BowFlex files for Chapter 11, enters purchase agreement with Johnson Health

BowFlex announced that it has entered into a purchase agreement with Johnson Health Tech Retail, Inc. to serve as the stalking horse bidder to acquire substantially all of the assets of the company for $37.5M in cash at the closing of the transaction, less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes. In order to facilitate the sale process, the company and certain of its subsidiaries have voluntarily initiated a Chapter 11 proceeding in the United States Bankruptcy Court for the District of New Jersey, which will provide interested parties the opportunity to submit competing offers. Additionally, subject to court approval, the company has secured a $25M facility for debtor-in-possession financing, comprised of a $9M revolving commitment and $16M term loan reflecting the roll-up of the company’s pre-petition term loans of approximately $16M from Crystal Financial d/b/a SLR Credit Solutions and its affiliates, subject to court approval, to enable the company to continue operating in a normal course and meet its financial obligations to employees, vendors and its continued provision of customer orders during Chapter 11 proceedings and while executing the sale process. The DIP Facility is being provided by SLR pursuant to an amendment to the company’s existing term loan credit agreement with SLR dated November 30, 2022. The company is seeking approval of the proposed transaction pursuant to Section 363 of Chapter 11 of the U.S. Bankruptcy Code, which will allow outside interested parties to submit higher or otherwise better offers. The transaction is subject to approval by the Bankruptcy Court and any other approvals that may be required by law, and other customary conditions. The asset purchase agreement with the Stalking Horse Bidder provides for standard bid protections. These protections include: the reimbursement by the company of up to $600,000 of the Stalking Horse Bidder’s expenses payable under specified circumstances upon a termination of the Stalking Horse Asset Purchase Agreement; payment by the company of a breakup fee of 3.5% of the purchase price; and the company’s forfeiture of the $3.75M Stalking Horse Bidder’s deposit.