Postscript
So what happens when this child-father starts behaving like Marie-Antoinette? Read on...
When figures were finally published in October 2000, they revealed that 1999 was a very bad year for Raleigh. The hoped-for upturn had not happened: instead, the company made a pre-tax loss of £4.2m on a turnover of £52.4m. This was more than four times the loss the previous year. According to Bicycle Business editor Carlton Reid, it may have represented a loss in the order of £10 per bike sold. In fact, Raleigh had not made a pre-tax profit since 1997. Consequently, the company's net worth slumped from £10m to £6.1m.
Parent group Derby was no longer based in the UK. The corporate owner was Derby Cycle Corporation, registered in the USA and based in sumptuous offices in Stamford, Connecticut, USA. Gary Matthews, chief executive officer of Derby Cycle Corporation and a relative newcomer to the cycle industry, became a director of Raleigh Industries Limited in August 2000. However, following the Sturmey-Archer debacle (further details to be added shortly to the Supplement to The Sturmey-Archer Story ), Derby parted company with Matthews early in 2001.
By this time, Alan Finden-Crofts, former co-owner of Derby and a fervent Raleigh supporter, had been appointed executive chairman of Derby Cycle Corporation. As a Derby board member, he had always been opposed to Matthews' appointment as CEO and to his management style. Finden-Crofts let it be known that, had he been in Matthews' position, he would not have sold Sturmey-Archer.
In March 2001, a financial restructuring of Derby at the expense of shareholders and bondholders was intended to leave Raleigh and other Derby local operating companies free of the parent group's huge debts. On Friday 13th April, Derby Cycle Corporation filed its full annual return to the United States' Securities Exchange Commission. This was after a 14-day extension to the normal deadline and revealed a loss of $51m. Sixteen days later, as part of the restructuring, the British-registered Derby Holdings Limited became Raleigh Holdings Limited.
In May 2001, Derby failed to pay interest due on priority loans. Whereupon, international credit ratings agency Standard and Poor's downgraded Derby's rating to D, the lowest possible.
On 7th June 2001, a management buy-out team led by Alan Finden-Crofts made a formal bid for Derby's cycle interests, apart from the profitable Dutch company Gazelle, which was to be sold separately. Four days later, the 110 Raleigh office staff learned that up to 50 of them would soon be redundant. This was partly blamed on poor sales resulting from exceptionally wet weather in 2000 and restrictions on access to the British countryside in 2001 because of the major outbreak of foot and mouth disease.
An important event took place on 19th July 2001: the sale of Gazelle by Derby Nederland BV to a new Netherlands-based company. This raised about £81m after settlement of debts and unpaid taxes. Derby was now debt free.
On 20th August 2001, Derby filed for Chapter 11 bankruptcy so that it could be sold off. Cycle Bid Co. was formed by the management buy-out team to bid for Derby's assets. Meanwhile, Derby's net revenue continued to decline. For the second quarter of 2001, it was down 25% on the corresponding quarter in 2000. Operating income for quarter two dropped even more drastically, by 75%.
Late September 2001 saw the indefinite suspension of Team Diamondback, successor to Team Raleigh as the Nottingham company's in-house mountain bike racing team. Abandonment of this sponsorship was estimated to save Raleigh in the order of £150,000 a year. This also marked the end of the use of Diamondback as branding for high-end mountain bikes.
At the end of September, Finden-Crofts' Cycle Bid Co. successfully bid $23m for Derby. Including assigned debts and liabilities, the full purchase price was $75m but following the disposal of Gazelle, Derby had $100m in assets. It was therefore a very good deal for Cycle Bid Co., although Derby's bondholders and shareholders were significant losers. Trek, Pacific and Huffy had expressed varying degrees of interest in Derby, or parts thereof, during the bidding period.
Alan Finden-Crofts reportedly owned 84% of ordinary shares in Cycle Bid Co, which in October 2001 became Raleigh Cycle Limited, registered in Jersey, Channel Islands. The non-trading British-registered Raleigh Holdings Limited became Raleigh (Services) Limited. At the end of October, all legal hurdles having been passed, Raleigh Cycle was free to trade.
Raleigh Cycle Limited controlled Raleigh America, Raleigh Canada, Raleigh UK and, in Germany, Derby Cycle Werke. There were also trading companies, Raleigh China and Raleigh Taiwan.
Ist November 2001 saw executive changes at Nottingham. Phillip Darnton, having survived almost two turbulent years as Raleigh's managing director, became executive chairman with overall responsibility for the UK operation. John Spon-Smith, hitherto MD of Raleigh's parts and accessories operation, took Darnton's place as managing director of Raleigh UK.
Early in December 2001, Nottingham city council granted planning permission for the new Raleigh factory, to be built at a cost of £14m on allotments (municipally-owned gardens let in small plots to private individuals) at Bulwell. Planning permission had been granted in June 2001 but allotment holders and a wildlife protection group raised objections. Subsequently, an environmental impact audit conducted by the city council found no grounds for objection. Also, the Government Office for the East Midlands decided not to refer the planning application to the Secretary of State.
Therefore, in December 2001, Raleigh looked set for a reasonably bright future. Alan Finden-Crofts was extremely bullish and deeply committed. Raleigh was free of debt and held substantial assets. Planning permission had been granted for the relocation, and Raleigh looked set to continue its long association with Nottingham.
Turning the Corner?
On 14th February 2002, the reborn Raleigh revealed a new corporate image. The head-badge retained a recognisable version of the traditional heron's head but without the heraldic scrolls. The red and gold colours remained but in deeper, more vibrant shades. Intended for use by Raleigh subsidiaries around the world, the head-badge therefore bore no reference to Nottingham. The new look nonetheless included a number of British references, including a stylised RAF roundel on many bikes and on associated advertising materials. The word 'Raleigh' reverted to slightly italicised chunky capital letters accompanied by a small Union Flag.
Simultaneously, a new range of cycles was launched, all bearing the new head-badge and graphics. Many of the paints used incorporated distinctive prism effects. For the first time in four years, a comprehensive point of sale support materials came with the new range, including floor stickers and wall hangers. The new look was achieved for less than £10,000 worth of creative work, a remarkably small sum. In-house staff worked with Belgian agency BLD and LLE/H of London.
Steve Davey, Raleigh's sales and marketing director, explained that the Raleigh brand had been repositioned to offer a very commercial range with the emphasis on 'colour, graphics and visual value for money rather than detailed, technical over-specification'. A new range of MTBs retailed from £139 to £279 and there was a parallel range of road bikes. A new sub-brand called Virus was introduced, offering models at price-points which the Raleigh brand would not compete with directly: the role once performed by old Raleigh-owned brands such as Phillips, Rudge, BSA and Triumph.
City bikes were promoted as stylish, comfortable and 'ready to wear', with something of a Savile Row image. Contrasting with this, the marketing of Jnr, a new range of bikes for youngsters, used imagery recalling an inner city estate.
As in the early days of Derby ownership, there was a buzz in the air at Raleigh. Again, the decision making chain was shorter and there was talk of greater empowerment. Whether by chance or not, the launch took place on St Valentine's Day. No doubt the new Raleigh management hoped that consumers would be smitten and that never again would there be a massacre like that which accompanied the fall of Derby.

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