Schutt Sports Inc. won court approval to sell virtually all its assets to Kranos Intermediate Holding Corp, a unit of Los-Angeles private equity giant Platinum Equity LLC, for about $33.1 million. The winning bid came after a 19-hour bidding marathon between Kranos and Rawlings.
Schutt Sports, based in Litchfield, IL, filed for bankruptcy in September. Kranos had made a stalking horse offer to buy Schutt in November in U.S. Bankruptcy Court in Wilmington, Del., which led to the auction. Platinum, the Beverly Hills, CA-based private-equity firm run by billionaire Tom Gores, has completed almost 100 acquisitions since the company was created in 1995, according to its website.
The auction started just before 11 a.m. on Tuesday and didn't conclude until after 6 a.m. Wednesday, according to the St. Louis Dispatch. John Stark, managing director of Oppenheimer & Co., the financial adviser who oversaw the auction, selected Platinum's bid largely because the offer included the provision that it could close on the acquisition on Dec. 15. It also agreed to keep Schutt Sports' employees in Litchfield and Salem, Ill., for 12 months, and Schutt Sports' employees in Pennsylvania for three months.
Rawlings filed an objection to the auction after it concluded, alleging proper procedures were not followed. Rawlings' highest offer before the auction concluded was $36 million. It had indicated it could close on the acquisition on Dec. 24.
U.S. Bankruptcy Judge Kevin J. Carey indicated he would approve the sale once final language has been drafted after ruling that the auction process was fair.
“The process was not so flawed that the court should upset it,” Carey said at the hearing Wednesday in Wilmington, Delaware, according to Bloomberg News. “The bidding was abruptly stopped, but I don't think in a way that prejudiced or wronged” any potential buyer.
Rawlings stopped making football helmets two decades ago but re-entered the market in July.
“We're excited, it gives us a fresh start and a lot of momentum coming out of bankruptcy, and it assures our customers, employees, and vendors,” Robert Erb, chief executive officer of Schutt Sports, told Bloomberg News in an interview after the hearing. “The future looks bright, we have high expectations of ourselves, and with a partner like Platinum we think we can exceed them.”
When Schutt filed under Chapter 11 in September, $34.8 million was owed to secured lender Bank of America NA. Another $17.5 million was owed on a subordinated note to Windjammer Mezzanine & Equity Fund II LP. The pre-bankruptcy secured debt was replaced with a $34 million credit to finance the Chapter 11 effort.
Schutt Sports filed for bankruptcy Sept. 6 after losing a $29 million patent infringement lawsuit filed by a competitor, Riddell Inc., which is based in suburban Chicago.
