Marking its entry into U.S. retailing, Sports Direct , the U.K.’s largest sporting goods chain, officially announced that it received approval to acquire Eastern Outfitters, the parent of Bob’s Stores and Eastern Mountain Sports, in a bankruptcy sale for $101 million in cash.
The businesses to be acquired include (following closures) approximately 50 retail stores in the U.S. under the Bob’s Stores and Eastern Mountain Stores names. In mid-April, Eastern Outfitters LLC, the parent of Eastern Mountain Sports and Bob’s Stores, won court approval to close 48 stores.
The purchase price has either been advanced by Sports Direct by way of debtor-in-possession and other loans to Eastern Outfitters LLC prior to, and as part of, the Chapter 11 process, or been used by Sports Direct for the acquisition of Eastern Outfitters’ debt.
In the year ended January 28, Eastern Outfitters incurred a pre-tax net operating loss of $26 million. As of January 28, the gross assets of the businesses being acquired was $126 million.
The sale had been approved by Delaware Bankruptcy Court on April 19, according to Sports Direct’s statement.
The acquisition is expected to complete in the first half of May 2017 and will provide Sports Direct “with a footprint in U.S. bricks-and-mortar retail and a platform from which to grow U.S. on-line sales,” according to Sports Direct’s statement.
At the same time that Eastern Outfitters filed for bankruptcy on February 6, Sports Direct, the U.K.-based sporting goods chain, committed to serve as the stalking horse bidder for its assets. Sports Direct also agreed to purchase its outstanding second lien debt from Versa, which had acquired the company out of bankruptcy proceedings last year, as well as to serve as the DIP (debtor-in-possession) lender in the chapter 11 case.
In late March, the retailer, facing protests about a planned sale from unsecured creditors, agreed to hold a private sale to Sports Direct rather than hold a bankruptcy auction as part of a deal reached with unsecured creditors.
Photo courtesy Eastern Mountain Sports