OMAHA, Neb. (BRAIN) — Spia Cycling, a subsidiary of Giant Manufacturing, has emerged as a stalking horse bidder for the assets of Stages Cycling LLC. Stages, Foundation Fitness LLC and related companies filed for Chapter 11 protection in Nebraska’s federal bankruptcy court here on June 22.
A stalking horse bid is the initial bid that sets the low-end limit so that other potential buyers can’t underbid the purchase price. On Friday the company filed a proposed Asset Purchase Agreement and bidding procedures for Stages, setting a minimum competing bid at $21.5 million, which includes matching Spia's $20 million bid, plus a break-up fee and a $500,000 minimum overbid charge. Foundation has told the court that the Spia offer is the best offer received so far; the company is proposing a bid deadline of Aug. 1. The final bidding procedure and calendar will be approved at a July 15 meeting.
Taiwanese stock exchange filings show that Giant Manufacturing’s board of directors approved its participation in the bidding process on June 19; that filing does not show the amount of the bid.
Court filings show Spia has made a $2.51 million down payment for the Stages assets. Pending court approval the down payment will be used to protect Stages’ assets during the bankruptcy period and to provide collateral for post-petition financing. An agreement carves out a $300,000 payment from an eventual sale to go to TekSport AS, a Norwegian company that sold Stages its cloud-based training technology in 2017.
Stages, which manufactured and sold power meters, smart stationary bikes, GPS units and related products, shut down in April. Another Giant division, AIPS TECHNOLOGY CO., LTD, is suing the company in Oregon, alleging it owes about $14 million in unpaid invoices for production work done by Giant. Several former Stages engineers have gone to work for Giant.
In early 2023, Giant’s board approved a bid of about $20 million to acquire a one-third share in Stages, but negotiations later fell through on that deal.
According to Foundation Fitness’s bankruptcy attorney, Patrick Patino, Spia will bid only for the trademarks and patents connected to Stages Cycling, not Foundation Fitness, which serves the commercial gym market. Patino spoke at a recorded telephone hearing on Wednesday.
Stages Cycling LLC, Stages Indoor Home Cycling LLC, Foundation Fitness, LLC, and Stages Ride LLC, filed separately for bankruptcy protection but filings show the companies have the same management and ownership so the cases are being jointly administrated. According to Patino’s remarks during Wednesday's hearing, the bank debt is secured by assets related to Foundation Fitness and there is no lien on any of the Stages Cycling assets.
According to Patino's remarks, Foundation Fitness’ sole secured debt is about $32 million owed to Nebraska-based Union Bank & Trust, which is why the bankruptcy is filed in Nebraska even though Stages was based in Colorado and Foundation Fitness was based in Oregon. At Wednesday's hearing Chief Judge Thomas L. Saladino said he was open to a change in venue if parties later decide Nebraska is not the best venue for the case.
Patino asked a judge to approve a handful of motions, including one to continue payments necessary to operate Stages’ cloud-based training software, which consumers continue to access even though Stages is otherwise not operating. Patino said if the software were shut down it would jeopardize the value of the intellectual property that Spia hopes to acquire. The court approved spending on insurance and utilities at Stages’ leased building in Boulder, which still contains some Stages assets. It also approved payments to third-party distribution centers that are holding Stages inventory.
At the hearing Patino said Stages entities registered in Germany and the United Kingdom are not part of the U.S. bankruptcy filing.
