Three and a half years after the owners of Texas based distributor Tucker Rocky merged the business with MAG, the group has filed for Chapter 11 bankruptcy protection in the U.S. courts.
One of the two largest parts and accessory distributors in the United States, in Europe Tucker Rocky is best known for its ownership of brands such as MSR (Malcolm Smith Racing), Answer, ProTaper, QuadBoss, Biker’s Choice, Firstgear, Speed and Strength, BikeMaster and more.
MAG, with whom Tucker Rocky merged in early 2014, is the owner of internationally recognised manufacturers and brands such as Vance & Hines, Performance Machine, Roland Sands Design (RSD), Kuryakyn, Progressive Suspension, Mustang, J&P Cycles and UK based Renthal, best known for their off-road handlebars and sprockets.In what the company describes as implementation of a “comprehensive, consensual recapitalisation” (aka a “Pre-Pack”), the “leading independent manufacturer and distributor of branded aftermarket products and online retailer for the powersports industry” seeks to “eliminate approximately $300 million in debt through a debt for equity exchange supported by in excess of 90 percent of the principal amount of the Company’s prepetition first lien secured lenders and its asset-backed lenders”.
The remaining debt burden the group is carrying (said to be in the region of $100m to $150m) is being recapitalised by a consortium of new owners that will be led by equity investors Monomoy Capital Partners, BlueMountain Capital and Contrarian Partners.
 |
| MAG CEO Andrew Graves: “Through this process we will deliver a balance sheet that allows us to more effectively compete in today’s evolving powersports market. MAG’s businesses will continue to operate unaffected and the company has sufficient liquidity to fund operations” |
Andy Graves, CEO, said that the new owners “have deep experience in consumer products and lifestyle companies including distribution, retail and manufacturing. We are encouraged to have access to the resources the new owners bring, by their passion for the powersports industry, and for their shared vision for MAG’s future. Looking forward, MAG will be able to more aggressively capitalise on market and growth opportunities given our strong balance sheet post recapitalisation.”
Speaking about the group’s emergence from its protection filings, what led the business to this point and what this means for the future of the group, Graves said: “Through this process, we will deliver a balance sheet that will allow us to more effectively compete in today’s evolving powersports market.
“MAG’s businesses will continue to operate unaffected, and the company has sufficient liquidity to fund operations. Customer service and sales will continue, employees will receive wages and benefits as before, and vendors and suppliers will be paid in the ordinary course of business going forward.”
 |
| When Indianapolis based Tucker Rocky owner Lacey Diversified merged the business with MAG (April 2014), it created one of the largest parts and accessory manufacturing and distribution groupings the motorcycle industry has ever seen |
“The company expects to move through this process quickly, and emerge in the first quarter of 2018 as a stronger, better capitalised and competitive company.” To support operations through this process, MAG has secured up to $135 million in debtor-in-possession (DIP) financing from certain of its current secured lenders.
“The U.S. powersports market has been in persistent decline for the past few years,” said Graves. “In response, MAG has been working diligently to adjust to the changing landscape and has implemented many initiatives to parallel today’s market. Unfortunately, the company’s long-term debt continues to be an impediment to success.
“As such, we believe that by availing the company of the chapter 11 process, MAG has chosen the most efficient and expeditious way to right-size its balance sheet for the long term, so that we remain an industry leader for many years to come. We and our key creditors are committed to what will hopefully be a short bankruptcy case.”
