SRAM and Jarden Insist Lehman Bankruptcy Won’t Slow Them Down

Jarden Corp., meanwhile, said it moved Sept. 12 to draw down the remaining balance on a revolving credit agreement administered by a Lehman unit even though it has no current need for the liquidity. JAH has moved to replace Lehman as the administrative agent on its $2.68 billion in credit facilities. Lehman provides less than 10% of the financing under Jarden’s revolving credit agreement, which had an outstanding balance of $194 million as of June 30.

SRAM said in early August that it chose to sell a minority stake to Lehman Brothers Merchant Bank (LBMB) after an extensive search for a strategic financial investor to support its growth in the global bicycle components industry. 

If completed, LBMB’s investment will be used to boost R&D at SRAM’s growing stable of brands and help establish the $10 million SRAM Cycling Advocacy Fund.

The fund would be capitalized 50/50 by the two companies the day LBMB closes the transaction. It would then invest $2 million a year for five years supporting advocacy in the U.S., Europe and Asia on policy issues affecting cycling infrastructure and the bicycle industry.
LBMB is still scheduled to close on the deal in the first week of October.
“The bank syndication is complete and the capital calls have been sent to LBMB’s Limited Partners,” SRAM said in a statement e-mailed to BOSS the day Lehman filed for bankruptcy.

The bankruptcy should not impair LBMB’s ability to complete the deal, SRAM said, because LBMB is a separate, albeit related corporate entity. Relations between SRAM and LBMB remain strong and have been “reinforced over the almost two months since” the two companies announced the deal, SRAM’s statement said.

“The LBMB partners did not cause the problems that have created the problems at Lehman Brothers,” SRAM said in its statement. “The LBMB partners have been caught in an unexpected crossfire.”
If the deal does fall apart, SRAM said it would merely look for another strategic partner.

“SRAM is financially sound and completely capable of moving forward without the LBMB investment,” the company said. “If the transaction doesn’t occur there is absolutely no disruption to our operations. We will simply move forward and reconsider finding a new strategic financial partner at some point in the future.”

Headquartered in Chicago, IL, SRAM is forecasting revenue of $500 million this year. It markets its products under the SRAM, RockShox, Avid, Truvativ and Zipp brand names.

“The most important point is that this effort was a long term strategic choice by SRAM,” SRAM’s statement concluded. “We wanted to add an experienced professional investor to our shareholder base. Certainly the headlines loom large and their may be a practical pause. We will certainly know more within a few days.”