Performance Sports Group Ltd. (NYSE: PSG) (TSX: PSG) disclosed Monday that its audit committee has hired a law firm to vet its annual financial statements and that the pending review will cause it to miss a filing deadline and put the company in technical default on its loans.
PSG’s shares plummeted from about $3 to $1.20 in the first two hours of trading, but had recovered to about $1.70 by mid afternoon.
The company, which owns Bauer hockey, Mission hockey and other team sports brands, announced that its annual report on Form 10-K, including its annual audited financial statements for the fiscal year ended May 31, 2016 and the related management’s discussion and analysis (collectively, the “Form 10-K”), will not be filed by the required filing date of August 15, 2016.
The delay is a result of the decision of PSG’s audit committee to conduct an internal investigation in connection with the finalization of the company’s financial statements and the related certification process. To assist with this matter, the audit committee has retained independent counsel, Richards Kibbe & Orbe LLP, and independent financial advisors.
PSG said it does not know how long it will take the audit committee and its advisors to finalize the Form 10-K.
The failure to file the annual report on Form 10-K on time is expected to result in a default under the company’s credit facilities. The company has initiated discussions with its lenders to address this issue. There can be no assurances as to the outcome of such discussions.
The company currently continues operating its business and serving its customers in the normal course.
Performance Sports Group Ltd. makes ice hockey, roller hockey, lacrosse, baseball and softball sports equipment, as well as related apparel and soccer apparel. The company is the global leader in hockey with the strongest and most recognized brand, and is a leader in North America in baseball and softball. Its products are marketed under the Bauer, Mission, Maverik, Cascade, Inaria, Combat and Easton brand names and are distributed by sales representatives and independent distributors throughout the world. In addition, the company distributes its hockey products through its Burlington, MA and Bloomington, MN Own The Moment Hockey Experience retail stores.
