Bankruptcy, Sale for Schwinn
BOULDER, Colo. Schwinn/GT Corp. has entered into a sale agreement with Huffy Corp. for the purchase of Schwinn's cycling division. Schwinn/GT also announced it has commenced proceedings under Chapter 11 of the U.S. Bankruptcy Code. This filing is necessary to allow Schwinn/GT to complete the sale of the cycling business, according to a company press release.
The Chapter 11 filing includes Schwinn Cycling & Fitness Inc., GT Bicycles Inc., Riteway Distribution Inc., Hebb Industries Inc. and certain other U. S. affiliates. Schwinn's subsidiaries in Switzerland, France and Japan are not included in the bankruptcy filing.
Under the terms of the current sale agreement, Huffy will pay in excess of $60 million, subject to adjustment, to acquire substantially all of the assets of Schwinn/GT's cycling division.
Schwinn has reached an agreement, subject to court approval, with a group of its existing lenders led by Comerica Bank to provide up to $30 million in debtor-in-possession (DIP) financing. The funding will be used to maintain normal business operations in the fitness division (responsible for the company's RiPP and Spinning products) and to ensure the orderly sale of the cycling business to Huffy.
“With the sale of the cycling division well on its way, we are now turning our attention to the fitness division,” said Jeff Sinclair, Schwinn's CEO, in the release. “Operations at fitness are continuing without interruption. Although it will take a little time to return the fitness division to business as usual, we expect to make substantial progress in the coming weeks.”