Gander Mountain Co., which sells hunting, camping, fishing and other outdoor-related gear from stores across the U.S., sought chapter 11 bankruptcy protection with the goal of finding a buyer.
The St. Paul, Minn., company said Friday that it plans to seek going-concern bids for its retail chain in the coming weeks. If multiple offers are received, it has proposed holding an auction in late April so it could ultimately close a sale by May 15.
Negotiations with a potential stalking horse, or lead bidder, are under way but didn’t yield a firm bid before Friday’s chapter 11 filing, court papers say.
Any bid for the chain would be subject to the approval of the U.S. Bankruptcy Court in St. Paul, where Gander Mountain sought chapter 11 protection. WSJ Pro Bankruptcy this week reported that Gander Mountain would file for bankruptcy.
To fund its chapter 11 case, Gander Mountain is seeking court approval of $452 million in bankruptcy financing from existing lenders led by Wells Fargo. The financing consists of new money as well as a refinancing of $390 million already owed to the lender group.
Gander Mountain is also proposing to continue honoring gift cards and rewards certificates during its bankruptcy case. The company estimates there are $46.5 million in outstanding gift cards and $3.7 million in rewards certificates, but it doesn’t expect customers to redeem all of those.
The company is the latest large retailer to turn to bankruptcy in the face of changing consumer behavior—most notably, the rising dominance of online shopping that has caused sales to fall at big-box retailers.
Gander Mountain said it would continue operating during the chapter 11 process, although it does plan to start closing about 30 underperforming stores in the coming weeks. Court papers say the chain operates about 160 stores in 27 states.
The company reported assets and debts each in the $500 million to $1 billion range in its bankruptcy petition.
Joining Gander Mountain in bankruptcy is its Overton’s Inc. subsidiary, which sells boating and water-sports products in catalogs and online.
Court papers say the companies are essentially run as one business and have “substantial overlap” of their creditors, from lenders to trade vendors.
Vendors are owed about $115 million, court papers say. That includes Remington Arms Co., owed $2.6 million, and Under Armour, owed nearly $1.1 million.
Together, Gander Mountain and Overton’s employ about 6,650 people at their stores, corporate headquarters and distribution centers.
Advising Gander Mountain and Overton’s in the bankruptcy are lawyers at Fredrikson & Byron and investment bankers at Houlihan Lokey Capital Inc.
The first hearing in the case will be held Tuesday, court papers say.
To read the full article from The Wall Street Journal, click here.