Former Performance Sports enters stipulation in wake of share sale

By Caroline Salls

Pittsburgh, July 13 – Old PSG Wind-down Ltd., formerly Performance Sports Group Ltd., entered into a stipulation with some overseas investment funds associated with Bybrook Capital LLP, which participated in trades in the company’s equity interests to enforce an order setting procedures for the trading of securities and mitigate any potential adverse tax consequences arising from a potential ownership change, according to a news release.

As previously reported, the trading order was implemented to protect Old PSG’s net operating losses and other tax attributes, including built-in losses in its assets.

The company said some of the funds affiliated with Bybrook Capital participated in trades in Performance Sports equity interests, “allegedly without actual knowledge of the procedures in the trading order or the purchasing restrictions and procedures.”

If not remedied, Old PSG said these trades could result in an ownership change under Section 382 of the Internal Revenue Code of 1986, which could, in turn, result in significant cash tax liabilities for the company in connection with its asset sale and an inability to use some of its tax assets to offset income for future periods.

“Bybrook purchased its PSG shares with no knowledge of any trading or purchasing restrictions,” Bybrook chief investment officer Robert Dafforn said in the release. “No seller or broker advised us of the trading order.

“Upon learning of the trading order on our own initiative, we immediately contacted debtor’s counsel to advise them of the situation and to work toward a consensual resolution.”

Under the stipulation, by midnight ET on July 28, Bybrook must rescind all transaction with all sellers, except for shares acquired on dates on which Brookfield Asset Management Inc. completed sales, and restore the shares to the sellers so that Bybrook and the sellers are in the same position they would have been if the trades had never occurred.

Bybrook must also sell all shares it holds in excess of 2.25 million shares into the market to holders that are not, and that would not become, substantial shareholders as a result of the purchase, donate all excess shares to qualifying charities or divest itself of all excess shares through a combination of rescission transactions restoring the shares to sellers, selling excess shares into the market and donating excess shares to qualified charities.

Performance Sports is based in Exeter, N.H., and makes sports equipment and apparel. The company filed for bankruptcy on Oct. 31, 2016 under Chapter 11 case number 16-12373.

© 2015 Prospect News.
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