StairMaster assets won by maker of Nautilus
Seattle Times Eastside business reporter
"We signed the documents at 9:30 (Thursday night)," said Chief Executive Brian Cook of Direct Focus, the Vancouver, Wash., company known for its Bowflex and Nautilus Fitness Products. "We are very happy with the purchase, but we didn't necessarily expect to be the winning bidder."
Direct Focus offered $25 million in cash for StairMaster, which had accumulated roughly $54 million in debt and filed for bankruptcy in August 2001. The second highest bidder offered $24.8 million, and the lowest bid came in at $17 million, according to Fred Corbit, the attorney representing StairMaster from the law firm Heller, Erhman, White, McAuliffe in Seattle.
If approved by the Bankruptcy Court for the Western District of Seattle on Friday, the company's operations in Kirkland, Bothell and Tulsa, Okla., will be handed over to Direct Focus. The fate of the roughly 360 employees at those locations then will be up to Direct Focus. StairMaster passed out provisional pink slips in November in case the buyer was not interested in keeping them onboard.
Although Cook could not say what the plans were, he said they "anticipate continuing operations." In fact, Direct Focus said it expects StairMaster to generate more than $40 million in annual sales and to be profitable in 2002. That's a different story from a year ago when, according to court documents, StairMaster had net sales of $59.6 million, and a net loss of $8.6 million for the year up until Nov. 30.
StairMaster, which was founded in 1983, made it big when its well-known exercise machine, which allows the user to simulate climbing stairs, literally climbed its way into almost every health club in the country. The company fell into trouble when its popularity waned as new products came out and it was leveraged with liabilities outweighing its assets.
Now the purchase price will not even cover its debt. The company's largest secured creditors are: ABN-AMRO Bank of New York for $12.2 million; Bank Austria Creditanstalt of Greenwich, Conn., for $5.9 million; Heller Financial of Chicago for $9.8 million; and Key Bank of Cleveland for $10.6 million. The largest two unsecured creditors are: Monark AB of Sweden for $354,549; and Ayrshire Electronics of Fayetteville, Ark., for $299,124.
Cook said he thinks the StairMaster name and product line are worth something.
"I can say from independent research that we've done, (StairMaster) must be one of the most recognized brands in the physical-fitness industry," he said.
Tricia Duryee can be reached at 206-464-3283 or email@example.com.
Information in this article, originally published January 19, was corrected January 23. In an article about the sale of StairMaster to Direct Focus, the amount of money owed the two largest unsecured creditors was incorrect. StairMaster owed Ayrshire Electronics of Arkansas $299,124 and Monark AB of Sweden $354,549.