Prince Sports Group has filed a voluntary petition for bankruptcy protection and reorganization for the U.S. operations. The move is seen as only an effort to clean up the tennis company's debt, especially with its Asian suppliers, prior to its takeover by Authentic Brands Group (ABG), owner of Taiput and licensee of important names such as Marilyn Monroe and Bob Marley.
The chairman, president and chief executive of this New York-based company is James Salter, an entrepreneur who has been involved in numerous transactions involving sporting goods companies such as Ride Snowboards, Airwalk, Tommy Armour Golf, Sims, Vision Street Wear, Lamar, LTD, Ultra Wheels and Ram Golf. The vice chairman of ABG is Kenny Finkelsein, co-founder and former manager of Gen-X Sports, which carried many of these sports brands and others including Hespeler and Volant Ski.
A few weeks ago ABG acquired Prince's secured debt of more than $60 million from GE Capital, and it is now converting it into a 100 percent stake in the tennis company. As of Jan. 11, Prince owed more than $56 million on two term loans and $5.08 million on a revolving credit line. Besides the secured debt taken over by ABG, Prince owes around $10.2 million to Asian suppliers and other unsecured creditors. The biggest creditors are said to be Da Sheng International of Taiwan, Pais International and Marshal Industrial of Hong Kong, Bridgestone Tecnifibre of Thailand and Ocean Well Company of Taiwan.
Gordon Boggis, president and chief executive of Prince, said that he anticipates emerging from the bankruptcy proceedings as “a more efficient performance racquet sports brand with a more competitive model in the market, while eliminating the economic constraints that have prohibited the brand from achieving its potential.”
A statement from the company stressed that Prince Europe and other subsidiaries outside the U.S. are not subject to the proceedings and are expected to continue to operate normally. According to reports, Prince suffered a sales decline on a global basis in the past few years due to a declining tennis market and competitive pressures, but not in Europe. Including Ektelon and Viking, it had total sales of nearly $70 million last year, of which more than half came from outside North America.
Company officials indicate that Prince is profitable now in Europe, where its sales grew by about 11 percent in 2011, giving it increased market share of 17 percent in tennis and more than 40 percent in squash. Sales grew by an additional 25 percent so far this year in Europe, and orders are up by more than 30 percent. In Europe, the brand is reaping the benefits of a policy of focusing on the performance side of the market, while taking over the distribution of its products in most countries.
In the past three years, it has set up sales offices in the U.K., Ireland, France, Italy, Spain, Portugal, the Benelux countries and all the German-speaking countries. The latest ones are those in the U.K. and Switzerland. In the U.K., Prince has stopped its distribution agreement with Solo Sport and is setting up a subsidiary headed up by John Ballardie, who ran Wilson in the U.K. until 2010. He is a brother of Mike Ballardie, who has been running Prince Europe for many years.
In Switzerland, Prince has a hybrid distribution agreement with a new company, called Ace Sports, that has been established by the brand's Swiss distributor, Werner Zuercher, together with the local distributor of O'Neill to sell Prince as well as Tretorn products. Prince owns the inventory of the Swiss company, which takes orders and invoices customers.
Prince has gone through many changes of ownership since it was sold by the former Benetton Sportsystem in 2003. It has been the property of a private equity firm, Nautic Partners, since 2007. The company has been on the block again since at least last October. Reportedly, ABC bought GE Capital's debt in March, also getting the related liens on Prince's assets held by GE Capital and another lender, Madison Capital. Prior to that, the company's advisers had found three potential candidates to its takeover, but for a much lower enterprise value.
