After executives juggled banks, investors and financial advisors for more than two months, the PaceMaster “bankruptcy” liquidation on July 16 should rebirth a company shed of its debt and back under the wing of its founding family with new investment support.
The deal is expected to be finalized, signed and sealed after a court “auction” Friday at 10 a.m. in which the new investment group — made up of President Tom Staub, semi-retired executive Jerry Staub, and Canada’s Fitness Depot founder Edwin Cameron — is the only qualified bidder. The deadline for other qualified bidders to throw their hats in the ring with the U.S. Bankruptcy Court, New Jersey, was 4 p.m. EST July 14.
The arrangement — in which Aerobics Inc., dba PaceMaster, will maintain its current name, logo, team and products — will allow the 42-year-old company to continue its tradition of fitness equipment manufacturing.
“This is the best deal and it provides the best for all involved,” President Tom Staub told SNEWS®. “It is liquidation in some aspects since the bank took possession of the assets and sold it, but it will be a seamless transition. It is seamless for the dealer base.”
In the deal, Tom Staub said the company has assumed liability for all of the current warranties, although other debt and liability has been shed. The price is $1 million and excludes warranty liability being paid to the bank, and does not include miscellaneous clauses and some amounts being paid to the unsecured creditors’ committee.
“We’re still in business,” he added. “We’re operating normally.”
SNEWS reported on May 14, 2010, that a Chapter 11 bankruptcy reorganization filing by Aerobics Inc. on May 13 was intended to return the company to private ownership (click here to see that story). However, once filed, the bankruptcy had to continue its normal course, although the court trustee on July 2 did request the court approve either a dismissal or a conversion to Chapter 7. (Click here to see that July 2 story, “PaceMaster bankruptcy in flux.”) The motion for a conversion or dismissal has not yet been approved and is scheduled to be heard on July 16. A likely conversion to liquidation will prompt the auction, in which the Staub/Cameron group is the “stalking horse” and sole bidder.
Staub explained to SNEWS in May that the company (www.pacemaster.com) was hit by a quadruple whammy in the last two years, including the economic downturn, a lack of working capital by its owning investment group, the bank seeking its money, and the Busy Body bankruptcy that cost it $1.3 million.
“In today’s economic climate, working with a bank is a challenging situation at best,” Staub said in May. “We decided it’s in the best interest of Aerobics to replace the bank credit facility with private equity funding.”
Staub told SNEWS recently that the family did not want to walk away from its company: “We didn’t want it to fall by the wayside,” he explained.
“I feel strongly we are a viable company,” he added. “We just got caught up in too much debt. We got caught up economically.”