The Forzani Group Ltd. last week announced that it plans to acquire Athletes World Limited, a Canadian retailer of athletic and recreational footwear and apparel owned by Bata Ltd. Athletes World had filed on October 30, 2007 for protection under the Companies' Creditors Arrangement Act in Canada, roughly the equivalent of Chapter 11 Bankruptcy protection in the U.S.
The retailer apparently opted for bankruptcy protection after a deal with previous suitor Michael Gold, who owns a number of fashion chains in Canada, fell apart over a tax dispute.
The Forzani deal, which is expected to close by the end of November, will be financed through existing credit facilities.
Athletes World, which is based in Toronto, Ontario and currently operates 138 stores throughout Canada, generated CN $186 million in revenues in fiscal 2006. According to the filing with the Ontario Superior Court of Justice, the retailer posted a loss of CN $7.4 million for fiscal 2006 after a loss of CN $5.6 million on approximately CN $211 million in sales in fiscal 2005. Athletes World owes creditors roughly CN $152.3 million, including approximately CN $115 million to Bata. One key issue that killed the Gold deal was a large amount of tax owed to Manitoba and the Canadian federal government. The bankruptcy filing is expected to make the tax issue less of an issue.
As recently as last week, Gold was still mentioned as a possible suitor, as was Foot Locker, Inc.
Forzani said it anticipates that “Athletes World will, as it has with its other banners, maintain dedicated office staff, store employees and operational functions.”
