BETHESDA, Md., Sept. 30 /PRNewswire/ -- American Capital (Nasdaq:ACAS) announced today $6,000,000 of investment and financial commitments in Cycle Gear, Inc., the largest multistore retailer of general motorcycle parts and accessories in the U.S. American Capital's initial investment of $1,500,000 will be followed by $4,500,000 over the course of the next few years. The investments will total $750,000 in senior notes and $5,250,000 in junior notes with warrants.
Cycle Gear, an employee-owned company, operates seven motorcycle parts and accessories retail stores in Northern California and a catalog division that serves the entire U.S. and export markets. The motorcycle parts industry is a $1.7 billion market that is principally served by small non-franchised single store operations. Cycle Gear has developed a model store that outperforms many of the small operations. Cycle Gear's strategy is to roll out its proven, profitable model store into adjoining geographic markets and increase its penetration in existing markets.
American Capital Principal Roland Cline said, ``Cycle Gear is a well- managed employee-owned business with a low-risk growth strategy to profitably consolidate a large and highly fragmented industry.''
Dave Bertram, Cycle Gear President and CEO commented, ``This industry has a loyal following including more than 4 million motorcycle enthusiasts in the U.S. Cycle Gear has spent more than 10 years developing and refining our model store and we are poised to become the emporium for the motorcycle zealot.''
David Johanson, attorney for Cycle Gear added, ``In my 10 years experience with American Capital, I found all of their Principals easy to work with during the course of a transaction. Further, American Capital has been responsive to Cycle Gear's needs from the very beginning to the closing of this transaction. I believe that American Capital and Cycle Gear have formed a great partnership.''
John Erickson, Chief Financial Officer of American Capital stated, ``This is our first transaction with a company that has an explicit strategy of industry consolidation. Cycle Gear is a high-quality operator in a fragmented market. This transaction further diversifies our portfolio and provides attractive current returns with an opportunity to share in the long- term growth of the business. We look forward to working with the management of Cycle Gear to implement their strategy.''
