Within hours of an acquisition of the repossessed Lamar company assets at a bank sale by former Pacific Cycle CEO Chris Hornung, Star Trac had landed the goods for its newly beefed up consumer division now led by Kevin Lamar.
How did that happen?
It was a busy November for all the parties involved: On the record, Lamar had said a week earlier that Star Trac had chatted with his former manufacturing partners in Asia who had also been talking to Hornung, who once had a partial ownership interest in their manufacturing business. Meanwhile, Hornung told SNEWS® he was purchasing the assets "on a speculative basis" that had nothing to do with his current Next Testing company. Sources said Star Trac had entered a bid with Wells Fargo bank to buy the assets but pulled out when it seemed the bank wasn't reacting favorably. But that didn't stop Star Trac from finalizing a three-part deal to get its hands on the inventory, tooling, parts and brands within about five or six hours after the sale closed.
A busy holiday
Here's what came down on a busy Veteran's Day holiday: In the morning, Hornung finalized his acquisition of the assets with Wells Fargo, never leading on to the bank that the assets were not staying with him or his company. Then he turned around and by early afternoon had sold the purchase onward to the manufacturing company's partners, Elton Chen and George Chen of the Accufit/Paragon companies in Taiwan and China. They were unsecured creditors in the bank's repossession of the Lamar assets in early September and stood to lose a lot of money, and Hornung apparently wanted to get things rolling again for them to help them recover losses. He told SNEWS® he knew they would either operate it themselves or distribute the goods in some way, but that he was only acting as an intermediary.
Meanwhile, the Chen partners had sealed an 11th-hour deal on Monday afternoon to sell the goods onward to Star Trac, where they had also made contact prior to the auction. They knew an arrangement with Star Trac would help them restart the business and perhaps recover potential losses more quickly, sources said. Sensing pullback from the bank representatives, Star Trac stayed away from the auction itself, as did Kevin Lamar. Hornung said he was not involved in any discussions with Lamar or Star Trac, but said he believes the deal between the Chen partners and Star Trac happened quickly.
Twenty-four hours after the bank sale, Star Trac announced it had bought the assets of the former Lamar, Health, Fitness & Sports company, never mentioning the convoluted path that lead to the acquisition.
Same office and back in business
All in all, this means that Star Trac, with former Lamar Fitness founder and CEO at the helm of its consumer division, owns the assets but not any liabilities including warranties made by the former company. Nevertheless, Kevin Lamar, who is now sitting back in his former office -- albeit at a folding table -- in Colorado that is now the Star Trac consumer division satellite office, said he and Star Trac will do what they can to work with retailers.
"We have the parts, and we'll take inventory," he said. "We'll do everything we can do to take care of those customers."
Consumers looking for service or warranty registration have also stumbled across SNEWS® and sent emails seeking help. Unfortunately, with the former Lamar Fitness website and old phone number not in operation, it may be difficult for them to find the company, although Lamar company's former retailers will receive the news to pass on to their customers.
Star Trac, which had already partnered with the Lamar company in spring 2007 for consumer equipment (click here to see a SNEWS® March 23 story), will now use the former Lamar equipment platform for its own lines, Kevin Lamar said. Those lines will include the Lamar, Advantage and Ignite brands. Kevin Lamar said other deals are pending for other brands; however, the Cybex name used on OEM equipment will disappear, also leaving those consumers without warranties or service.
"We are proud to add the LHFS consumer and vertical products to our market-leading portfolio," said Star Trac President and COO Steve Nero, in an official statement. "The coupling of Star Trac's design expertise, marketing, distribution channels and product family with LHFS' manufacturing and development resources will allow Star Trac to aggressively grow our consumer division."
The consumer division for Star Trac can be reached at the new Star Trac office in Boulder, Colo., 1-877-530-TRAC (877-530-8722). In addition to those sales and development managers already hired by Star Trac, additional office and warehouse employees of the former Lamar company will be hired.
SNEWS® View: In the end, the arrangement is win-win-win…mostly. We just need to wait and see how Star Trac deals with parts and service needs of former Lamar company retailers and end-consumers. Star Trac is a very service-oriented company and its representatives have told us multiple times it will do what it can, but we're not sure how much of the liabilities of the past it will be willing to take on. No question that it makes good business sense for Star Trac to take care of as many retailer and customer requests as it can since no retailer that felt burned by the Lamar company closure (and we have heard from some who needed or knew they would need parts or service and were beginning to feel desperate) will want to jump onboard with Star Trac unless the issues are made right. We suspect and trust that all will be worked out (but we at SNEWS® want to hear if they are not). This is likely a pretty inexpensive and quick entree into the consumer arena for Star Trac since it suddenly has an entire team accustomed to working together, brands that are known, equipment that has been developed, and a manufacturing partner already ready to go. 2008 should be another interesting year of growth for the company.