Irvine Firm’s Operators Plan Bid for Ailing MacGregor

The operators of Sports Specialties Corp., an Irvine baseball cap maker, said Tuesday that they have drawn up a plan to buy bankrupt MacGregor Sporting Goods Inc., one of the most prominent names in athletic equipment and clothing.

James H. Warsaw said he and his brother, Robert A. Warsaw, acting independently of Sports Specialties, planned to present a takeover proposal to MacGregor Chairman Frederic H. Brooks today.

The plan includes the repayment of MacGregor’s secured debts totaling $18 million and the relocation of the firm’s headquarters to Irvine, James Warsaw said. Other MacGregor operations would remain intact and its 500 employees would continue with the firm, he said.

“We have the ability in management resources and financial capability to turn this company around,” said Warsaw, president of Sports Specialties. Robert Warsaw is chairman of the cap maker.

Brooks confirmed that he has talked to the Warsaws about their plan, but he would not discuss any details. He said he is talking to a number of parties who have made proposals for retrieving the East Rutherford, N.J., company from bankruptcy.

MacGregor, which traces its roots to 1870, has provided baseballs, footballs, basketballs, uniforms and a host of gear to generations of athletes, amateur and professional alike.

But the company overextended itself in recent years with purchases of a number of sporting goods firms and last month sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. For the 2 years ended July 31, MacGregor lost $22 million.

Any deal that the Warsaws might reach with MacGregor would have to be approved by a creditors committee and the bankruptcy court. Shareholder approval also may be needed.

An acquisition by Sports Specialties would carry a tinge of irony.

MacGregor bought Sports Specialties from the Warsaw family in 1986 but sold it to an investment firm a year later to help settle a lawsuit the Warsaws filed against MacGregor over the operations of Sports Specialties.

The Warsaws ended up with about 8% of MacGregor’s stock, second to Brooks’ 25% stake, and an undisclosed minority share of the new owner, the Oppenheimer-Palmieri Fund in New York. The brothers also returned as the firm’s managers.

James Warsaw said that if he and his brother are successful in buying MacGregor, they will take the company private and then try to arrange for MacGregor to buy Sports Specialties.

Brooks said MacGregor has to decide on a plan soon. One of the creditors putting pressure on MacGregor is the National Basketball Assn. and its commissioner, David Stern. MacGregor carries the exclusive right to sell NBA uniforms and warm-up gear to NBA teams and to the public.

Stern, in Los Angeles for an owners meeting Tuesday, said he expects MacGregor to come up with a plan for resolving its bankruptcy woes within the next few weeks.

Because the license to sell NBA products is a major asset of MacGregor’s, Stern said the NBA expects to have “an important say in the ongoing MacGregor operations.” He said MacGregor’s cash constraints have hindered its ability to market official NBA products.

Stern spoke favorably of the Warsaws, whose firm has a license to sell NBA caps. But he did not endorse any plan or prospective suitor.

“Their operational expertise is a spectacular asset going in” to negotiations with MacGregor, Stern said.

Among MacGregor’s creditors are some professional athletes, including Moses Malone, who is owed $100,000 for endorsing a line of MacGregor basketballs.

Warsaw said his plan to take over MacGregor calls for the repayment of all debts, including $18 million in secured liabilities. With corporate notes and bonds, MacGregor has a total of $35 million in debts, Brooks said.

The plan also would pump about $2 million in cash into MacGregor immediately and $5 million over 30 days for operating capital.

No price for stock has been determined, Warsaw said. MacGregor stock closed Tuesday at $1.625 a share, unchanged from Monday’s close. MacGregor has about 6.4 million shares outstanding.

COMPARING THE TWO COMPANIES

Sports MacGregor Specialties Sporting Corp. Goods Inc. Headquarters Irvine East Rutherford, N.J. Employees 30* 500 (U.S.) Products baseball caps sporting goods, equipment, athletic clothing Revenue for most $25 million** $28.9 million recent year Earnings (loss) NA ($4.0 million) for most recent year 52-week stock NA $3-$1 price range Tuesday’s closing NA $1.625, unchanged stock price Common shares NA 6.4 million outstanding Market value of NA $10.4 million common stock Chief executive James H. Warsaw Frederic H. Brooks

* The company contracts with plants in Winslow, Ariz.; Seoul, South Korea; San Jose, Costa Rica and Sri Lanka. ** company estimate for current year