2005: Slazenger embroiled in bankruptcy catfight
Tuesday, August 16, 2011
A heated bankruptcy dispute has broken out between the company that holds the U.S. license for the Slazenger brand and its business partner.
SGP Acquisition LLC alleged that its efforts to rebuild Slazenger’s domestic business, which it has operated for two years, have been undermined by Sports World International, which is based in the United Kingdom. SGP, or Slazenger Golf Products, made the claims in the federal bankruptcy court in Delaware, where it sought Chapter 11 protection.
In February, SWI acquired Slazenger’s international rights, Dunlop Slazenger International Ltd., and Dunlop Slazenger Manufacturing LLC, the South Carolina manufacturer that makes Slazenger golf balls for SGP. Sports World International also owns Antigua, the Arizona-based apparel brand.
Slazenger Golf Products alleges that SWI, having assumed the contract to manufacture balls, tried to use that leverage to acquire Slazenger’s domestic rights and market the brand through Antigua.
SWI’s Delaware-based attorney did not respond to an interview request.
SGP, which is jointly owned by Resilience Capital Partners LLC and Zapis Family Group, two Cleveland-based private-investment firms, alleges that Dunlop Manufacturing’s fill rates on Slazenger balls were below 90 percent in each of the first six months after SWI acquired the ball maker, causing a breach of the supply contract. SGP also claims that SWI breached its agreement by selling Slazenger Money and Black balls outside of North America.
SGP alleges that some of these balls made their way back into the United States through other channels, and that its efforts to sell Money and Black balls to “a large North American retail customer” were foiled when the retailer got the product from another source. Discounted Slazenger balls subsequently began showing up in other retail accounts not serviced by SGP, according to the complaint.
In October, the complaint says, SWI’s Dunlop Sports Group agreed to acquire SGP for
$2.5 million and assumption of all of SGP’s liabilities, which exceed $10 million, according to the bankruptcy filing. SWI terminated the negotiations Nov. 18. That led SGP to cut its work force from 51 to 23 the following day, according to the complaint. Brad Seybert, SGP’s vice president of sales, says his company still has about a dozen salespeople carrying the brand.
SWI subsequently offered $5 million less on Nov. 22 to acquire SGP, according to the complaint, but when those negotiations didn’t progress quickly, SGP sought bankruptcy protection.
According to court documents, SWI made yet another offer Dec. 2 of $1.5 million for Slazenger’s apparel rights plus forgiveness of about $3 million owed to SWI-controlled companies. SGP refused that offer, according to the complaint, because it was $8.6 million less than the original offer and would leave SGP $6.1 million short of the amount needed to pay off creditors.
Seybert said the company hopes to reorganize, emerge from bankruptcy and refocus on the green-grass and corporate markets.