NORTON EXCLUSIVE UPDATE

Bikerglory understands that Indian manufacturer Kinetic have withdrawn from the bidding process for the Norton group of companies currently being overseen by administrators BDO. This is a significant move. And there’s more…

Kinetic already hold the rights to manufacture and market Nortons in SE Asia,  and were one of the companies approached by Norton CEO Stewart Garner as he frantically tried to divest pre administration (he was subsequently able to flog a dead horse in the form of the 961 motor to Jinlang; the whereabouts of any payment remaining open to question). At the time of Garner’s offer, Kinetic established that Norton’s total level of indebtedness was £40m – comfortably in excess of some of the figures that have been quoted post administration. Unsurprisingly, they decided to pass. However, once BDO were officially in situ, it made sense for Kinetic to put in a bid, since administration represented a chance of getting the whole package relatively cheaply. Any buyer would not be liable for Norton’s debts beyond paying an agreed purchase price, and Metro – the chief creditor – was very likely to take the view that recouping a small slice was better than a total write off.

Kinetic’s due diligence process revealed a complex web of third party involvement which compromised any prospect of a deal. For example, anyone who buys Norton will not be purchasing exclusive rights to the use of the name or the logo. Although Garner / Norton own the trademark, other companies have licencing deals in situ which allows them to use it irrespective of whoever happens to own the brand. One of these is Andover Norton, along with its German parent company Norton Motors. Their licensing agreement represents an entitlement to use the Norton name and manufacture / market spares, worldwide and in perpetuity. Two other companies (Norvil and Unity Equipe) have rights to the Commando and Manx Norton names respectively. Manufacturing rights in SE Asia (Kinetic) and China (Jinlang and Zongshen) are off the menu, and Norton’s own IP rights don’t appear cover South America, Canada, Africa or Russia.  Since the marketing potential of the intellectual property was unsurprisingly thought to be the only real game in town, the diligence revelations may well have put the kibosh on any prospect of a sale to anyone. Which would mean liquidation.

 Garner has form when it comes to shipping out assets pre collapse / administration.  Getting out of Dodge by divesting when the writing is on the wall is completely legal. One of his companies, Fireworks International, had Nat West knocking on the door for £600,000. Their recovery attempts were in vain: all assets had been stripped and  funds transferred leaving administrators (BDO again) to oversee company liquidation.  The fact that Garner enjoyed a pre-existing relationship with BDO may raise one or two eyebrows.

Even if a sale is achieved, only Metro will recover any money, and it will represent a small percentage of their claim. By the time someone finally applied due diligence to Norton it was too late to do anything but walk away.

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