As SEW reported last week, Huffy Corporation filed a motion in U.S. Bankruptcy court seeking approval to sell its Hespeler hockey, in-line skates, and action sports businesses to Forzani Group Ltd. in a deal worth $1.6 million. Huffy was also soliciting higher or better offers for these assets.
This week, it appears that Forzani has their hands in at least one more deal involving the Huffy assets, this time bidding with two other parties to acquire the companys Lamar and LTD snowboard businesses for $2.5 million. Filed court documents listed the acquiring company as Collective Brands of Ontario, Canada, causing some questions early in the week if the company was related to Collective Licensing, which owns the Airwalk brand.
It now appears that attorneys for the acquiring company misfiled their papers and the company has had a name change to Lifestyle Brands, Inc. The company is 40% owned by former and current Gen-X execs Jamie Salter and Kenny Finklestein, 40% by David Kassie, the former CIBC CEO who is now a principal at Genuity Capital, and 20% owned by Forzani Group Ltd. Salter and Finkelstein bought back the gray market portion of the Gen-X business in March of this year and then quickly flipped it to Forzani.
Finkelstein told SEW that Lifestyle is a business set up to acquire and license brands. He said the company is not part of the Gen-X Sports business, which is a subsidiary of Forzani. Asked about the confusion in the name, Finklestein said they never intended to use Collective as a name for the business, that it was just a descriptive moniker until they formalized the Lifestyle name. An 8-K filed by Huffy Corp. on Friday confirmed the name change.
Huffy was apparently in negotiations to sell the snowboard business to another third party, but the party backed out on November 23, according to the court documents. Three days later, Lifestyle indicated its desire to purchase these two brands.
Competing bids for the two brands will be given consideration if received before December 8, 2004. The final auction date is December 10, 2004. Lifestyle has been granted stalking horse” status in the deal that is subject to a $75,000 break-up fee. Any other bids must be at least $125,000 more than the Lifestyle bid, including the break-up fee. A hearing to approve the sale will be held on December 14, 2004 at the U.S. Bankruptcy Court in Dayton, OH.
As part of its reorganization strategy, Huffy has decided to focus its efforts on its core business of “bicycles, other wheeled products and golf equipment” and discontinue the “less successful” lines of businesses under its former Gen-X operation that it acquired from Salter and Finklestein in September 2002.
In the bankruptcy filings, it was stated “The debtors and their affiliates have analyzed the profitability and product mix of their various businesses The Debtors have determined, for a variety of reasons that the snowboard business does not fit with Huffys strategy ”
Court documents also placed a heavy emphasis on completing the sale of these brands before the end of the year. The primary reason behind this was the importance of “an annual tradeshow” in mid January. It appears that if Huffy does not sell Lamar and Ltd. by years end, the two brands will not be attending SIA.
The document stated, “Failure to capture the benefits of a pre-tradeshow sale would lead to a substantial decrease in the value of the trademarks as the products would not be able to be actively marketed again until the January 2006 Tradeshow.”
