Pacific Cycle Acquires Schwinn/GT; New Plans to Be Unveiled at Interbike Convention on Sept. 30

Business Wire, Sept 11, 2001

Business Editors

MADISON, Wis.--(BUSINESS WIRE)--Sept. 11, 2001

Pacific Cycle LLC today announced that it has acquired the bicycle assets of Schwinn/GT Corp. for $86 million.

The purchase was made at a U.S. District Court bankruptcy auction in Denver, where Judge Sidney Brooks ruled in favor of Pacific's bid.

"This is a landmark day for Pacific and for Schwinn/GT dealers," said Chris Hornung, Pacific Cycle's chief executive officer. "The Schwinn name is an American icon. It is the brand that many Americans grew up with and aspired to own. We feel that we offer the best opportunity in a generation to restore vitality to the Schwinn brand."

Hornung said the acquisition will mean an increase in sales to Pacific of approximately 1 million bicycles annually.

Pacific plans to bring "new life" to Schwinn/GT, said Hornung. "One of the biggest benefits of the brand is the strong dealer network. While it's extremely unfortunate that the bankruptcy process resulted in the dissolving of dealer agreements, it's our intention to quickly restore the network of independent Schwinn and GT dealers. We also plan to immediately establish clear and open communication, and hope to begin meeting with a group of dealers this week."

Hornung said that the company will immediately begin re-establishing the flow of 2002 model year product of both Schwinn and GT bicycles from Asia. Financial constraints prevented the former company from receiving shipments since spring of this year.

Pacific will also begin working closely with existing Schwinn dealers, both through focus groups and through the establishment of a dealer advisory council to understand and serve their needs. Specific programs will be unveiled later this month at the Interbike convention in Las Vegas, the largest bicycle trade show in the United States.

Anticipating dealer concern of possible expansion of Schwinn distribution to mass merchandisers, Hornung said: "While we are considering our options, the earliest we would introduce Schwinn to mass retail would be fall 2002. We want to speak with dealers to determine how we can best support them using our high-volume, efficient business model.

"We are dedicated to maintaining the Schwinn dealer network, brand essence and positioning, which is embodied in quality, value and family recreation."

Hornung also said the company will continue to support the GT brand while it evaluates a long-term strategy.

The acquisition of Schwinn/GT brings to a close a decade of uncertainty in the brand's history. Schwinn entered Chapter 11 bankruptcy in 1992, and the Schwinn family sold the company to Scott Sports Group in 1993. In 1997, Schwinn was sold to Questor Partners. The company entered Chapter 11 again in July of this year.

According to industry sources, Americans purchase approximately 17 million bicycles each year and spend more than $2 billion on bicycle purchases. In December 2000, Pacific Cycle LLC successfully acquired the assets and trademark of Brunswick Bicycles.

About Pacific Cycle LLC

Pacific Cycle LLC, the largest importer of quality bicycles in America, designs, markets and imports a full range of bicycles under the Pacific, Roadmaster, Mongoose and Mongoose Pro brand names.