Judge backs participation of largest shareholder in Performance Sports Group auction
But process, timeline are modified in wake of criticism
A bankruptcy judge in Delaware ruled on Wednesday that Performance Sports Group can sell its assets to the company's largest shareholder, provided there isn't a higher bid at an end-of-January auction.
The shareholder, Sagard Capital Partners, owns 17 percent of the Exeter-based PSG. Under the procedure, Sagard, as the “stalking horse,” will open the auction with a $575 million bid – enough to pay for all of the company’s secured debt, part of its unsecured debt, with nothing left for shareholders. Sagard would also provide $361 million of debtor-in-possession financing.
But the sale is far from a done deal. Other companies are considering a bid for PSG.
Centerview Partners, PSG’s financial advisor, has executed confidentiality agreements with 30 possible bidders, and another five are in the works, according to court filings.
Any of those bids would have to include enough to pay Sagard slightly more than $20 million, plus 3 percent of the bid price. That’s down from a 3.5 percent rate – a concession to creditors, shareholders and the bankruptcy trustee, all of whom criticized the deal.
The order also stretched out the time line a bit. The auction was originally supposed to take place on Jan. 9, but bids are now due Jan. 25, and the auction will take place on Jan. 30. A hearing on the sale will take place on Feb. 6. PSG said it expected the deal to close at the end of February.
"We are pleased to have reached these important milestones in our financial restructuring process and to move forward as planned to effect an orderly sale of the business as a going concern and maximize value for our stakeholders," said Harlan Kent, PSG’s CEO. "We expect to have sufficient liquidity to fund our ongoing operations and continue serving our customers and consumers and delivering our industry leading products and brands. We are committed to acting in the best interests of Performance Sports Group, our employees and our other stakeholders and look forward to engaging in a robust auction process."