Giant’s Big Play: Snapping Up Stages Cycling for $20 Million
In a plot twist that could rival the best of soap operas, Giant Manufacturing, through its subsidiary Spia Cycling, has emerged as the white knight (or should we say, stalking horse) for the beleaguered Stages Cycling LLC. The company has gallantly stepped forward with a $20 million bid to rescue the once-prominent cycling tech company from the clutches of bankruptcy.
The saga began on June 22 when Stages Cycling, along with Foundation Fitness LLC and its entourage of related companies, filed for Chapter 11 protection in Nebraska’s federal bankruptcy court. Enter Giant Manufacturing, a titan in the cycling industry, ready to swoop in with a stalking horse bid. For those not fluent in bankruptcy jargon, this means Spia’s bid sets the bar, ensuring that no sneaky underbidder can lowball the auction price.
Just last Friday, Spia dropped its Asset Purchase Agreement on the table, setting a minimum competing bid of $21.5 million. This includes Spia’s princely $20 million offer, a break-up fee to cushion any bruised egos if things fall through, and a $500,000 minimum overbid charge. Foundation Fitness, clearly starstruck, declared Spia’s bid as the best offer so far, pushing for an August 1 bid deadline. The final auction rules and calendar will be solidified in a July 15 court showdown.
Meanwhile, across the globe in Taiwan, Giant’s board of directors gave a resounding nod to the bid on June 19. Although the exact bid amount was cloaked in mystery, court filings revealed a $2.51 million down payment from Spia. This chunk of change is set to safeguard Stages’ assets during the bankruptcy period and act as collateral for post-petition financing. An agreement also earmarks a $300,000 payout to TekSport AS, a Norwegian company that generously lent its cloud-based training technology to Stages back in 2017.
Stages Cycling, the darling of power meters, smart stationary bikes, and GPS units, abruptly shut down operations in April. Adding to the drama, another Giant division, AIPS TECHNOLOGY CO., LTD, is suing Stages in Oregon, alleging it’s owed a cool $14 million in unpaid invoices. Several of Stages’ former engineers, perhaps sensing the impending doom, have already jumped ship to Giant.
To spice things up, Giant had originally flirted with the idea of acquiring a one-third share in Stages for about $20 million back in early 2023. But like any good cliffhanger, the negotiations hit a wall.
In a recent court hearing, Patrick Patino, Foundation Fitness’s bankruptcy attorney, clarified that Spia’s bid is laser-focused on Stages Cycling’s trademarks and patents. Foundation Fitness, which caters to the commercial gym market, is left to fend for itself. According to Patino, Foundation Fitness’s sole secured debt is a staggering $32 million owed to Nebraska-based Union Bank & Trust, hence the Nebraska bankruptcy filing despite Stages being based in Colorado and Foundation Fitness in Oregon.
Chief Judge Thomas L. Saladino, presiding over this courtroom drama, indicated he might consider a venue change if it suits the parties involved. Patino, meanwhile, is working tirelessly to keep the lights on at Stages, securing court approval for essential payments to maintain Stages’ cloud-based training software and other operational costs.
The tale of Stages Cycling and its potential rescue by Giant is far from over. Stay tuned for the next thrilling installment as the bankruptcy court gears up for its July 15 session.