Bauer Performance Sports Ltd.

TSX : BAU


Bauer Performance Sports Ltd.

June 13, 2012 15:09 ET

Bauer Performance Sports Agrees to Acquire Cascade Helmets for US$64 million

Acquisition expands presence in lacrosse-fastest growing team sport in North America

Acquisition fully funded through C$30 million bought deal equity financing and US$34 million of debt

TORONTO, ONTARIO--(Marketwire - June 13, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Bauer Performance Sports Ltd. (TSX:BAU) ("BAUER") today announced it has entered into a definitive agreement to acquire Cascade Helmets Holdings, Inc. ("Cascade"), a leading manufacturer and distributor of men's and youth lacrosse helmets in North America (the "Acquisition"), for a purchase price of US$64 million, payable in cash and subject to adjustment. The Acquisition is expected to close on or about June 29, 2012, subject to satisfaction of customary closing conditions.

Strategic Rationale:

Cascade is the leading designer, developer, manufacturer and marketer of lacrosse helmets and eyewear in North America, and is a leading and well-recognized brand in the broader lacrosse equipment industry. In addition to Cascade's lacrosse business, the acquisition also includes Cascade's recently-established hockey helmet business, which has experienced success in the industry with its M11 helmet, which was co-developed with hockey icon Mark Messier. Cascade designs and manufactures all of its products at its operations in Liverpool, NY, which allows it to provide 48-hour turnaround time for custom helmet orders and over 750,000 different color combinations.

One of BAUER's key growth strategies is to pursue acquisitions of complementary sports equipment companies that require innovative performance products, feature authentic brands, and are or have the potential to become leaders in their categories. The Acquisition of Cascade by BAUER expands BAUER's presence in the lacrosse equipment industry, adding the industry's premier line of helmets to the Maverik family of sticks, heads, shafts and protective gear. The transaction also provides an attractive opportunity to leverage BAUER's commitment to product development and safety, realize attractive cross-selling opportunities, and achieve cost synergies. BAUER intends to leverage Cascade's patented head-protection technologies and extend and build upon its partnership with Mark Messier to improve player safety through product developments, education and awareness initiatives. BAUER also plans to continue Cascade's custom manufacturing capabilities for lacrosse and hockey helmets and expects to expand manufacturing at its facility to include BAUER-branded hockey helmets.

"The acquisition of Cascade increases our presence in North America's fastest growing team sport, and allows us to expand our product offering in our core hockey business through the use of Cascade's proprietary helmet technology and manufacturing capabilities," said Kevin Davis, President and Chief Executive Officer, Bauer Performance Sports. "We are very pleased with the similarities in corporate culture and will continue our focus on delivering innovative products which increase player safety and performance. I would like to welcome the Cascade team to the BAUER family."

Financial Benefits:

Cascade is a profitable, privately-held business with revenues of US$22.1 million and Adjusted EBITDA1 of US$6.4 million for the twelve months ended December 31, 2011. The combination of BAUER and Cascade is expected to provide numerous opportunities to achieve potential acquisition-related synergies, including cross-selling opportunities for their complementary product offerings as well as cost synergies. Assuming the impact of anticipated synergies, BAUER currently expects the Acquisition to be immediately accretive to adjusted earnings per share. Cascade's EBITDA margins are approximately twice those of BAUER. See "Caution Concerning Forward-Looking Statements" below.

Acquisition Financing:

The US$64 million purchase price, excluding transaction expenses, will be funded through the issuance of approximately C$30 million new equity and approximately US$34 million in new borrowings. Today, BAUER entered into an agreement with a syndicate of underwriters, led by RBC Capital Markets as bookrunner, co-led by Paradigm Capital Inc., and including National Bank Financial and Scotiabank, under which the underwriters have agreed to buy 3,210,000 common shares of BAUER ("Common Shares") for sale to the public at a price of C$7.80 per Common Share for gross proceeds of C$25,038,000 (the "Public Offering"). In addition, BAUER entered into a subscription agreement with funds advised or managed by Kohlberg Management VI, LLC, BAUER's majority shareholders, pursuant to which they will buy, in a concurrent private placement, the equivalent of 642,000 Common Shares at the same price as those sold under the Public Offering, for gross and net proceeds of C$5,007,600 (the "Concurrent Private Placement").

Completion of the Public Offering is subject to certain conditions including normal regulatory and stock exchange approvals and the closing of the Acquisition and the Concurrent Private Placement. The Common Shares will be offered in all provinces of Canada by way of a short form prospectus. The closing of the Public Offering and the Concurrent Private Placement are currently expected to occur on or about June 29, 2012.

In addition, BAUER has received a commitment from its existing lending syndicate to make available an upsized credit facility of approximately US$275 million, thereby providing additional borrowing capacity in support of the Acquisition. BAUER's credit facility matures in March 2016.

The securities offered pursuant to the Public Offering have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registrations requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.

Notes:

1Adjusted EBITDA and EBITDA are non-U.S. GAAP measures that are not recognized under U.S. GAAP and do not have a standardized meaning prescribed by U.S. GAAP. In respect of Cascade, Adjusted EBITDA is defined as EBITDA (net income adjusted for income tax expense, depreciation and amortization, gain or loss on disposal of fixed assets, net interest expense and deferred financing costs), before sponsor fees and share-based payment expenses. Cascade's recent financial results, including a reconciliation of net revenues to Adjusted EBITDA, will be provided in BAUER's future disclosures as required by applicable laws. These measures are being used to provide a comparable measure to how we evaluate our operating performance.

ABOUT BAUER PERFORMANCE SPORTS LTD.

Bauer Performance Sports Ltd. (TSX:BAU) is a leading developer and manufacturer of ice hockey, roller hockey, and lacrosse equipment as well as related apparel. The company has the most recognized and strongest brand in the ice hockey equipment industry, and holds the top market share position in both ice and roller hockey. Its products are marketed under the Bauer Hockey, Mission Roller Hockey and Maverik Lacrosse brand names and are distributed by sales representatives and independent distributors throughout the world. Bauer Performance Sports is focused on building its leadership position and growing market share in all product categories through continued innovation at every level. For more information, visit www.bauerperformancesports.com.

ABOUT CASCADE HELMETS HOLDINGS, INC.

Cascade is the leading helmet brand in lacrosse. Cascade was founded in 1986 with a niche focus on designing and manufacturing innovative lacrosse headgear and has expanded into adjacent market segments including women's lacrosse and field hockey eyewear, and whitewater and rescue helmets. In 2009, Cascade partnered with former NHL player Mark Messier to introduce a new branded line of hockey helmets which shared much of the product technology utilized in Cascade's lacrosse helmets.

Caution Concerning Forward-Looking Statements

Certain statements in this press release about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward looking statements. The words "will", "expects", "plans", "intends", "estimates" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward looking statements. Forward looking statements are based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance, achievements, future events or developments to differ materially from those expressed or implied by the forward looking statements, including, without limitation, the following factors:
our inability to successfully pursue and implement our acquisition growth strategies, our inability to achieve synergies from, and integration plans relating to the Acquisition, our inability to achieve management's estimates and expectations in relation to resulting accretion to adjusted earnings per share, our inability to complete the Acquisition, and the financing thereof, within the expected timeframes or at all, our inability to satisfy conditions to borrowing under the credit facilities, increased indebtedness resulting from the Acquisition, intense competition in the apparel and equipment industries, volatile market price for Common Shares, general economic and market conditions and current adverse economic conditions. These factors are not intended to represent a complete list of the factors that could affect us; however, these factors should be considered carefully. The purpose of the forward looking statements is to provide the reader with a description of management's expectations and may not be appropriate for other purposes; readers should not place undue reliance on forward looking statements made herein. Furthermore, unless otherwise stated, the forward looking statements contained in this press release are made as of the date hereof, and we have no intention and undertake no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward looking statements contained in this press release are expressly qualified by this cautionary statement.

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