Bally readies for bankruptcy, deals with shareholder opposition to plan
Bally Total Fitness Holding (Pink Sheets: BFTH) has been paving the way for its impending Chapter 11 bankruptcy filing, while various senior managers have been selling shares and majority shareholders have voiced opposition to the current restructuring plan.
On July 2, Bally announced that Morgan Stanley Senior Funding will arrange credit facilities. According to Bally, Morgan Stanley will be the sole lead arranger and bookrunner for $292 million of super-priority secured debtor-in-possession (DIP) and senior secured exit credit facilities. These provide for a $50 million revolving credit facility and a $242 million term loan, it said.
The DIP facility will refinance the existing senior credit facility and provide working capital during the planned Chapter 11 bankruptcy case, Bally said.
On July 5, various members of Bally's senior management sold company shares -- most of these sales were for a price of between about $0.42 to $0.49, with a few getting $0.75. Sellers included: Harold Morgan, senior vice president and chief administrative officer, who sold 921 shares; Gail Hamber, senior vice president and chief information officer, who sold 13,400 shares or nearly half her shares; Marc Bassewitz, senior vice president and general counsel, who sold 75,000 or more than half his shares; and Julie Adams, senior vice president, membership services, who sold 50,000 shares or more than half of what she owned.
Additionally, Emanuel Pearlman, general manager, chairman and CEO of Liberation Investments L.P. and Liberation Investments Ltd., sold 412,570 out of 4.1 million shares owned in a private sale to Harbinger Capital Partners. The purchase price was $0.50 per share, or an aggregate purchase price of $206,285.
Following the transaction, Bally's board received letters on July 6 from both Harbinger and Liberation -- majority shareholders in Bally -- proposing an alternate Chapter 11 plan of reorganization while noting they were opposed to the restructuring plan and shareholder plans announced.
In the letter, the group said it would adopt the restructuring plan with the following modifications:
>> existing shareholders would receive 10 percent of the reorganized equity of the company and rights to participate in a rights offering for an additional 10 percent of the reorganized equity,
>> Harbinger and the Special Fund would backstop the rights offering and own 80 percent of the reorganized equity of the company in any event,
>> holders of Senior Subordinated Notes would receive $60 million in cash in lieu of reorganized equity of the company,
>> holders of claims in Class 6-B-1 (Rejection Claims Against Bally) would receive payment in full in cash in the allowed amount of their claims,
>> holders of claims in Class 7 (Subordinated Claims) would receive payment in full in cash.
The shareholders have agreed to complete their due diligence by July 20, Bally said in a statement. The company is engaging in discussions with these shareholders, but added that there are no assurances that any agreement will be reached with the shareholders.
Bally is currently soliciting consents to its prepackaged plan of reorganization, as to which holders of 63 percent of its senior notes and more than 80 percent of its senior subordinated notes have signed a restructuring support agreement. The expiration of its solicitation of consents for its proposed plan of reorganization is July 27.
Amer Sports reorganizes executive structure
Amer Sports said it is reorganizing its executive structure to improve the efficiency of its operations and ensure the efficient implementation of group development. The changes will take effect on Sept. 1, 2007.
In its business areas, Salomon, Atomic, Mavic, Arc'Teryx and Bonfire will form the new winter and outdoor business unit. Kari Kauniskangas, currently Amer Sports senior vice president of sales and distribution, will lead the new unit. The presidents of Salomon and Atomic, Jean-Luc Diard and Michael Schineis, will report to Kauniskangas.
The company said the goal of the reorganization is to guarantee future development of the group's winter sports and apparel and footwear categories and to ensure that synergies based on the group's current plans and strategy will be efficiently realized.
Suunto, Wilson and Precor will continue to operate as distinct units.
Also, the sales and channel management unit will include the group's sales and distribution functions. The unit will be lead by Thomas Ehrnrooth, currently the global vice president of sales and marketing for Salomon. The regional general managers Mike Dowse (winter and outdoor Americas), Francois Fauroux (EMEA), Matt Gold (Asia Pacific), David Deasley (Canada) and Juan Carlos Aziz (Latin America) will report to Ehrnrooth. Emerging markets and retail concepts will also be a part of this unit.
The corporate supply chain management and IT functions will develop the group's supply chain, logistics processes and IT systems. The leader of this function will be announced later. Thomas Henkel (information systems), Michel Joulot (Asian sourcing organization) and Eero Alperi (supply chain development) will report to the leader of the new unit.
Lastly, members of Amer Sports executive board are: Roger Talermo, president and CEO; Pekka Paalanne, senior vice president and CFO, deputy to the President and CEO; Max Alfthan, senior vice president, communications; Kari Kauniskangas, winter and outdoor; Jean-Luc Diard, Salomon; Chris Considine, Wilson; Paul Byrne, Precor; Michael Schineis, Atomic; and Juha Pinomaa, Suunto.
Amer added that Thomas Ehrnrooth (sales and channel management) and the future leader of supply chain management will become members of the executive board.
Nike hits 52-week high, analyst raises price target
Shares of Nike (NYSE: NKE) hit a 52-week high on July 6, after rising steadily for two weeks. Additionally, an analyst said the shares could rise as much as 18 percent as the company benefits from sales growth overseas and it buys back shares.
Nike shares have risen 12 percent since the close of trading on June 22, the day the company said it signed Greg Oden, the 7-footer who was picked No. 1 by Portland in the NBA draft last week, as a spokesman.
The share price got another boost on June 27, when the company said fourth-quarter earnings jumped 32 percent to $437.9 million, meeting analyst expectations. Nike also said that worldwide orders grew 12 percent for the quarter.
Analyst Lehman Brothers Robert S. Drbul wrote in a note to investors the company has room for growth, particularly in Europe and China. He increased his price target to $70 from $60, which is an 18 percent increase from July 5's close at $59.35. He rates the shares "Overweight."
Nike shares rose $0.49 to $59.84 in midday trading on July 6, after earlier trading to a 52-week high of $59.97. It closed the day at $59.67.
Drbul added that he expects the company to actively repurchase shares under its $3 billion, four-year buyback program, which began in June 2006 and has $2.2 billion remaining.
Adjusted for a stock split, Nike shares have risen about 50 percent during the past 12 months.
Everlast's original suitor says company violated merger pact
Investment firm Hidary Group said Everlast Worldwide Inc. (Nasdaq: EVST) violated their merger pact by accepting a new takeover bid from a UK sporting goods retailer.
Brand Holdings, a unit of Sports Direct International raised its offer for Everlast to $134 million, or $33 per share. That compared with a sweetened bid of $127 million, or $31.25 a share, from Hidary.
In a letter filed with the SEC, Hidary said Everlast was "not entitled to terminate the merger agreement ... because the company had not received a superior proposal."
On June 28, Everlast terminated its merger pact with Hidary in favor of a deal with Brand Holdings. Both suitors raised their bids the next day, but Everlast stayed with its new partner, Brand Holdings.
Hidary said Everlast was required under the terms of the merger pact to give it written notice that it had received a new offer from a rival suitor. Hidary also was entitled to a four-day window to review any documents related to Brand Holdings' bid and negotiate a potential new offer for Everlast, according to the SEC filing.
Hidary said it was continuing to explore all options, including legal and equitable remedies, regarding Everlast's potential breach of the merger pact.
Crocs vice president exercises options
Crocs (Nasdaq: CROX) vice president of sales and marketing exercised options for 11,669 shares of common stock and sold them under a prearranged trading plan, according to a SEC filing.
In a Form 4 filed with the SEC, Michael C. Margolis reported he exercised options for the shares on July 2 for $2.85 apiece and then sold all of them the same day for $43.14 to $43.31 apiece.
The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.
Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.
Under Armour appoints president for European arm
Under Armour (NYSE: UA) has appointed Peter Mahrer as president and managing director for Under Armour Europe, overseeing its European operations headquartered in Amsterdam. He replaces Ryan Wood who is returning to the United States as planned in a reduced role where he will continue to leverage his global sales experience to support the brand's growth initiatives.
Mahrer comes to Under Armour from Puma AG where he most recently served as head of international sales and general manager, Central Europe. Prior to his tenure at Puma, Mahrer held executive positions at adidas AG, including head of the global football unit where he was responsible for development and implementation of all product categories and sports marketing.
Under Armour established its European headquarters in Amsterdam in January 2006.
GSI Commerce completes notes offering
GSI Commerce (Nasdaq: GSIC), a provider of e-commerce solutions for retailers and manufacturers, said it has completed its private offering of $150 million principal amount of unsecured 2.5 percent convertible senior notes due June 1, 2027. It also includes the exercise of the initial purchaser's over-allotment option to purchase an additional $25 million of notes.
Net proceeds to GSI from this offering will be approximately $145 million after deducting estimated discounts, commissions and expenses. GSI expects to use the proceeds for working capital, general corporate purposes and possible acquisitions.
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