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Niner assets to be sold this month

Published January 5, 2018
An investor group has made a stalking horse offer and will acquire the company from bankruptcy unless it's outbid.

DENVER (BRAIN) — If all goes to plan, a Colorado investor group will acquire Niner, Inc.'s assets and bring the company out of bankruptcy before the end of the month

But first, other potential buyers will be given a chance to bid for the company at an auction next Thursday.

The auction will be held only if additional qualified bidders appear by next Wednesday, the deadline for bid submissions. If no bidders turn up, the investor group's "stalking horse" purchase agreement will be accepted and the deal will be closed on Jan. 17.

Niner petitioned for Chapter 11 protection on Nov. 27 in Denver's bankruptcy court, listing assets of $9.8 million and liabilities of $7.9 million. A few days prior to the filing, Niner had announced that it would be acquired by an investor group later identified as Columbia Basin Partners.

At the time, company co-founder, CEO and president Chris Sugai told BRAIN that the bankruptcy filing was done in anticipation of the sale.

"This was the cleanest and fastest way to do it," Sugai told BRAIN on Nov. 28. He said Niner had been looking for an investor or buyer who could help it grow and compete with better funded rivals in the bike market. Court filings indicated Niner was over leveraged and lacked resources to invest in product development and marketing.

"We will be a stronger company when we come out of this," Sugai told BRAIN. "(The partners) are not buying the company to strangle it; they like the company and they want to grow it."

Business as usual

This week, Sugai declined to comment to BRAIN on the proceedings, saying the company's attorney had advised him to remain quiet until after the auction.

Sugai said Niner was continuing to operate as usual and there had been no layoffs, and he said, "All warranties past and future will be honored," a promise he has also made in comments under articles on several consumer websites.

The court approved Niner's debtor in possession interim financing plan in mid-December.

In court documents, the stalking horse bidder is called Niner Acquisition LLC, whose managing partners are Brady Dolsen, Steve Foreman, and Kevin Burns, who are the principals in Columbia Basin Partners.

Niner Acquisition has agreed to pay cash to pay off Niner, Inc.'s obligations owed to PMC Financial Services Group, with which Niner had a credit line with a $2.75 million balance at the time of the Chapter 11 filing. Niner Acquisition also will pay an additional $100,000 in cash and assume the company's other liabilities.

Niner Acquisition would be awarded a "break-up fee" of at least $100,000 plus reimbursement of expenses of up to $50,000 if it is not the successful bidder. Break-up fees are a common feature of stalking horse bid agreements.

In addition to Niner's assets, the buyer would assume the company's leases and contracts, including contracts with pro cyclists Kirt Voreis and Rebecca Rusch, and leases for Niner offices in Ft. Collins, Colorado, and Taiwan.

Assets and liabilities

Niner's listed assets include $4.1 million in inventory, $2.8 million in machinery and vehicles, $1.5 million in accounts receivable, $378,000 in prepayments, $362,000 in office equipment, $260,000 in research and development, and $146,000 in intellectual property.

Unsecured debts owed to bike industry suppliers include $316,000 owed to SRAM; $274,000 to Very Impressive Product, a Vietnam bike builder; $267,000 to Willing Industry Co., of Taichung, Taiwan; and $105,000 to Astro Engineering, a Taiwan builder. Niner owes smaller amounts to Enve and Fox and a handful of other bike suppliers, in addition to unsecured debts with non-industry suppliers.

Secured debts include the credit line with PMC Financial and a $3.1 million loan from West Town Bank & Trust of North Carolina.

If qualified bidders appear and there is an auction, it will be held at the Denver office of Niner's attorney, Markus Williams Young & Zimmerman LLC on Jan. 11 at 1 p.m.

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Photo courtesy of Niner.

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