Prince Sports filed a voluntary petition for Chapter 11 reorganization in U.S. Bankruptcy Court for the District of Delaware with a plan that calls for the iconic tennis brand to be acquired by Authentic Brands Group LLC, the owner of the TapouT brand. The proposed restructuring would relieve the company from a debt burden in excess of $60 million of secured indebtedness.
Prince Sports' portfolio of brands includes Prince (tennis, squash and badminton), Ektelon (racquetball) and Viking (platform/paddle tennis). Its tennis unit recorded $59 million in sales last year, accounting for 83 percent of the company's revenue, according to a court filing. Just over half of Prince's sales come from North America.
In court papers, Gordon Boggis, president and CEO of Prince Sports, Inc., said, “Declines in the global racquet sports market and demand for the industry's products, combined with increased competition over the past five years, have resulted in lower sales of the debtors' product lines. The downturn in the economy commencing around 2008 has particularly negatively impacted consumer discretionary spending and thus sales industry-wide.”
Prince said the 2008 downturn and its high debt load Prince caused the company to put itself on the block. In 2010, the Bordentown, N.J., company hired UBS to explore the sale of the rights to its brands and its Chinese operations, but didn't receive an acceptable bid. After the failed sale, Boggis noted in court papers that a new brand and advertising strategy and an upgrade of the company's products was embarked on starting in February 2011 that resulted in a “meaningful increase” in booking orders in many markets. Prince again tried to sell itself last October. Robert W. Baird & Co. found nine potential buyers interested in buying the whole company. In March 2012, Baird was in discussions with three possible purchasers, who would have paid “substantially less than the existing amount of debt,” according to court papers. But Authentic Brands acquired Prince's secured debt from GE Capital and Madison Capital on March 27, and obtained their previously-held liens on substantially all of the company's assets. Thereafter, Authentic Brands indicated its interest in acquiring ownership of the company.
Authentic Brands, owned by Leonard Green & Partners, owns or licenses the intellectual-property rights for the estates of Marilyn Monroe and Bob Marley, as well as the mixed-martial-arts brand TapouT and clothing brand Silver Star.
In the past decade, Prince has changed hands through a series of private-equity deals, getting acquired most recently in 2007 by Nautic Partners LLC. Nautic bought Prince from Lincolnshire Management Inc., which had purchased Prince in 2003 from apparel company Benetton Group.
Boggis said in a statement that despite economic constraints, consumer demand for Prince products and interest in the brand remains strong worldwide.
“Prince is, and will continue to be, a great, global brand in the racquet sports business. This filing does not change that,” said Boggis. “We have a long history, and are planning for an exciting future, focused on game-changing, product innovation, engineered to take players' games to the next level. Securing this protection will help us to continue to focus on that vision.”
