BowFlex files for Chapter 11 bankruptcy with $37.5 million ‘stalking horse’ agreement

BowFlex Inc.
said Tuesday it has filed for Chapter 11 bankruptcy with a New Jersey court, after the home exercise equipment company entered a so-called “stalking horse” asset purchase agreement with specialty retailer Johnson Health Tech Retail Inc. Under the terms of that deal, Johnson Health is paying a total of $37.5 million in cash to purchase substantially all of BowFlex’s assets, the company said in a regulatory filing. The agreement must be approved by the bankruptcy court and an auction will be held to solicit higher bids. Separately, the company and Crystal Financial LLC and its units have agreed to amend an existing term loan credit agreement to offer the company and its Nautilus Fitness Canada Inc. subsidiary a debtor-in-possession loan of up to $25 million. That loan will be used for working capital and general corporate purposes to allow the company to continue operating during the bankrtupcy process. “The company cannot be certain that holders of the company’s common stock (the “Common Stock”) will receive any payment or other distribution on account of those shares following the Chapter 11 Cases,” said the filing. The stock was halted for the news after closing Monday at 20 cents.

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