Today in New West news: Sports Authority declares bankruptcy, Montana reacts to medical college news, and Ultra Petroleum dodges default.
According to the Denver Business Journal, Englewood-based retailer Sports Authority has filed for bankruptcy protection, after a slew of layoffs and store closures. Most recently, the company missed an interest payment, compounding their financial woes. From the DBJ:
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry. We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations,” said Michael Foss, CEO of Sports Authority, in a statement.
The company — officially Sports Authority Holdings Inc. and incorporated as TSA Stores Inc. — has more than $1 billion in debt, according to its bankruptcy filings (download here), with as many as 99 creditors, but less than $50,000 in assets.
Among Sports Authority’s creditors cited in the bankruptcy-court filings are suppliers such as Nike Inc. (owed $48 million) and Under Armour Inc. (owed $23 million). Some $300 million in unsecured “mezzanine” debt is also listed.
Sports Authority expects to have access to up to $595 million in bankruptcy financing, subject to court approval, according to its statement.
Many of its 463 stores nationwide will remain open, the company said, but the 140 stores that had been previously identified for potential closure, as well as distribution centers in Denver and Chicago, are still earmarked for closure or sale.
“This decision follows a comprehensive review of the Sports Authority store portfolio in light of the increasing amount of shopping that is occurring online,” the company said in its statement. “As a result of these changes in consumer buying patterns, Sports Authority determined that it needs fewer stores as part of its long-term business model. Therefore, the company has filed a motion with the court seeking approval to proceed with store closing sales at the identified stores, after which those stores are expected to be closed or sold. The store closing process is expected to take up to three months.”
Reportedly, Sports Authority is in talks with competitors Dick’s Sporting Goods Inc. and Modell’s Sporting Goods about buying a few of the company’s existing stores, according to Bloomberg News.
The company missed the interest payment on a $343 million loan (valued at $20 million) February 14, set to mature in 2018. Prior to that, in January, the company laid off 100 people at its Englewood headquarters.
Sports Authority’s bankruptcy will most likely effect Sports Authority Field in Denver, home of the Denver Broncos, as the company currently pays $6 million per annum for naming rights. According to the DBJ, the next payment is due August 1.
We previously reported on the Burrell Group’s plans for a for-profit medical school in Idaho after first approaching Montana—specifically, Bozeman. According to the Bozeman Daily Chronicle, the news has been met with mixed reactions from state officials (who feel the state lost out) and medical professionals (who feel the state dodged a bullet):
“Montana dropped the ball,” a disappointed state Sen. Llew Jones, R-Conrad, wrote on his Facebook page.
Yet Dr. Andrew Grace, chief of staff at Bozeman Health Deaconess Hospital, where a majority of physicians signed a petition opposing the for-profit college, disagreed.
“No, I don’t think we blew it,” Grace said Tuesday. “Overall, we are breathing a little collective sigh of relief.”
“We want to get good doctors in Montana,” he said. The Burrell Group was “very, very good at pitching the financial impact.… Is this more of a business investing opportunity, thinly veiled as medical education?”
Grace said he hopes Montana can now take the “energy and buzz” created by the osteopathic college debate and use it to expand doctor training in a responsible way.
The Montana Board of Regents will take a step in that direction Thursday while meeting in Dillon.
Dr. Jay Erickson, assistant dean of the WWAMI program in Montana, will explain to the regents how doctor training works now and propose steps to train more Montana physicians through WWAMI. Based at the University of Washington School of Medicine, WWAMI trains medical students from rural Wyoming, Alaska, Montana and Idaho.
The Burrell Group said it plans to invest more than $100 million to launch the new college, which will train up to 600 osteopathic doctors a year. Idaho leaders, described by one newspaper as “euphoric,” have offered tax incentives — a 21 percent reimbursement over 10 years. Some Idaho physicians have since complained that they were blindsided by the quick decision.
The Burrell Group originally planned to build in Bozeman and affiliate with Montana State University but ran into a storm of protest from Montana physicians.
Finally, we previously reported Ultra Petroleum could face bankruptcy within the coming year. Now, according to the Wyoming Business Report, the company has stopped short of that cliff—for the time being:
In a release from Ultra, its subsidiary Ultra Resources Inc. entered waiver and amendment agreements with all its lenders.
“The waiver and amendment agreements provide the company with an opportunity to continue discussions with its creditors about restructuring all of its debt burdens, including the senior notes issued by the company,” the release stated. The waivers keep the company from defaulting on debt repayments between March 1 and April 30. The company said it has $266 million cash on hand that it needs to fund ongoing operations.
According to Seeking Alpha, the waivers keep the company from defaulting on $128 million in payments across three different agreements. Of that, $102 million would have been due Tuesday, including a $62 million maturity payment and a $40 million interest payment.