Liquidators and retailers, including Dick's Sporting Goods Inc., are among the potential buyers for Golfsmith International Inc.'s U.S. retail chain at a coming auction, according to people familiar with the bidding.

Ahead of Wednesday's bankruptcy court-overseen auction, these people said Tuesday that potential bidders include retail competitor Worldwide Golf Enterprises Inc., which is working on a bid with liquidator Great American Group. Other potential bidders are retailer Golf & Tennis Pro Shop Inc. and liquidator Yellen Group.

Dick's, one of the biggest U.S. sporting goods retailers that also owns and operates the Golf Galaxy retail chain, is working with liquidators including Tiger Capital Group to make a possible play for Golfsmith's assets, two of these people said.

Representatives of Dick's, Worldwide and Golf & Tennis Pro Shop didn't respond to requests for comment Tuesday.

The bids likely won't seek to preserve Golfsmith, which filed for bankruptcy protection last month, as a going concern but instead aim to cherry-pick from its list of approximately 90 still-open stores and inventory, the people said. Worldwide Golf and Great American's bid would keep a large portion of the stores open, while Yellen Partners wants the right to liquidate the entire chain, according to the people.

An auction for the Golfsmith assets is set to begin Wednesday morning in the New York office of its bankruptcy lawyers at Weil Gotshal & Manges. Winning bids will be subject to bankruptcy-court approval.

Buyers face a tight deadline to close a deal under terms of Golfsmith's bankruptcy financing set by Antares Capital LP, the successor to GE Capital Corp. However, Golfsmith recently lined up replacement financing from PNC Bank, which court papers show offers the company more flexibility in carrying out the sales.

Golfsmith filed for chapter 11 bankruptcy protection on Sept. 14 and quickly won court approval to immediately close 20 of its worst-performing stores in the U.S. Like many other retailers, Golfsmith struggled with locations that are simply too big or in oversaturated markets.

The company simultaneously sought court protection in Canada with plans to sell its chain of 55 Golf Town stores to an entity controlled by two of its creditors, Fairfax Financial Holdings Ltd. and funds managed by CI Financial Corp.

The company's financial woes reflect the waning popularity of golf, a sport that has seen the number of people hitting the links fall to about 24 million from a 2005 peak of 30 million according the National Golf Foundation.

Canada's Golf Town acquired Golfsmith in 2012 for about $100 million, with backing from the private-equity arm of Canadian pension fund Ontario Municipal Employees Retirement System. People familiar with the auction said they expect bids for the U.S. assets to fall well below the 2012 purchase price.

Many of the same faces bidding on Golfsmith's U.S. stores and inventory turned up at the auction for big-box sporting goods retailer Sports Authority Holdings Inc. earlier this year. The company sought bankruptcy protection in February with the hopes of reorganizing, but ended up selling its stores to a trio of liquidators. Dick's scooped up Sports Authority's brand name and other intellectual property for $13.5 million as well as 31 store leases for $8 million.

Write to Jacquie McNish at Jacquie.McNish@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com

(END) Dow Jones Newswires

October 18, 2016 19:05 ET (23:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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