BORDENTOWN, N.J. (AP) — Prince Sports, which for more than 40 years has been affiliated with tennis greats like Jimmy Connors, Martina Navratilova, as well as modern stars like Maria Sharapova, has filed for Chapter 11 bankruptcy protection.
"After considering several business options, the Board of Directors and the senior management team firmly believe that the Chapter 11 filing is not only a necessary step but also the right thing to do to ensure a secure future for Prince," said CEO Gordon Boggis.
Prince, which was founded in 1970 and pioneered the oversized racket, has wrestled with heavy debt and said it would use the bankruptcy process to develop a competitive business model. The proposed restructuring would relieve Prince of its more than $60 million debt burden, the company said.
It has secured a commitment for debtor-in-possession financing to allow it to continue to operate while under bankruptcy protection.
Prince Sports Inc., based in Bordentown, N.J., makes rackets, shoes and accessories for tennis, squash and other sports. It has changed ownership several times over the years and was once owned by Benetton Group, the parent company of the clothing company United Colors of Benetton.
The private equity firm Nautic Partners acquired the company in 2007.http://www.leveragedloan.com/prince-sports-files-for-chapter-11-plans-debt-for-equity-swap/
May 1, 2012 at 1:15pm
Prince Sports files for Chapter 11; plans debt-for-equity swap
Tennis racquet maker Prince Sports Inc. filed for Chapter 11 protection in Wilmington, Del., today, with a proposed reorganization plan that would hand the company’s equity to licensing company Authentic Brands Group.
Prince CEO and President Gordon Boggis blamed the company’s bankruptcy on “declines in the global racquet sports market and demand for the industry’s products, combined with increased competition over the past five years,” as well as the downturn in consumer spending tied to the economic downturn starting in 2008, according to an affidavit filed with the court. Prince Sports’ portfolio of brands, distributed in more than 100 countries, includes Prince (tennis, squash, and badminton), Ektelon (racquetball), and Viking (platform/paddle tennis). The company’s international subsidiaries in Europe and Asia are not included in the Chapter 11 proceedings.
For the fiscal year ending Dec. 31, 2011, Prince reported total book value assets of about $54.2 million, including about $9.7 million in accounts receivable. The company currently owes about $65 million in secured debt to ABG-Prince LLC (Authentic), $10.2 million in trade debt, and about $1.8 million in other payables, court records show.
Under the proposed plan, Authentic would discharge all of Prince’s secured debt in exchange for 100% of the new equity interests in the reorganized company. Current equityholders will be wiped out. Prince is seeking bankruptcy court approval of a $2.5 million debtor-in-possession facility provided by Authentic, priced at L+800, with up to $1 million available on an interim basis.
Prince began its restructuring efforts in November 2010 when it hired UBS to sell the company’s brands in certain product categories, as well as its ongoing operations in China, to pay down a significant portion of its secured debt and to restructure its debt with its then-lenders, GE Capital and Madison Capital, according to court filings. That process ended in February 2011 when it failed to generate any acceptable bids.
The company launched a second, more extensive sale process in October 2011 with the help of Robert W. Baird and Company. Several potential buyers emerged, interested both in acquiring assets on a piecemeal basis and as a going concern, Boggis said.
Prince was in the process of negotiating a sale with three potential third-party purchasers in March 2012 for substantially less than the existing amount of secured debt when Authentic acquired the debt from GE and Madison on March 27, and obtained their previously held liens on the company’s assets.
“Given Authentic’s proven track record in successfully acquiring and managing companies with extensive intellectual property holdings and the fact that Authentic is now the single holder of the secured debt, the company believes that its acquisition by Authentic pursuant to the terms set forth in the plan are in the best interests of the company’s economic constituents and provide the best prospects for the company’s successful reorganization as well as the deleveraging of the secured debt from the reorganized company’s balance sheet,” Boggis said. Authentic’s current investments under management include TapouT and the “brands” for Marilyn Monroe and Bob Marley.
Law firm Pachulski, Stang, Ziehl & Jones is advising Prince in its restructuring. Authentic is represented by DLA Piper.
A hearing on the company’s first-day motions is scheduled for Wednesday in Wilmington, before Judge Kevin Carey. – John Bringardner