Bowflex Inc., the publicly traded fitness company, which rebranded itself from Nautilus, announced on May 3 that it has entered into a purchase agreement with Johnson Health Tech Retail, Inc. to serve as the stalking horse bidder to acquire substantially all of the assets of the company for $37,500,000 in cash at the closing of the transaction, less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes. To facilitate the sale process, the company and certain of its subsidiaries have voluntarily initiated a Chapter 11 bankruptcy protection proceeding in the United States Bankruptcy Court for the District of New Jersey, which will allow interested parties to submit competing offers. The move into bankruptcy protection had already been foreseen as a possibility in February.
Additionally, subject to court approval, the company has secured a $25 million facility for debtor-in-possession financing, comprised of a $9 million revolving commitment and $16 million term loan reflecting the roll-up of the company’s pre-petition term loans of approximately $16 million from Crystal Financial LLC d/b/a SLR Credit Solutions and its affiliates, subject to court approval, to enable the company to continue operating in a normal course and meet its financial obligations to employees, vendors and its continued provision of customer orders during Chapter 11 proceedings and while executing the sale process. The DIP Facility is being provided by SLR under an amendment to the company’s existing Term Loan Credit Agreement with SLR dated Nov. 30, 2022.
The company is seeking approval of the proposed transaction under Section 363 of Chapter 11 of the US Bankruptcy Code, which will allow outside interested parties to submit higher or otherwise better offers. The transaction is subject to approval by the bankruptcy court and any other approvals that may be required by law, as well as other customary conditions.
The asset purchase agreement with the stalking horse bidder provides for standard bid protections. These protections include the reimbursement by the company of up to $600,000 of the stalking horse bidder’s expenses payable under specified circumstances upon termination of the stalking horse asset purchase agreement; payment by the company of a breakup fee of 3.5 percent of the purchase price; and the company’s forfeiture of the $3.75 million stalking horse bidder’s deposit.
Information about the Chapter 11 cases and proposed asset sale are available online at https://dm.epiq11.com/Bowflex.
