Bauer, Easton sports gear maker says it is in default with creditors
Firm says fiscal 2016 filing has been delayed by an internal investigation by audit committee
The maker of Bauer hockey equipment saw its bruised share price tumble to the lowest level in years on Monday after the company announced it was unable to file an audited annual report with regulators on time.
Performance Sports Group Ltd., which also makes Easton baseball gear and other sports products, also said that failure to meet the Aug. 15 deadline puts it in a default position under its credit agreements.
Its shares lost almost half of their value Monday. In Toronto, they were down $2.09, or 46.44 per cent, to $2.41 on 4.2-million shares—and down about 90 per cent from its year-earlier price at $19.93.
- Bauer bringing 24,000 square-foot store to Vaughan in 2017
- Hockey gear maker Bauer buys into the boys of summer
The company said Monday before markets opened that its filing was delayed by an internal investigation by the board audit committee.
Performance Sports didn't reveal what the audit committee is investigating, but said independent legal and financial advisers have been hired. It has started talks with its lenders, but could not predict the outcome.
According to an announcement in June, Performance Sports expected to end its 2016 financial year with US$424.8 million in debt — little-changed from a year earlier.
Among the company's investors is Sagard Capital Partners, part of the Montreal-based Power group of companies. As of July 25, Sagard owned a 17 per cent stake of its common shares, making it the largest shareholder.
Sagard began increasing its holdings in Performance Sports in March after the company's stock plunged following a downgrade to its 2016 adjusted earnings estimate.
Hurt by failure of retailer
One of the biggest problems for Performance Sports has been the Chapter 11 bankruptcy proceedings for The Sports Authority, one of the biggest sports retailers in the United States.
Performance Sports said Monday it will continue to operate its business normally as it works to complete its audited financial report.
"Our company continues to operate effectively and we do not expect that this announcement will have any impact on our ability to continue to provide our leading products to any of our retailers," said in an emailed statement.
"The vast majority of product has already shipped to hockey retailers and there should be no impact to any players or families purchasing equipment for the upcoming season."
Based in Exeter, N.H., Performance Sports announced in recent weeks that it had experienced "adverse retail market conditions" in its fourth quarter, the March to May period.
It announced in June that would have to make unexpectedly high reserves for bad debts by its customers. It also said it had decided against fulfilling "several customer orders" and that sales would be lower than expected as a result.
In July, it announced a restructuring of its baseball-softball segment, reducing offerings under its Combat brand and a consolidation of the business under its Easton brand.
On Aug. 2, it announced a further restructuring that would reduce its workforce by 15 per cent since its 2016 financial year ended in May.