Motorcycle publisher hopes for smoother roads

Acorn Staff Writer


Officials with Easyriders, Inc., the motorcycle publisher and retail licensing company based in Agoura Hills, said the firm is still firing on all cylinders despite a bankruptcy proceeding that threatens to leave creditors and stockholders in the dust.


Easyriders and its principal operating subsidiary, Paisano Publications, Inc. filed for Chapter 11 relief in the San Fernando Valley Division of the United States Bankruptcy Court on July 17.


Chief creditor Nomura Holding America Inc. was unwilling to extend the Sept. 23 maturity date on its loan of $21.2 million to Easyriders, which prompted the bankruptcy.


Easyriders secured the loan in 1998 when it became the public holding company for Paisano, the 30-year-old publishing company founded by Joe Teresi.


Easyriders hired the Westlake Village investment banking firm of Murphy Noel Capital to "look at any and all opportunities" including the raising of new financing to replace Nomura, according to Bob Fabregas, Easyriders president and chief operating officer.


Easyriders had previous restaurant interests, but sold them in 2000. Fabregas said there’s still the possibility the company could sell more assets.


Despite their dispute, Easyriders and Nomura entered into a "cash collateral stipulation" prior to the bankruptcy that allowed Easyriders to use its cash profits to conduct business.


There’s been no change in management or control at Easyriders and the company’s operations have continued uninterrupted. Easyriders has 70 employees.


"We’re hitting our plan," Fabregas said. "Our magazines our doing well at every level and our advertising is doing well."


Translation: There’s still hope for the company’s stockholders.


Rarely does a company file for bankruptcy and continue to be listed on the stock exchanges, but that’s exactly what has happened to Easyriders, Inc. (AMEX: EZR).


Fabregas said that because Easyriders turned a profit in the first two quarters of 2001, the American Exchange allowed the company to keep its listing although trading has been halted at 43 cents per share.


"The [stock] exchange has taken the view that his thing could turn itself around and we could emerge from bankruptcy as a reconstituted public company with a de-leveraged balanced sheet," Fabregas said.


But according to finance officials, if the company dilutes or cancels part or all of its common stock, a de-listing from the exchange will take place.


"So far, our plan is to remain public and to minimize any dilution that would occur to the existing shareholders," Fabregas said.


For the six months ending June 30, 2001, Easyrider revenues fell 3 percent to $15.2 million, but net income totaled $1 million, or 36 cents a share, compared to a loss of $6.9 million, or 27 cents a share, in the same period a year ago. The latest revenues reflected the sale of Easyrider’s restaurant interest, El Paso Bar-B-Q Company.


Teresi said the idea to turn the restaurants into Easyrider theme cafes backfired.


"It did not work. The timing was wrong and the market fell out on the theme cafes," Teresi said.


For the three-month period ending in June, Easyriders posted a net income of $101,000, and as cash flow turned from negative to positive, the company outlook brightened.


"We’ve been around for 30 years and we’ve been profitable," Teresi said. "We’re a very good candidate to come out of Chapter 11."


Under the Easyrider banner, Paisano publishes more than a dozen special-interest magazines directed to motorcycle, hot-rod and tattoo enthusiasts, with a total worldwide readership of more than 6 million. Easyriders also licenses more than 40 retail stores throughout the United States and Canada.


Canyon Cycle, the motorcycle store next door to Easyriders on Chesebro Road, is not an Easyrider licensee, but does carry some of their products.


"If they ever get a loan, this is going to be a good play, said Steve Levine, an Easyriders stockholder who lives in Westlake Village. "You have the motorcycle mania and the demographics are changing from the Hell’s Angels to businessman. It has a niche market in publishing."


Is Levine worried about his investment?


"When you only have about a thousand shares at 43 cents it’s hard to get hurt," he said.





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