Gander Mountain files bankruptcy, looks to complete going-concern sale

By Caroline Salls

Pittsburgh, March 13 – Gander Mountain Co. filed Chapter 11 bankruptcy March 10 in the U.S. Bankruptcy Court for the District of Minnesota “to maximize the opportunity to achieve a going-concern sale of its business,” according to a company news release.

Gander Mountain said the bankruptcy filing resulted from an in-depth review of its strategic options undertaken in recent months to preserve the value of the company and position it for long-term success.

Despite aggressive actions to improve the efficiency of its retail operations and support functions, the company said the underlying financial impact from underperforming stores and unproductive, excess inventory hampered efforts to create a sustainable path forward.

The company said its strategic review revealed that a narrowly focused and lower-cost operating model is necessary to position it for profitable growth; the company does not have the financial capacity or time to reset its operations to fully implement the new model and, as a result, the best available path forward is to sell the company on a going-concern basis.

Gander Mountain said it is in discussions with a number of parties interested in a going-concern sale and expects to solicit bids before an auction to be held in late April. The company expects to submit the winning bid to the court for approval in early May and to close the sale by May 15.

Under proposed bid procedures, stalking horse bids would be due by March 23, other bids would be due by March 24 and an auction would be held on April 27, if necessary.

The company said it generally expects to conduct normal business operations during its restructuring.

Store closures

As a product of the strategic review, 32 underperforming retail locations will begin a shutdown process in the next several weeks.

The company requested court approval of a liquidation consultant agreement under which Tiger Capital Group, LLC and Great American Group, LLC will conduct store-closing sales at those locations.

The sales are expected to begin by March 17 but no later than March 31 and run through August.

DIP financing

In conjunction with the bankruptcy filing, Gander Mountain obtained a commitment for $452 million of debtor-in-possession financing underwritten by Wells Fargo.

Interest on tranche A loans will accrue at the base rate plus 300 basis points, and interest on tranche A-1 loans will accrue at the base rate plus 425 bps.

The facility will mature in March 2018.

Subject to court approval, the company said this DIP financing, combined with cash from operations, is expected to provide sufficient liquidity to support its continuing business operations and to minimize any disruption during the reorganization process.

Debt details

According to court documents, Gander Mountain has $500 million to $1 billion of both assets and debt.

The company’s largest unsecured creditors are as follows:

• Vista Outdoor Sales – Federal of Anoka, Minn., with a $15.18 million trade payable claim;

• Pure Fishing of Brainerd, Minn., with a $4.55 million trade payable claim;

• Ellett Brothers LLC of Chapin, S.C., with a $3.03 million trade payable claim;

• Sigarms Inc. of Exeter, N.H., with a $2.86 million trade payable claim;

• Remington Arms Co. of Madison, N.C., with a $2.62 million trade payable claim;

• Starcom Worldwide, Inc., based in Chicago, with a $2.24 million trade payable claim;

• Vortex Optics of Middleton, Wis., with a $2.12 million trade payable claim;

• Liberty Safe & Security of Payson, Utah, with a $2.01 million trade payable claim;

• Bill Hicks & Co. Ltd. of Minneapolis, with a $1.69 million trade payable claim; and

• 5.11 Inc. of Modesto, Calif., with a $1.5 million trade payable claim.

Houlihan Lokey Capital Inc. is acting as financial adviser and investment banker in the restructuring, Fredrikson & Byron, PA is acting as legal adviser, and Lighthouse Management Group is providing a chief restructuring officer.

Gander is a Saint Paul, Minn.-based retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services. The Chapter 11 case number is 17-30673.

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