Performance Sports Group, which makes Bauer hockey equipment and Easton baseball equipment, plans to file for Chapter 11 bankruptcy court protection as soon as Monday and will likely put itself up for sale.
Jacquie McNish of The Wall Street Journal has the news:
Performance Sports is preparing to file for protection from its creditors as early as Monday under chapter 11 in the United States and a similar court process in Canada, the person said.
The Exeter, N.H., company was unable to win an extension from its lenders on a deadline Friday to file its overdue audited annual financial statements. The missed deadline puts the company at risk of defaulting on some debts.
As always, the deal could fall apart. There is no guarantee that Performance Sports will file for bankruptcy protection or that its lenders will support a sale of the struggling company’s business.
Fairfax, Sagard and Toronto-based Brookfield Asset Managementsaid last week they were considering a possible play for Performance Sports, which dominates the North American sports market with such brands as Bauer hockey gear and Easton baseball equipment.
Brookfield remains interested in supporting the Fairfax and Sagard bid, the person said, but hasn’t yet decided whether to join the takeover bid or lend money through a so-called debtor-in-possession loan.
Josh Kosman of the New York Post noted creditors had given the company until Friday to comply with loan covenants:
Creditors owed $450 million had given the cash-strapped business until Friday to comply with its loan covenants.
PSG’s shares fell 7 percent Friday to close at $3.48, as investors waited to see what would happen.
The Bronfman family’s Brookfield Capital Group, together with PSG creditor and shareholder Sagard Capital Partners, plan to take over the company in a pre-packaged bankruptcy, a sources close to the matter said.
The expected pre-pack reorganization, if it happens, sets up the Brookfield-Sagard team in a face-off against former PSG Chairman Graeme Roustan.
Roustan has said publicly he would like to bid for PSG, and has alleged that Sagard should not have nominated its employee, Paul Desmarais, to the PSG board because the firm also has a leading stake in Adidas.
Adidas owns hockey equipment maker CCM, a Bauer rival.
The company, which also makes baseball bats and other sports equipment, intends to file with a buyer in hand, and seek out higher bids through a bankruptcy auction, the people said, requesting anonymity because the matter is confidential.
Canadian alternative asset manager Brookfield Asset Management and investor Sagard Capital Partners LP, a unit of Power Corp of Canada, said this week they were exploring a deal with Performance Sports. In a separate filing, Sagard said that it was also working with Canadian investment firm Fairfax Financial Holdings Ltd. on a deal for the manufacturer.
Performance Sports and Sagard Capital declined to comment. Brookfield and Fairfax did not immediately respond to requests made outside office hours for comment.
Brookfield and Sagard are among the biggest shareholders in Performance Sports.
The plans are not yet finalized, with Performance Sports alternatively seeking another break from its lenders, the people said.
