Performance Sports reveals SEC also investigating in wake of delayed audit

TORONTO – The maker of Bauer hockey equipment says it’s under investigation by the U.S. Securities and Exchange Commission and that Canadian authorities have also made inquiries about unspecified problems.

The announcement by Performance Sports Group Ltd. (TSX:PSG) comes two days after it revealed its board has launched an internal investigation and that PSG wouldn’t be able to file its audited annual results by the Aug. 15 deadline.

The focus of the internal and external probes hasn’t been revealed and PSG’s spokesman declined to answer questions about its announcements this week.

“At this time, we have no further comment beyond what is included in the 8-K filing,” PSG’s Steve Jones said in an email.

Shares in Performance Sports lost nearly half of their value on Monday after the company said the delay in filing audited results would put it in default of agreements with its creditors.

PSG stock traded at $2.35 in Toronto at midday, above an all-time low of $1.55 set on Monday but just a shadow of its former value.

According to an announcement in June, Performance Sports expected to end its 2016 financial year on May 31 with US$424.8 million in debt — little-changed from a year earlier.

Performance Sports shares traded at midday Wednesday at C$2.30 in Toronto, down 49 per cent from Friday’s close before this week’s announcements and down nearly 90 per cent over the past year.

The company’s head office is in New Hampshire and its main listing is on the New York Stock Exchange, but Performance Sports has deep roots in Canada, where it first became a publicly traded company in March 2011.

Performance Sports said Wednesday that a U.S. newspaper report about the Monday announcement erroneously stated that “the firm is not under any investigation” by federal authorities.

“That report is not accurate,” the company said in an 8-K filing, used for various types of announcements.

“While its Aug. 15 announcement referenced an internal investigation, Performance Sports Group is also the subject of inquiries by U.S. and Canadian securities regulators, including an investigation by the U.S. Securities and Exchange Commission.”

Among the company’s investors is Sagard Capital Partners, part of the Montreal-based Power group of companies (TSX:POW). As of July 25, Sagard owned a 17 per cent stake of its common shares, making it the largest shareholder.

One of the biggest problems for Performance Sports has been the Chapter 11 bankruptcy proceedings for The Sports Authority, one of the biggest sports retailers in the United States.

Performance Sports said Monday it will continue to operate its business normally as it works to complete its audited financial report.