wchester
Bowling Tragic
I wouldn't quit your day job yet, but I'd sure as hell start getting my resume updated.
--------------------------------------------------------------------------------
February 7, 2003
AMF, Bowling Giant, Is Said to Seek Buyer
By ANDREW ROSS SORKIN
Bowling for dollars, anyone?
AMF Bowling Worldwide, the world's largest bowling company, is planning to put itself up for sale, executives close to the company said yesterday. AMF has hired Greenhill & Company to approach possible buyers, the executives said, and it hopes to raise as much as $700 million in cash and the assumption of debt.
The sale would represent a new chapter in the tumultuous life of AMF, which was founded as American Machine and Foundry. At one time or another in its century-long history, it has made Harley-Davidson motorcycles, Ben Hogan golf clubs and Hatteras yachts.
Last March, AMF, based in Richmond, Va., emerged from bankruptcy protection after a disastrous series of bowling-alley acquisitions when the business was owned by the investment bank Goldman, Sachs.
AMF's current owners — mostly vulture investors that bought the company's debt for cents on the dollar and are hardly considered natural long-term investors in the business — are now looking to profit. The company's board is expected to decide whether to proceed with the sale plan in the next several weeks, the executives said.
AMF's four largest investors — Farallon Capital; Angelo, Gordon & Company; Satellite Asset Management; and Oaktree Capital Management — are pushing for the sale, the executives said.
The company is without a permanent leader. In December, its chief executive, Roland Smith, resigned to become chief executive of the American Golf Corporation and National Golf Properties. George W. Vieth Jr., an AMF board member, was appointed interim chief executive.
Merrell Wreden, a spokesman for AMF, did not return calls seeking comment yesterday.
The sale suggests a pattern that could emerge over the next several years as investors that speculated in the debt of bankrupt companies seek to unwind their positions.
It remains unclear how attractive AMF will prove to be to buyers. Under Goldman, Sachs, AMF went on a spending spree, buying bowling centers nationwide in an effort to create a true national chain. It is about double the size of its closest rival, Brunswick.
But some analysts question whether the strategy is still practical. "The jury is out on whether a national bowling chain is viable," said Sandy Hansell, a consultant and broker for the bowling industry in Southfield, Mich. "The markets vary too much to be standardized. You have different people looking for different recreation in each region."
And the bowling craze of the mid-1990's — with "extreme bowling" nights complete with disco music and black lights — may or may not be returning.
Goldman, Sachs learned that the hard way. Goldman bought AMF in 1996 for $380 million and $1 billion of debt with a plan to take the company public to finance a rapid expansion in the United States and China. AMF would make money two ways: by operating a chain of bowling centers and by selling the equipment to outfit new ones.
But while AMF was buying alleys and trying to run them more efficiently, league bowling, the lifeblood of the bowling business, was dying. And in the summer of 1998, the Asian economic crisis spread and deepened, wiping out demand for capital-intensive leisure activities like bowling. AMF lost $125 million in 1998, widening to $200 million by the time the debt-burdened company filed for Chapter 11 protection in July 2001.
While business has returned and AMF has reduced its debt to $450 million from $1.2 billion, it is hardly the growth business investors expected it to be. It remains unclear who will emerge to buy AMF, which has 385 bowling centers in the United States and more than 100 abroad. Analysts said the most likely buyers would be leveraged-buyout firms and so-called location-based entertainment companies that run theme park chains. Because AMF has cash flow of about $125 million a year, analysts expect that buyout firms could afford to spend $600 million to $700 million and still make a tidy profit.
Some analysts say that a buyer could try to break up the business, splitting the chain of bowling centers and its equipment-making arm. AMF manufactures equipment like automatic pinspotters, scoring equipment, bowling-center furniture, bowling pins, special lanes, ball returns and spare parts. It also sells products like bowling balls, bags and shoes.
Indeed, the automatic pinspotter — developed by an inventor named Fred Schmidt, who was hired by AMF in 1938 to perfect it — revolutionized the bowling industry when it was introduced at the ABC National Championship in Buffalo in 1946 and it made AMF a leader in the industry.
A buyer could also try to split up the bowling-alley chain, Mr. Hansell said, and sell groups of bowling centers piecemeal to regional competitors.
--------------------------------------------------------------------------------
February 7, 2003
AMF, Bowling Giant, Is Said to Seek Buyer
By ANDREW ROSS SORKIN
Bowling for dollars, anyone?
AMF Bowling Worldwide, the world's largest bowling company, is planning to put itself up for sale, executives close to the company said yesterday. AMF has hired Greenhill & Company to approach possible buyers, the executives said, and it hopes to raise as much as $700 million in cash and the assumption of debt.
The sale would represent a new chapter in the tumultuous life of AMF, which was founded as American Machine and Foundry. At one time or another in its century-long history, it has made Harley-Davidson motorcycles, Ben Hogan golf clubs and Hatteras yachts.
Last March, AMF, based in Richmond, Va., emerged from bankruptcy protection after a disastrous series of bowling-alley acquisitions when the business was owned by the investment bank Goldman, Sachs.
AMF's current owners — mostly vulture investors that bought the company's debt for cents on the dollar and are hardly considered natural long-term investors in the business — are now looking to profit. The company's board is expected to decide whether to proceed with the sale plan in the next several weeks, the executives said.
AMF's four largest investors — Farallon Capital; Angelo, Gordon & Company; Satellite Asset Management; and Oaktree Capital Management — are pushing for the sale, the executives said.
The company is without a permanent leader. In December, its chief executive, Roland Smith, resigned to become chief executive of the American Golf Corporation and National Golf Properties. George W. Vieth Jr., an AMF board member, was appointed interim chief executive.
Merrell Wreden, a spokesman for AMF, did not return calls seeking comment yesterday.
The sale suggests a pattern that could emerge over the next several years as investors that speculated in the debt of bankrupt companies seek to unwind their positions.
It remains unclear how attractive AMF will prove to be to buyers. Under Goldman, Sachs, AMF went on a spending spree, buying bowling centers nationwide in an effort to create a true national chain. It is about double the size of its closest rival, Brunswick.
But some analysts question whether the strategy is still practical. "The jury is out on whether a national bowling chain is viable," said Sandy Hansell, a consultant and broker for the bowling industry in Southfield, Mich. "The markets vary too much to be standardized. You have different people looking for different recreation in each region."
And the bowling craze of the mid-1990's — with "extreme bowling" nights complete with disco music and black lights — may or may not be returning.
Goldman, Sachs learned that the hard way. Goldman bought AMF in 1996 for $380 million and $1 billion of debt with a plan to take the company public to finance a rapid expansion in the United States and China. AMF would make money two ways: by operating a chain of bowling centers and by selling the equipment to outfit new ones.
But while AMF was buying alleys and trying to run them more efficiently, league bowling, the lifeblood of the bowling business, was dying. And in the summer of 1998, the Asian economic crisis spread and deepened, wiping out demand for capital-intensive leisure activities like bowling. AMF lost $125 million in 1998, widening to $200 million by the time the debt-burdened company filed for Chapter 11 protection in July 2001.
While business has returned and AMF has reduced its debt to $450 million from $1.2 billion, it is hardly the growth business investors expected it to be. It remains unclear who will emerge to buy AMF, which has 385 bowling centers in the United States and more than 100 abroad. Analysts said the most likely buyers would be leveraged-buyout firms and so-called location-based entertainment companies that run theme park chains. Because AMF has cash flow of about $125 million a year, analysts expect that buyout firms could afford to spend $600 million to $700 million and still make a tidy profit.
Some analysts say that a buyer could try to break up the business, splitting the chain of bowling centers and its equipment-making arm. AMF manufactures equipment like automatic pinspotters, scoring equipment, bowling-center furniture, bowling pins, special lanes, ball returns and spare parts. It also sells products like bowling balls, bags and shoes.
Indeed, the automatic pinspotter — developed by an inventor named Fred Schmidt, who was hired by AMF in 1938 to perfect it — revolutionized the bowling industry when it was introduced at the ABC National Championship in Buffalo in 1946 and it made AMF a leader in the industry.
A buyer could also try to split up the bowling-alley chain, Mr. Hansell said, and sell groups of bowling centers piecemeal to regional competitors.
