The bankruptcy auction by Flexible Flyer of Universal Gym Equipment assets is setting up to be more than a gavel-thump formality.
True Fitness in March had submitted its bid of $500,000 for Universal assets -- being auctioned May 12 as a part of owner Flexible Flyer Acquisition (FFA) Ch. 11 bankruptcy reorganization filed September 2005 – making it the "stalking horse" bidder. A stalking horse bidder is the first approved bid and one that others must beat to participate in the court auction.
In a letter faxed to the court May 8, Sportcraft tendered its offer of $550,000 for Universal assets. In addition, in a recent letter to the U.S. Bankruptcy Court, Northern District of Mississippi court, Icon Health & Fitness called itself "a party in interest in the … bankruptcy case" and has requested that all notices regarding the case be sent to its legal representatives. A bid was to be tendered, an Icon company representative said, and Icon did plan to be at the auction as a bidder.
Already FFA has auctioned off or is preparing to liquidate other divisions: Flexible Flyer, its toy division, was sold to Troxel Products; and Yerf Dog, its wheel-goods division, is being prepared for liquidation through auction, similar to Universal. (Click here to see an April 17, 2006 SNEWS® story, "Universal Gym set for auction, True lines up as 'stalking horse' bidder." -- )
SNEWS® View: The assets of Universal make sense for Sportcraft – likely the company would develop it as a "value-priced" strength line for its mass merchandiser customers, which would be exactly the demographic for a name like Universal. The assets also make sense for Icon – somewhat a collector of good brand names, like NordicTrack. Since True has not had a raging success yet in developing strength-training equipment, this could give it a leg-up with a known brand name, but we're not convinced the name "Universal" will translate to its normally higher-end specialty lines. However if it submitted a bid, True must have plans as to how it could integrate Universal. Of course, Kevin Lamar of Lamar Fitness has also said he won't let the brand get away from him since he has a license to use the name at sporting goods for cardio. Now that a court bankruptcy auction will happen, anybody could walk into the court room and tender a bid, assuming it met terms. Any objections would be up to the judge, but it's the judge's role to get the best offer for the seller. Until the judge approves a bid – set for May 12 – only the companies involved will know where they may be headed. As we said – game on!