(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
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)