KKR and backers lose more than €1bn in pandemic-era bet on Raleigh bikemaker
US private equity firm agrees to hand remaining stake in Accell to Dutch group’s lenders after latest debt restructuring
KKR and its backers have lost more than €1bn in a pandemic-era bet on bikemaker Accell Group, after the owner of brands including Raleigh and Babboe agreed a second debt restructuring in the space of a year.
The US private equity firm said on Wednesday it had agreed to hand its remaining equity stake to the Dutch group’s top-ranking lenders.
KKR and the backers of its funds will lose all of the €1.1bn equity cheque they wrote to acquire Accell in 2022, as well as hundreds of millions more that they pumped in after it started struggling.
The announcement caps four difficult years for KKR after it struck a €1.8bn deal to take Amsterdam-based Accell private in 2022, in a bet that sales of e-bikes in particular would continue to flourish after the pandemic.
But Accell’s e-bike sales growth was lower than expected, supply-chain disruptions led to shortages of some components, and KKR’s dealmakers had underestimated just how much the company had over-ordered other parts in response to heightened pandemic demand.
As inventories ballooned, Accell had to offer significant discounts to shift products and slash the value of its stock, hitting revenue and earnings.
By the middle of 2023, Accell had turned to its shareholders for more money, with KKR and another investor ultimately extending about €300mn in loans before the first restructuring completed last February.
That deal cut €600mn from Accell’s €1.4bn debt load and allowed KKR and the other shareholder, Teslin, to retain control. But the bikemaker continued to burn cash and face liquidity pressure, prompting fresh restructuring talks this year.
The majority of the company’s lenders had agreed to a new transaction that would “significantly reduce Accell’s total debt” and provide it with additional funding, the bike group said in a statement on Wednesday without providing further details.
The agreement avoids an insolvency or liquidation of Accell, which some lenders had feared if the bikemaker had been unable to raise fresh funding.
“The shareholding in Accell will be transferred for the benefit of existing super senior lenders,” the statement said. KKR would not retain any shareholding, a person close to the firm confirmed.
The private equity firm said: “During its ownership, KKR supported a wide-ranging programme of operational and organisational measures, consistent with KKR’s role as a long-term and responsible investor . . . These actions were taken to ensure continuity of operations, support Accell’s customers and partners, and position the business for a return to sustainable profitability.”
Jonas Nilsson, chief executive of Accell, thanked KKR for its “significant support” and said that “we are well advanced in our plans to fundamentally transform the business”.