AMF Bowling scores Strike

August 2013 | DEALFRONT | BANKRUPTCY & RESTRUCTURING

Financier Worldwide Magazine

AMF Bowling Worldwide Inc announced in July that it had completed its merger with Strike Holdings LLC, otherwise known as Bowlmor – a precondition of AMF’s plan to emerge from Chapter 11 bankruptcy protection.

The merger between the two companies was originally announced in May and its completion will create a new company: Bowlmor AMF.

USbankruptcy court judge Kevin Huennekens approved AMF Bowling’s exit plan in late June after it received overwhelming support from the company’s major creditors and the official committee of unsecured creditors. Under the terms of the deal AMF’s first lien creditors will essentially have their debts paid in full. Meanwhile, a number of AMF’s second lien creditors, including an affiliate of Cerberus Capital Management LP and Credit Suisse, will jointly own the new business with Bowlmor.

Bowlmor, a New York based operator of upscale bowling centres, will own a 22.5 percent stake in the new company while AMF’s second lien lenders will own the remaining 77.5 percent share. Of those lenders Cerberus Capital is providing the new company with a $50m term loan. Credit Suisse is also supplying Bowlmor AMF with a term loan facility of $230m and a revolving loan facility of $30m.

The newly formed business will have three distinct brands and categories of bowling centres within its portfolio, including Bowlmor centres, Bowlero centres and AMF centres. According to a statement released by the two companies, by building on the legacy of the old AMF Bowling, Bowlmor AMF is now the largest operator of bowling centres in the world. The new company employs around 7500 people in 272 bowling centres and has combined annual revenues of around $450m. “For generations, the AMF brand has been synonymous with bowling in America,” said Brett Parker, vice chairman, chief financial officer and executive vice president of Bowlmor AMF. “Bowlmor is the leading upscale bowling brand. The completion of this merger will effectively bridge these two worlds, creating what we envision as the ultimate American leisure company.”

Tom Shannon who will serve as chairman, chief executive officer and president of Bowlmor AMF said “We are confident that Bowlmor’s proven approach to marketing and operations, coupled with AMF’s incredible scale and penetration in key markets, will ensure the company’s future growth and success.” Steve Satterwhite, AMF Bowling’s incumbent chief operating officer and chief financial officer will leave the new company, ending his 15 year association with AMF.

Bowlmor AMF will also retain a 50 percent ownership stake in QubicaAMF, a maker of bowling equipment including pinsetters, lanes and ball returns. Qubica was formed in 2005 when AMF Bowling Products merged with Italian manufacturer Qubica Worldwide. In his statement Mr Shannon noted that the new company is “excited about the potential for renewed innovation and growth at QubicaAMF”.

The merger brings to an end AMF’s most recent bankruptcy period. The company filed for Chapter 11 protection for the second time in November 2012, reporting between $100m and $500m in assets and liabilities. The company stated that the sluggish global economy and a debt load of around $300m was preventing it from making the necessary investments and improvements needed in its bowling centres to attract new customers. AMF originally filed for bankruptcy protection in July 2001 following an aggressive period of expansion. The company subsequently emerged from bankruptcy protection in February 2002.

Despite undergoing a companywide reorganisation while under bankruptcy protection, business does appear to have picked up for AMF. In May, prior to the formal merger of the two companies, AMF posted its best same store sales growth since 2007 and its highest profitability since 2009.

Richard Summerfield