a sale as a “going concern” or enable a restart of opera- tions with restriction after emerging from Chapter 11. General Motors and Chrysler Fiat took the same path in 2009. CEO Harlan Kent commented in a statement that “the agreement we have reached with Sagard Capital and Fairfax Financial is a testament to their confidence in the future of our business and all of our great brands.” Kent made it clear that a sale is the direction they are headed and stated “we believe that pursuing a sale through a court-supervised restructuring process represents the best path forward for our customers, vendors, retail and business partners, employees and other stakeholders.” Earlier this year the company board hired independent legal counsel to review the holdup in finalized financial statements which were preventing corporate results from being certified for lender analysis. The lenders agreed to wait until October 28th but that deadline was not met by the organization and the Chapter 11 process was started shortly after. While the brand remains strong the company said the market was not. According to the organization retail sales have been way off in areas such as baseball bats. The company also took a major hit when U.S. sports retail giant Sport Authority filed for Chapter 11 earlier this year. The shopping list of excuses for poor performance was long including lower youth baseball numbers, customer credit issues, currency rates and a bad economic climate. Performance Sports has reported owing $608 million on $594 million in listed assets.
By Jamie Barrie T he first pair of ice skates to go onto the feet of many people were probably Bauer. It’s nearly impossible to attend a hockey game and not see the name stamped on everything from players sticks to even the referee’s pants. That is why so many people were taken by surprise this week when the maker of Bauer hockey and Easton baseball equipment filed for Chapter 11 bankruptcy protection. The parent company Performance Sports Group based in Exeter, New Hampshire filed a motion in Delaware to protect itself from creditors. A similar motion was filed in Canada. The company also took another crucial step and set an opening bid for an auction of its assets through a process known as a “stalking horse” offer. A stalking horse bid is an effort by a company declaring Chapter 11 protection to see what the market will offer prior to a court ordered sale of their assets. The intent is to fend off low ball offers and avoid the ugly process of valuation which happens during a true liquidation under a bankruptcy judge’s oversight. The bid is often lined up by the company through a trusted firm which is the case with Sagard Capital Partners and Fairfax Holdings who bid $575 million. They are the largest shareholder with just under 17% of the total equity.
Per formance Sports will keep the lights on and still pay employees p r i ma r i l y because of their ability to secure debt-
or-in-possession financing of $386 million. This is the surest way to enable
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SPOTLIGHT ON BUSINESS • DECEMBER 2016
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