32 LEXPERT MAGAZINE
|
JULY/AUGUST 2017
COVER STORY
Insolvency
The
SINCE IT IS TOO TEMPTING
to use sports clichés when talking about the
demise — and subsequent salvaging — of North America's preeminent sporting-
goods maker last year, let's just shed the guilt and go with it. Performance Sports
Group Ltd. (PSG), parent company of such globally iconic brands as Bauer
hockey gear and Easton baseball equipment, got tagged hard by bankruptcy last
year. Among its fouls, it tried to steal bases from its own independent retailers, it
dropped the ball on sales, it was challenged by securities umpires — and, with all
that, investors le the stands in droves.
On October 31, 2016, aer months of uncertainty about its fading prospects,
PSG, headquartered in Exeter, New Hampshire, voluntarily filed for insolvency
protection under the Companies' Creditors Arrangement Act (CCAA) in the On-
tario Superior Court of Justice, and in the United States, under Chapter 11 of the
U.S. Bankruptcy Code in the District of Delaware.
Facing a liquidity crisis, that same day PSG also announced a potential sav-
iour: its major shareholder, Sagard Holdings, which held 16.9 per cent of its stock.
A subsidiary of Montréal-based Power Corp. of Canada, headed by billionaire
Paul Desmarais Jr., Sagard announced it was making a US$575-million stalking
horse bid for the company in conjunction with fellow Canadian billionaire Prem
Watsa, the founder, chairman and CEO of Fairfax Financial Holdings. Together,
the Sagard/Fairfax line-up, along with several other existing lenders, offered PSG
US$386 million in debtor-in-possession (DIP) financing so it could continue op-
erations while it restructured under court supervision. An auction process was
then launched to see if anyone would top the Sagard/Fairfax bid.
Arena
IN 2016, BANKRUPTCY
CHECKED PERFORMANCE
SPORTS GROUP INTO
THE BOARDS. BUT
AN UNBEATABLE BID
FOLLOWED BY A
US$575-MILLION ASSET
SALE TO SAGARD
HOLDINGS AND FAIRFAX
FINANCIAL HOLDINGS
SAVED ITS ICONIC
HOCKEY AND
BASEBALL BRANDS
BY ANTHONY DAVIS
PHOTO:
SHUTTERSTOCK