UPDATE: Tennis Giant Prince Sports Files For Bankruptcy
May 01 2012 - 3:39PM
Dow Jones News
Prince Sports Inc. filed for bankruptcy protection Tuesday after
reaching a deal to be taken over by Authentic Brands Group LLC,
which recently bought up Prince's debt.
Prince, which started in the 1970s as a manufacturer of
tennis-ball machines, has become a prominent maker of tennis
rackets and balls pioneering oversize and long-body tennis
racquets, along with equipment for other racket sports. It has
sponsored some of tennis's best-known athletes, including Jennifer
Capriati, Patrick Rafter and Martina Navratilova. Though it lost
Maria Sharapova to Head NV in January 2011, it currently sponsors
Nikolay Davydenko and Gael Monfils.
In the past decade, Prince has changed hands through a series of
private-equity deals, getting acquired most recently in 2007 by
Nautic Partners LLC. Nautic bought Prince from Lincolnshire
Management Inc., which had purchased Prince in 2003 from apparel
company Benetton Group SpA.
In court papers filed with the U.S. Bankruptcy Court in
Wilmington, Del., the company blamed increased competition amid the
economic downturn for the start of its financial woes, causing
Prince to begin marketing itself. Prince in 2010 attempted to sell
the rights to its brands and its Chinese operations, hiring UBS AG
to manage the sale, but didn't receive an acceptable bid.
Instead the company decided to change its brand and advertising
strategy by upgrading products in hopes of increasing market share
in an industry where it competes with sporting retailers Head NV
and Wilson Sporting Goods Co., which both offer a wider range of
products, and Dunlop International.
Prince tried again to sell in October 2011. Robert W. Baird
& Co. found nine potential buyers interested in buying the
whole company and was in discussions in March with three possible
purchasers, who would have paid "substantially less than the
existing amount of debt," according to court papers.
Its tennis unit recorded $59 million in sales in 2011,
accounting for 83% of the company's revenue, according to a
bankruptcy-court filing. Just over half of Prince's sales come from
North America.
The company has a book value of $54.2 million and about $65
million in debt to Authentic, plus $12 million in debt to vendors
and other payables, the filing said.
Authentic, a brand development and licensing company, in March
purchased the debt from Madison Capital and General Electric Co.'s
(GE) GE Capital unit and said it would acquire the whole company.
The debt will be swapped for Prince's entire equity.
Authentic, owned by private equity firm Leonard Green &
Partners L.P., owns or licenses the intellectual property rights
for the estates of Marilyn Monroe and Bob Marley, mixed martial
arts brand TapouT and clothing brand Silver Star.
Prince is slated to make its debut appearance in bankruptcy
court Wednesday.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Stephanie Gleason, Dow Jones Daily Bankruptcy Review;
202-862-1347; stephanie.gleason@dowjones.com
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