Scott Sports has received a loan of CHF 150million (£137m, $174m) to help “improve its financial structure” and balance its high stock inventory.
The loan, provided to the company responsible for bikes such as the Scott Addict and Scott Foil, comes from the manufacturer's majority shareholder, South Korean clothing company Youngone Corporation, and will be paid in instalments at a 4.6% interest rate.
In a financial regulations filing, Youngone said: “We are providing financial support through a monetary loan to secure additional liquidity for Scott and improve its financial structure.”
The company note continued: “Scott Sports plans to use this loan for the company’s working capital and will appoint a person designated by Youngone Corporation as a financial controller to manage and supervise the overall process.”
As well as the Scott bike brand, Scott Sports also produces equipment for winter and motorsports.
Cycling brands have struggled for financial stability following the pandemic boom, in which stock inventory levels rose and demand waned.
In a statement shared with Cycling Weekly, Scott's chief marketing officer Reto Aeschbacher said: "The cycling industry needs significant financing in times with high inventory. Youngone, as a shareholder, has now provided such a short-term loan to Scott.”
Accell Group, the company that owns Lapierre, Raleigh and Haibike, had to rely on a recent cash injection of €250million (£216.5m) from its parent company KKR in order to have “sufficient liquidity”.
Cycling Weekly also previously reported losses at German brand Canyon, and falling profits at Giant, the world’s largest bike manufacturer. The latter cited “high inventories” and “weak demand” from the US and Europe markets as reasons for a slump in trade.
It is uncertain how urgent the liquidity challenge is that Scott is facing. According to the brand's most recent accounts, which only cover the year up to October 2022, the manufacturer made a pre-tax profit of CHF 56.8million (£52m).
Youngone bought a 20% stake in Scott in 2013, before growing its share to 50.1% stake in 2015, making it a controlling entity.
According to the regulatory filings, the firm has already provided CHF 100million (£91.3m, $116m) of the loan, with the remaining amount due later this year. The loan will mature on 27 December 2024, the date Scott will be expected to pay it back.
Founded in Switzerland in 1958, Scott is known among cyclists as a premium bike manufacturer and partner to WorldTour team dsm-firmenich PostNL.
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