrow additional funds from SMC needed
during the restructuring.
Honoring Commitments
ASMC intends to operate its Motorcycles/ATV and Marine businesses as
usual and is dedicated to completing the realignment process as
smoothly and efficiently as possible. ASMC will continue to fully stand
behind all of its products and honor all warranties from these
divisions. ASMC is working with GE Capital’s Retail Finance and
Commercial Distribution Finance businesses to continue providing
motorcycles and ATV consumer financing programs and motorcycle, ATV and
marine dealer inventory financing respectively. The Company
expects existing agreements with other dealer and consumer financing
providers to continue as well.
ASMC has filed a series of first day motions requesting approval to
continue paying employee wages and benefits in the ordinary course,
offering dealer incentives and payments under customer warranties. ASMC
also expects to pay vendors in the normal course of business for goods
and services delivered on or after its November 5, 2012 filing. Payments
for goods received before ASMC’s November 5, 2012 filing will be made
in accordance with the chapter 11 procedure.
SMC, the 100 percent interest holder in ASMC, is not a debtor in the
chapter 11 filing. ASMC’s legal advisor on the restructuring is
Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI
Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving
as special counsel on automobile dealer and industry issues. Further,
ASMC has proposed the appointment of M. Freddie Reiss, Senior Managing
Director at FTI Consulting, as Chief Restructuring Officer, and has also
added two independent Board members to assist it through this period.
Additional information regarding ASMC’s business realignment can be found at the Company’s website, www.suzuki.com, or via an information hotline at 1-877-465-4819.
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