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Government Aid for Struggling H-D Credit Arm

The struggling Goliath that is Harley-Davidson took a spoonful of government-aid elixir on November 23rd. A group of investors are using $562 million in TALF-which stands for Term Asset-Backed Securities Loan Facility, if that helps you at all-funding to underwrite a huge bond deal. The bond terms vary between one and three years and are backed by the Federal program.

H-D’s flagging profits have been further diminished by the blows dealt to HDFS, Harley’s financing arm (which has been hit hard by the recession and has already borrowed money at very high interest rates from private investors). TALF makes H-D bonds attractive and carry a low interest rate, because the funds are backed by the Federal Reserve bank. That money should be used to finance motorcycle purchases and, hopefully, spur the Motor Company into solid black ink again.

In other H-D news, subsidiary MV Agusta-up for sale-will be brokered by Italian investment firm BNP Paribas. Despite the exotic-bike maker’s new model releases, it’s still hemorrhaging money. When it does sell, it’ll probably go for a lot less money than the $109 million H-D paid for it in July of 2008.

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MD Readers Respond:

  • I know you didn’t solicit feedback on this story, but I had to vent to someone. As we all know, 10 years ago, customers had two choices: put your name on a list and wait two years to pay list price for a Harley Davidson, or pay a premium of 50 to 100 percent to own one now. If the Motor Company only made loans to people with excellent credit, they would have done marvelously. Instead, they embarked on a pump-and-dump strategy that anyone with the slightest bit of sense knew was doomed to fail. Several of Harley’s executives–current and former–should be sharing cells with some select people from Goldman-Sachs.

    Ironically, now that their bikes are selling for pennies on the dollar on craigslist, I find myself wanting one again for the first time in a decade. Thanks, and keep up the good work. Curtis

  • So, I can’t help but what happened to the trainloads of money the MOCO hauled out of Milwaukee between the early 90s to the mid 2000s?.. Squandered?

    Their capital gains and market share were the envy of the industry.. Now they’re on their knees groveling to the government for a handout … We are so screwed. Chris