Riddell Bell Holdings last week filed an S-4 with the SEC to exchange existing 8.375% Senior Subordinated Notes due 2012 for new notes that are registered under federal securities laws. The new notes, worth $140 million, are not subject to transfer restrictions and are not entitled to certain registration rights relating to the existing outstanding notes. Due to the registration of the notes, RBH will now provide more visibility to its business and give more insight into the acquisitions over the last two years that have created the company.
Fenway Partners, which owns the company, arranged the original notes offering along with a $130.2 million senior secured credit facility when it merged Riddell Sports Group and Bell Sports in September 2004.
Proceeds from the financings were used for the $243 million purchase of Bell Sports and for the refinancing of existing indebtedness. Of the overall net purchase price, $60.7 million was paid in cash funded by an investor group led by Fenway Partners Capital Fund II, L.P. and certain members of management, $7.5 million of member equity units of certain Bell Sports shareholders, and $0.9 million in consideration of certain services provided in effecting the transaction and related financing. The balance was financed through the debt facilities.
Fenway acquired Riddell Sports Group in June 2003 in a $149.4 million deal with former owner Lincolnshire Management. Lincolnshire had acquired Riddell for approximately $61 million in cash in June 2001 from the company now known as Varsity Brands.
RBH claimed a 55% market share in high school, college, and pro helmets for 2003, and sees Schutt Sports as their largest competitor. The company also stated that they estimated that the Bell and Giro brands had a 60% market share in the U.S. in 2003. The Giro brand was said to have a 38% share of the ski and snowboard helmet market. In the filing with the SEC the company stated that in 2004, it sold more than 8.4 million helmets.
Approximately 36.4% of the 2004 pro forma net revenues were generated from sales of team sports products, 54.4% from bicycling and action sports products, 5.7% from snow sports products and 3.5% from other products.
The companys top ten customers accounted for approximately 44% of 2004 pro forma net revenues, with Wal-Mart accounting for approximately 25% of pro forma net revenues for the year. In 2004, Bell Sports grew its market share and SKU count at each of its top five retail customers. During the same period, Riddell Sports increased its sales primarily by improving its sales force productivity and expanding its sales force headcount by approximately 10%. Bell Riddell Holdings intends to leverage its combined channel strength to pursue cross-selling opportunities.
The company said that it will supply helmets to 85% of the NFL as well as six-time Tour de France winner Lance Armstrong, BMX stunt-riding champion Dave Mirra, leading freestyle skier Tanner Hall, and super cross champion Jeremy McGrath.
Looking ahead, Riddell Bell Holdings said that it will focus on four main areas in order to continue growth. First, the company will grow market share by increasing sales to existing customers; second, it will leverage its brand portfolio and customer relationships to develop and sell new product lines; and third, it will increase profitability and service levels through “continued operational improvements and further optimization of the supply chain.”
Finally, the company intends to selectively pursue acquisition opportunities that are “accretive to our cash flow, accelerate our growth into other helmeted activities or enable us to offer complementary products to our customers.”
>>>Judging by the SEC filing, the press release, and the private conference call with investors, BOSS is willing to bet an IPO is on the horizon
