Fitness financials: Winmark to redeem notes, plus Hanesbrands, Puma

Winmark said it would redeem all of its outstanding renewable unsecured subordinated notes by late July, an analyst added Hanesbrands to his list of ‘Top Picks,’ and Puma said it would appeal a court ruling that could force it to pay up to EUR 98 million to settle a long legal battle.

Winmark to redeem notes

Winmark Corp. (Nasdaq: WINA), parent of Play It Again Sports, said it would redeem all of its outstanding renewable unsecured subordinated notes by late July, using a combination of its existing cash as well as bank borrowings.

The company said the redemption price would equal 100 percent of the principal amount, plus accrued and unpaid interest up to the redemption date. All interest due on the notes will cease to accrue on and after the redemption date, it added.

“This series of transactions will lower our overall cost of borrowing, allow us to use our existing cash to pay down debt and preserve our flexibility for the future,” said John Morgan, chairman and CEO, in a statement.

As of June 26, Winmark said it had approximately $18.6 million of renewable unsecured subordinated notes outstanding.

The company noted that the redemption is contingent upon it obtaining financing to complete the transaction. It said it has received a commitment from one of its existing lenders on a new bank agreement that it expects to have in place prior to the redemption date.

Analyst adds Hanesbrands to ‘Top Picks’ list

Earnings for Hanesbrands (NYSE: HBI), parent of Champion, could grow by as much as 20 percent annually over the next three years, an FBR Capital Markets analyst said as he placed the stock in his firm’s “Top Picks” list.

Analyst Eric Tracy said in a note to investors that shares have fallen 14 percent over the past two weeks, but the stock will likely rise after the company reports earnings on July 21.

Investors eventually will get more comfortable with the fact that cotton prices and other costs are rising and Hanesbrands plans to implement a price increase to offset this, he added.

The company’s long-term outlook also plays a role in moving the stock to the “Top Picks” list. “Should Hanesbrands successfully execute its strategy, 20 percent annual earnings growth is achievable over the next three years, making Hanesbrands one of the most compelling stories in our space,” Tracy wrote.

Puma to appeal court ruling to pay EUR 98 million

Puma (PUMG.DE) said it will appeal an arbitration court ruling that could force it to pay up to EUR 98 million (USD $119.6 million) to settle a long legal battle.

The company said in a statement, “After a thorough legal assessment, Puma will challenge the ruling, and management believes that a favorable outcome is more likely than not.”

Puma has been trying to reclaim sole branding rights from its former licensing firm in Spain, Estudio 2000 SA. The rights were granted by the court, though, on the condition of a substantial payment that the company said it is not prepared to pay.

“According to the arbitration ruling, the vesting of the trademark rights is subject to a one-time payment of up to 98 million euros to Estudio 2000 SA,” it wrote in a statement.

If it pays the fee, the cost for Puma would represent about three-quarters of the EUR 128 million (USD $156 million) in net income it earned last year.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of June 29.)

–Compiled by Wendy Geister

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