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Bauer hockey gloves are seen in this file photo.

Investors lopped almost half the market value from the maker of Bauer hockey gear after the company disclosed it has launched an investigation into its books and may default on its debt.

Performance Sports Group Ltd. said on Monday it has delayed filing its audited year-end financials, and retained legal counsel and financial advisers to assist with the probe.

The company, based in Exeter, N.H., has a significant following among Canadian investors. It needed to file the annual results with the U.S. Security and Exchange Commission by Monday to remain on side with its credit facilities. The delay puts its status in limbo.

Its Toronto Stock Exchange-listed shares skidded 46 per cent to $2.41 (Canadian) in the mass sell-off on Monday. They have lost about 85 per cent of their worth in the past year, as the company's fortunes eroded.

Performance Sports and its investors had already endured a tumultuous year, which has included senior executive and board changes, falling sales amid a retail slump and a 15-per-cent cut to the work force. In June, the company reported preliminary results for its fiscal year end on May 31, in which it projected a 10-per-cent drop in revenue to $587-million (U.S.).

It has also been hit by credit problems and outstanding bills among several of its major customers, prompting it to reduce shipments to some and boost its own bad debt reserves.

Performance Sports said it is working to finish its investigation so it can file its financial statements as soon as possible.

"The company has initiated discussions with its lenders to address this issue. There can be no assurances as to the outcome of such discussions," it said in a statement.

An official declined to offer more details into what aspects of its financials might be under investigation, and whether any errors are thought to be the result of mistakes or were by design.

"The investigation has just started. Obviously we have advisers that we're working with and there's not much more we can say beyond what's in the press release," Performance Sports spokesman Steve Jones said.

The company faces two potential outcomes as a result of the delay in filing the annual document, known as a 10-k, said Royal Bank of Canada analyst Sabahat Khan.

The lenders could grant the company an extension, likely in exchange for higher interest payments or some other penalty. Or they could refuse to give ground and force the company into a reorganization, Mr. Khan wrote in a note to clients.

Besides Bauer, the best-known line of ice-hockey equipment, Performance Sports distributes Easton baseball equipment, as well as accoutrements for lacrosse and roller hockey.

Sagard Capital Partners Management Corp., a private-equity firm led by executive chairman Paul Desmarais III, vice-president of Power Corp. and Power Financial, is Performance Sports' largest shareholder with 17 per cent of the stock.

Mr. Desmarais was named to Performance Sports' board last month. Sagard declined to comment on Monday's announcement.

In April, executives lamented unexpectedly weak sales in the company's baseball products, especially bats. That was in addition to the impact of the Chapter 11 bankruptcy of U.S. retail chain Sports Authority, which resulted in the closing of its 463 stores. The company's revenues have has also been hit by the weak Canadian dollar.

Last month, Performance Sports said it had accelerated its efforts to cut costs by reducing staff in efforts to save as much as $5.9-million in salaries and benefits annually.

Performance Sports Group (PSG)

Close: $2.41 (Canadian), down $2.09