From Bicycle Retailer:
CEO says "funds never came" after merger with Blue and Mad Fiber
SARATOGA SPRINGS, NY (BRAIN) — Serotta has laid off 40 percent of its workforce and is planning to shut down production in the next two weeks, CEO Bill Watkins told BRAIN on Wednesday.
The company was recently merged with Blue Competition Cycles and Mad Fiber Wheels to become part of the Divine Cycling Group. At the time of the merger, DCG said the combined brands would be better able to attract investment and pool resources. However Watkins said the merger did not result in any immediate increase in funding, forcing him to lay off eight or nine employees on July 19.
DCG officials and company founder Ben Serotta were not immediately available to comment.
Mad Fiber spokesman Jasen Thorpe told BRAIN on Tuesday that production was continuing at the wheel company and there had been no layoffs there. Blue Competition CEO Steven Harad was not immediately available to comment.
Watkins said Serotta's bike builders were working to complete orders.
"We still have a core group of craftsman still producing bikes, but we are not accepting orders. I'm anticipating a shut down in two weeks. I do not know if that will be temporary or permanent while the owners figure out what to do," he said. "I'm working to build out the runway and land this airplane gracefully and professionally."
"(DCG) have not invested any capital that was required to consummate the merger, and to fuel the plans that each of the three companies had at time the merger was being discussed. Ben (Serotta) and I disclosed what we were doing, they bought into plan and said, 'go for it' and we did the plan ... but the funds never came. We got official notification last week that the funds would not be coming."
Prior to joining Serotta last fall, Watkins was a consultant with Bradway Capital, an investment group that bought an interest in Serotta in May 2012. Watkins said he did not have any equity in Serotta or DCG.
Total bummer since I've always dug those bikes. With any luck it won't be permanent..
UPDATE!
Here's a little tidbit from an ex employee that might shed some light on the subject:
The Serotta thing is hard for me being that I used to work there and know many of the guys who still do(did). The feeling that they are getting from Ben and Bill (the new CEO) is that the whole thing was a lie. That the DCG never actually intended to do anything with them. Essentially that they were just buying the name and had always intended to shut it down. I'd imagine that the only new Serotta's in the future are going to have a Made in China sticker on them.
Another one bites the dust I guess.
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