Leadership changes at Milwaukee-based Harley-Davidson Inc. and its financial arm, Harley-Davidson Financial Services (HDFS), as well as a $500-million loan, could set the motorcycle manufacturer on a steadier course this year after it experienced difficult sales in 2008.
HDFS announced on Jan. 8 that chief financial officer, Tom Bergmann, would become the interim president of the finance company. The appointment follows HDFS president Sy Naqvi’s decision to resign. Naqvi joined HDFS as president in February 2007. The company said Bergmann would serve as interim HDFS president while it conducted an external search for Naqvi’s replacement.
The changes at HDFS come on the heels of president and CEO Jim Ziemer’s announced plans to retire this year after a 40-year career with Harley-Davidson Inc.
Ziemer, 58, will remain in his current role until a new CEO is named. The company’s board of directors has formed a search committee to find a successor.
Harley-Davidson’s shift in leadership comes at a time when the motorcycle manufacturer is experiencing a sales slump due to the battered economy and an aging customer base.
In November, Fitch Ratings downgraded Harley-Davidson and HDFS from A+ to A, citing declining sales and weaker margins. The outlook was negative.
In a Securities and Exchange Commission filing in December, the company said it received a one-time $500 million advance from its lenders for HDFS. The advance must be repaid in full on March 31, 2009.
The deal coincides with the maturation of $400 million medium term notes, which Harley expected to fund with a $300 to $500 million deal in the unsecured debt market during Q4 2008 or Q1 2009.
The announcement of the $500 million one-time advance reveals that the unsecured debt market may have been too difficult for Harley to access, analysts said. The recent bank advance will give the company more time to complete the deal.
Analysts with financial firm UBS estimated that HDFS will require $1.5 billion to continue funding its loan operations in 2009. The company is working through its options to secure the liquidity in the tight credit market.
According to analysts, recent checks have shown that HDFS has not reduced its lending to subprime borrowers, which represent 25 to 30 percent of its loan portfolio.
