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Posts Tagged ‘Sy Naqvi’

pink_slipI’m fascinated by the decline or some might say the “fallout” of the Harley-Davidson management team.

HD announced a couple days ago that effective immediately the CFO, Tom Bergmann was leaving the company.  Labeling the hasty departure with the all too familiar and politically correct words; “seeking other career opportunities” to describe his abrupt exit.   Mr. Bergmann had been CFO since 2006 and in January 2009 it was announced he would take on the additional responsibility as president of Harley-Davidson Financial Services (HDFS) after Sy Naqvi’s sudden departure.  So it’s rather odd that on the very first day that the new CEO, Keith Wendell comes to work Mr. Bergmann would choose it as the most optimal time to leave?! 

I smell “Mr. Clean”… and I even provided Keith a 10-step success plan, but forcing out the CFO in the first 8 hours on the job was not on the list!

On the day of his departure, Tom had just completed a transaction that would provide about $1B in funding capacity that the company could use for consumer lending in 2009. The new funding was important, since the firm finances roughly one of every two HD motorcycle purchases.  HDFS increased the size of an existing $500 million asset-backed commercial paper conduit facility to up to $1.2B, based on the level of outstanding receivables. The facility expires April 29, 2010.  In addition, Tom negotiated to have replaced a 364-day, $950M bank credit facility expiring July 31 with a new 364-day, $625M credit facility expiring April 29, 2010. Together, the two agreements provide additional available credit of up to approximately $375M over the term of the agreements for the lending activities of HDFS. 

Getting the funding covered is a monkey off their back and a fairly impressive accomplishment to tell the new boss on day #1, but to turn around and say “Hasta la vista, baby”…I’m outta here.  WTF?  Whether Mr. Bergmann was run off the road or decided no more black leather, but instead it’s time for touring suits with leg guards and time to gear-up for a sound different than a low rumble…we’ll never know.

The HD press release stated that Controller John Olin would serve as interim CFO at the company.  Bergmann also served as President of Harley-Davidson Financial Services (HDFS) and Treasurer Perry Glassgow would take over on an interim basis.  Lastly it named Mark Kornetzke, senior director of financial reporting, as the company’s chief accounting officer.

Photo courtesy Henny Ray Abrams/Reuters.

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money_stackBarack said yesterday that I should sacrifice, but I need to ask myself to what extent am I willing to go.  And as it turns out the ultimate discretionary item — Harley-Davidson — is in the same situation…determining how willing they are to sacrifice or jeopardize their company! 

I previously blogged about Harley’s inability to securitize motorcycle loans HERE the delinquency rates HERE and the five quarter earnings decline HERE.  Obviously not good times for the company.

But, like a lot of things these days related to financial issues they change weekly.  On behalf of Harley-Davidson, Sen. Bob Casey Jr. (D-Pa.,) wrote a letter on Jan. 16th to the Federal Deposit Insurance Corp. chairman Sheila Blair, saying Harley-Davidson recently inquired whether its financing company and subsidiaries — Harley-Davidson Credit Corp. and Eaglemark Savings Bank — are eligible for the Temporary Liquidity Guarantee Program (TLGP).  The TLGP guarantees a corporation unsecured debt against defaultA bailout?

The Harley Springettsbury Township plant is the largest of the company’s manufacturing facilities and employs more than 2,800 workers as well as supports approximately 1,500 jobs at Harley dealerships in Pennsylvania.  It’s easy to see why Sen. Casey is supporting the eligibility for TLGP due to the potential negative impact to his state’s economy.  And it’s “pile on” season in reference to the challenging economic environment, lower consumer confidence and banking sector meltdown so why not jump on board.

Demonstration Against UK Gov Bailout

Demonstration Against UK Gov Bailout

This sounds a bit like the ‘ol… “It’s not my fault” redirect the blame to the economy trick?  Do you think this a problem of people not being able to get loans to buy motorcycles?  I have no insider information, but I’m inclined to believe it has more to do with delinquency rates and processing bad loans on the part of Harley-Davidson Financial Services (HDFS).  Sure the economy and financial markets being reluctant to fund higher risk loans contributed, but don’t forget about the MV Augusta acquisition which has been described as an over reach by the company execs. 

Also we should not forget the sudden “personal” decision of Sy Naqvi (HDFS President) two weeks ago to immediately resign.  Mr. Naqvi was HDFS president for 23 months when Harley announced that Tom Bergmann (CFO Harley-Davidson) would assume the the additional responsibilities of HDFS president.  Naqvi joined HDFS from DeepGreen Financial, Inc., an online home equity lender, where he was CEO.  DeepGreen was acquired by Lightyear Capital and had a somewhat sorted history with operations in Cleveland while Naqvi worked out of Chicago.  Efforts to turn DeepGreen into a brick and mortar bank failed.  Is HDFS next?

But let’s think positive.  If Harley obtains eligibility status from the FDIC it (really taxpayers) will guarantee unsecured corporate debt against default.  In addition, Harley would get federal funds if a customer defaulted on his or her motorcycle loan.  Nice!  How do I sign up?

It will be hard to calculate Naqvi’s impact on/at HDFS or what role if any he played in its current set of troubles.  I wonder if the company is “positioned appropriately” for the faltering economy or if it’s another bailout on the list of so many?

Harley-Davidson is expected to report fourth-quarter results this Friday and I’m not hopeful of Q4’08 results.

Photo courtesy Flickr.

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