(Adds Moody's downgrade)
By Jessica DiNapoli and Lauren Hirsch
Feb 23 Sporting goods retailer Sports Authority Inc intends to file for bankruptcy as early as next month, an action that would expedite the closing of some of its 450 stores across the United States, according to three people familiar with the matter.
Sports Authority missed a $20 million coupon payment on Jan. 15, triggering a 30-day grace period to work out a compromise with creditors. Moody's Investors Service downgraded the retailer's credit ratings Tuesday, and said that it views the missed interest payment as a limited default.
The grace period expired on Feb. 14.
The Englewood, Colorado-based company's bankruptcy plans underscore the challenges the fragmented sporting goods industry faces as it competes with discounter Wal-Mart Stores Inc and online retailer Amazon.com Inc.
Ahead of the bankruptcy filing, Sports Authority is trying to work out a deal with creditors for a loan to get the company through bankruptcy, and line up liquidators for the 150 to 200 stores it plans to close, one of the people said this week.
The company hopes it can eventually re-emerge through a Chapter 11 bankruptcy process, the people added.
Sports Authority, owned by private equity firm Leonard Green & Partners LP, declined to comment.
Retailers often take advantage of bankruptcy to shed costly leases for underperforming stores all at once, or sell them. Doing so out of Bankruptcy Court can be more costly and time-consuming.
The company has also been struggling to make payments to suppliers of golf clubs, sneakers and other sporting apparel that stock the stores. Some of the suppliers have been asking for cash upfront out of fear that they will not be paid back. (Reporting by Jessica DiNapoli and Lauren Hirsch in New York; Editing by Steve Orlofsky and Jonathan Oatis)