The former chairman of Performance Sports Group Ltd, which has filed for bankruptcy protection, is talking with U.S. and Canadian private equity firms about submitting a bid for the company, he said in an interview on Monday.
The maker of Bauer ice hockey gear said it had filed for bankruptcy protection in the United States and Canada to facilitate a restructuring and sale of almost all of its assets. The move comes after Performance Sports defaulted on a loan payment by missing a deadline on Friday.
The company plans to hold the auction in January and to close a sale by the end of February, according to bankruptcy court documents.
“I’m mobilizing my team to prepare a bid,” said former Chairman Graeme Roustan, who stepped down in 2012 and had been a critic of the company’s management. He said many private equity firms had approached him to determine next steps.
Roustan had told Reuters in August that he was working with investment banks to explore a bid for the company.
Trading in Performance Sports shares was suspended on Monday.
Performance Sports, which also makes baseball bats and other sports equipment, said it would put its assets up for auction but already had a deal to sell nearly all of them for US$575 million to an investor group led by Sagard Capital, its biggest shareholder, and Fairfax Financial Holdings.
Reuters reported on Friday that Performance would file for bankruptcy with a buyer in hand and would seek out higher bids. Sagard and Fairfax are acting as “stalking horse” bidders, effectively setting a minimum price.
A U.S. bankruptcy court judge must approve any sale.
Roustan said he would challenge the Sagard deal and intended to ask the U.S. Department of Justice and Canadian competition authorities to investigate it. He said there was a conflict of interest as Sagard’s owner, Canada’s wealthy Desmarais family, is an investor in rival Adidas AG through its Power Corp of Canada vehicle.
Performance Sports and Power Corp did not immediately respond to requests for comment.
In recent months, Performance Sports has suffered from weakening sales and mounting losses, a U.S. Securities and Exchange Commission probe and an inability to file financial statements because of an internal investigation into its accounting.
Performance Sports also has lost customers because of industry consolidation and the bankruptcies of the Sports Authority Holdings Inc chain and Team Express online retailer earlier this year.
The company listed assets of US$500 million to US$1 billion and liabilities of US$500 million to US$1 billion in its voluntary petition filed in Delaware under Chapter 11 of the U.S. Bankruptcy Code.
Performance Sports said it had begun proceedings under the Companies’ Creditors Arrangement Act in Canada’s Ontario Superior Court of Justice.
The company said it expected operations to continue uninterrupted during the bankruptcy process, through debtor-in-possession financing of US$386 million provided by existing lenders and the investor group.
Founded in the 1920s, the Canadian-born Performance Sports was owned for about a decade by sporting goods maker Nike Inc and then sold to Roustan and U.S. private equity firm Kohlberg & Co in 2008. It listed on New York and Toronto’s stock exchanges in 2014.
By John Tilak and Matt Scuffham
(Additional reporting by Jessica DiNapoli in New York and Ismail Shakil in Bengaluru; Editing by Lisa Von Ahn)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo of Reuters/Ray Stubblebine