Performance Sports, formerly known as Bauer Performance Sports, said in a filing that it was subject to inquiries by the U.S. Securities and Exchange Commission as well as the Canadian securities regulatoFrank Gunn
Shares of Performance Sports Group Ltd. fell Tuesday after surging about 30 per cent during the last hour of trading before equity markets closed for the long weekend.
The Exeter, N.H.-based company's dual listed stock lost about 10 per cent Tuesday in both Toronto and New York. The shares closed at $4.12 and $3.22 (U.S.), respectively.
The selloff in PSG, which makes Bauer hockey equipment and Easton baseball gear, comes on the heels of a buying frenzy. Late on Friday, volume spiked and the price of the stock soared, closing close to 30 per cent higher in Canada and 31 per cent higher in the U.S.
It's still unclear what was behind Friday's rally.
The shares jumped shortly before PSG's largest shareholder, a U.S. investment firm controlled by the wealthy Desmarais family of Montreal, said in a press release that it is evaluating the company's financial position and may consider proposals involving a refinancing of PSG's debt or even a sale of the business or some of its assets.
After stock markets closed on Friday, Sagard Capital Partners LP, the Desmarais firm, added in the statement that it had terminated its shareholder nomination agreement that gave Sagard a seat on the board of PSG. The seat was to be occupied last month by Paul Desmarais III. The agreement, which is no longer in place, included various standstill restrictions on Sagard. The Connecticut investment firm added that it has also entered into a new confidentiality agreement with PSG.
PSG is having a difficult year, putting its investors on edge. Its sales have tumbled and the company delayed the filing of its audited financial statements. There has also been turnover in the boardroom and in the corner office.
The company, meanwhile, is fending off a class-action complaint in the U.S. that accuses it of "channel stuffing" – pulling future sales into the current period to give an impression of strong revenue. None of these allegations have been proved in court.
PSG is under investigation by the U.S. Securities and Exchange Commission and is now the subject of inquiries from securities regulators in Canada.
So far in 2016, its stock has lost more than 65 per cent on both sides of the border.