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Receivership will 'alleviate unsustainable costs' for Mavic, Regent partner says

Published May 11, 2020
Mavic's US operations unaffected by troubles in France, CEO says.

PARK CITY, Utah (BRAIN) — Mavic's U.S. operations are continuing as usual despite the brand's French wing being put into receivership, the CEO of MAVIC USA told BRAIN.

"For all intents and purposes, it's business as usual in the U.S. and Canada," said David Steinhafel, the CEO. Steinhafel is a principal in Regent LP, the California-based investment group that acquired Mavic from Amer Sports last year.

While Regent bought the entire company, Steinhafel said the North American operations are separate legal entities from the French business that is undergoing restructuring. The French company, Mavic SAS, has been under management by a turn-around firm since February. 

Steinhafel said the U.S. operations have resumed operations following a shut down due to COVID-19 and that customer service and sales functions are underway at the brand's U.S. center in Utah. He said he expects no product shortfalls here. The company's operations in France remain closed due to the virus response, however. 

In a letter to customers and other partners Monday, Steinhafel said the receivership process in France will allow the company "to alleviate unsustainable costs and hopefully access additional capital to secure the future of the business, and emerge a stronger company with the ability to better serve our customers worldwide."

Steinhafel said that despite publicized remarks by a member of the company's labor committee in France, there is no question that Regent acquired Mavic and is its owner. He said Regent set up a separate company, M Sports International LLC, to acquire Mavic. It was a commonplace business practice, he said. 

"M Sports is entity we control," he said.

Steinhafel declined to elaborate on the receivership situation in France.

However, sources close to the company tell BRAIN that the separation of Mavic's French operations from its former owner is complicated. Complying with French and EU regulations and negotiating a transition services agreement is one reason why it took almost five months between the time Regent announced it had agreed to purchase Mavic and the completion of the deal in July.

But even after the acquisition, Mavic's headquarters remain in the same building near Annecy as Salomon, the Amer-owned ski brand. Amer also either owns or controls Mavic's carbon wheel production facility in Bulgaria and its wheel building facility in Romania. (Mavic's aluminum rims are made in France).

Like any investment group acquiring a distressed brand, Regent is likely interested in reducing the number of employees at the Annecy facility and exploring other production options outside the Amer-controlled factories in Bulgaria and Romania. The French commercial court overseeing the receivership may be able to wind down some operations in accordance with strict French labor laws. In France, receivership is akin to a Chapter 11 filing in the U.S. 

Amer is now owned by a China-led investor group, a sale that was completed during the same period that Regent was acquiring Mavic. Besides Salomon, Amer continues to own Enve, Arcteryx, Suunto, Wilson, Louisville Slugger and other sports brands. Amer did not reply to inquiries from BRAIN.

Steinhafel said it's no secret that Regent business is in buying distressed companies and returning them to profitability. But he said bankruptcy is not typically part of the plan, noting that several Regent acquisitions are thriving, including, Plainville Farms, and Alta Cycling Group. Alta, which owns Diamondback, Redline and iZip, has recently had two of its best fiscal quarters in years, Steinhafel said.

Not all Regent acquisitions have done as well, although there's no indication any have filed for bankruptcy while owned by Regent.

In January a creditors' group filed a petition for an involuntary Chapter 7 bankruptcy against La Senza, a fashion brand that Regent acquired in 2019. Nextag, the price comparison service that Regent acquired in 2015, later shut down. Regent acquired Cinema Now from Best Buy in 2014, and sold it in 2015; it later shut down.

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