Heelys, Inc. and The Evergreen Group Ventures, LLC entered into a definitive asset purchase agreement under which an affiliate of Evergreen will acquire substantially all of the operating assets and assume substantially all of the operating liabilities of Heelys and its subsidiaries for $13.9 million in cash.
Heelys' cash and marketable securities, which totaled approximately $58.2 million as of June 30, 2012, will not be included in the assets to be acquired in the Transaction. The Transaction was unanimously approved by Heelys' board of directors.
“After a thorough analysis of various strategic alternatives, the Board has determined that this all-cash transaction represents a great outcome for the company and its stockholders,” said Tom Hansen, Heelys' President and CEO.
“Heelys is an iconic brand recognized around the world for its innovative skate shoes. The brand embodies an active, social, fun lifestyle that we value highly. I've seen the joy these shoes bring to kids of all ages – it's truly magical, and we are incredibly excited to build on that foundation with product innovation, licenses and creative partnerships,” stated Jim Wagner, manager of Evergreen.
The purchase agreement contains a 30-day period (the “go-shop period”) during which the company, with the assistance of its financial and legal advisors, will actively solicit, and potentially receive, evaluate and enter into negotiations with third-parties that offer alternative transaction proposals. There can be no assurance that this process will result in the company receiving a superior proposal. The company does not intend to disclose developments with respect to its solicitation process unless and until the Board has made a decision with respect to any potential superior proposal, subject to the company's reporting obligations with the Securities and Exchange Commission. The go-shop period commences on the date of the purchase agreement.
The Transaction is subject to various closing conditions, including the receipt of approval from the holders of a majority of the outstanding shares of Heelys' common stock. In addition, Capital Southwest Venture Corporation and another stockholder of the company, who collectively hold approximately 35.1% of the issued and outstanding shares of the company's common stock, have entered into voting agreements with Evergreen, pursuant to which they have agreed, among other things, to vote their shares in favor of the Transaction. Subject to the closing conditions set forth in the purchase agreement and the receipt of no superior proposal, the Transaction is expected to close this year.
The Board also unanimously determined that following the closing of the Transaction, the company should be dissolved and liquidated pursuant to a plan of liquidation and dissolution (the “Plan of Dissolution”). The Plan of Dissolution is conditioned on the consummation of the Transaction and obtaining approval of the company's stockholders relating to such Plan of Dissolution. Following the closing of the Transaction and the payment of outstanding liabilities, along with the taking of other actions specified in the Plan of Dissolution, the company intends to distribute the net proceeds of the Transaction and the liquidation and dissolution of the company to the company's stockholders in one or more liquidating distribution installments.
Roth Capital Partners, LLC is serving as exclusive financial advisor to Heelys and has delivered a fairness opinion in connection with the Transaction. Gardere Wynne Sewell LLP is serving as legal advisor to Heelys.
Sutton, Pakfar & Courtney LLP provided legal counsel to Evergreen in connection with the Transaction. Imperial Capital, LLC is serving as strategic advisor to Evergreen.
