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Sports Authority Files for Chapter 11; Closing Up to 200 Stores

Sporting Goods Retail Exiting Texas, Hires A&G Realty to Shop First Batch of Leases
March 2, 2016
TSA Stores Inc., which operates The Sports Authority chain of sporting goods stores, filed for voluntary Chapter 11 bankruptcy reorganization along with several of its affiliates.

The Sports Authority CEO Michael E. Foss said the action was needed to enable the firm to adapt to the changing dynamics in the retail sector.

"We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations," said Foss.

While the retailer said it expects more than half of its stores will continue to operate without change or interruption during the Chapter 11 process, it identified approximately 140 stores, including all its stores in Texas, and two distribution centers, one in Denver and the other in Chicago, that it intends to close or sell in the coming months. Another 60 stores are under consideration and could be targeted for closure as well.

With more purchasing activity moving online, The Sports Authority determined that it needed fewer stores after conducting a review of its business over the past several months with its financial advisors.

In addition to holding discussions with its financial creditors regarding a debt restructuring, The Sports Authority said it also explored recapitalizing the business through a potential sale of some or all of its assets. The company said it plans to continue to pursue the two tracks consistent with the Chapter 11 milestones established by the DIP financing.

"We have received strong interest from third parties interested in investing in or buying some or all of Sports Authority,” Foss said. “We intend to continue evaluating all options to maximize the value of the organization and position us for sustainable success in our industry."

Sports Authority’s Store Closing Plan

As of January 30, 2016, The Sports Authority operated 464 stores in 40 states and Puerto Rico, and five distribution centers located in New Jersey, California, Colorado, Georgia, and Illinois.

The retailer has hired A&G Realty Partners of Melville, NY, to manage the sale of retail store leases and assist in reducing the retailers occupancy costs.

A&G Realty is currently accepting bids on the leases, which range from 10,000 to 75,000 square feet.

"The company has many attractive below-market rate leases (for stores) that are well-positioned in key retail strip centers," said Emilio Amendola, A&G Realty co-president. "By taking assignment of leases, retailers have the opportunity to enter new markets and gain access to projects they may have previously been unable to penetrate. The availability of these leases is expected to attract interest from many national and local retailers."

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