Kent Outdoors Lands a $100 Million Credit Facility and Plans to Sell its Kona Bicycles Brand. But What About its Other Non-"Water Sports Businesses?"

Following "... a strategic review of its operating units," Kent announced that it has decided it will "... seek a buyer for its bike business, Kona (Bicycles), ..." so it can "... direct its resources toward investment in its key water sports businesses." (Emphasis added.)

QUESTION: Does this mean that Kent also intends to sell its two other outdoor brands that are NOT in the water sports world?

On the surface, the news coming out of Park City, Utah-based Kent Outdoors was pretty straightforward: The firm had secured a $100 million credit facility from Eclipse Business Capital.

According to Kent's news release a month ago, Eclipse is an Asset-based Lender, simply meaning that any loans or debt that Kent draws from Eclipse must be backed by assets.

As defined by Investopedia, Asset-based Lenders

"... loan money in an agreement that is secured by collateral (such as) inventory, accounts receivable, equipment, or other property owned by the borrower."

Formed over 65 years ago in Ohio, the now-named Kent Outdoors is, in my mind, one of the most intriguing, mid-sized firms focused on the recreational / outdoors marketplace.

In fact, as we reported in late October 2023, Kent Outdoors' then owner (Seawall Capital) announced that it was moving Kent's headquarters to Summit County, Utah.

In total, Kent Outdoors has 17 brands under its corporate umbrella (including the Kent brand), specifically

1. Aquaglide;
2. Arbor Collective;
3. Arctic Shield;
4. Barefool International;
5. BOTE;
6. Connelly;
7. FatSac;
8. Freedom Foilboards;
9. Full Throttle;
10. HO Sports;
11. Hyperlite Wake Co.;
12. Kent Outdoors;
13. Kona Bicycles;
14. Liquid Force;
15. Margaritaville;
16. Obrien; and
17. Onyx.

That said, the day before Kent Outdoors announced its new $100 million credit facility, the firm announced it had hired Rob Otto as its new Chief Financial Officer.

According to the company release about this hiring, Otto joined Kent Outdoors after successfully leading the sale of RW Designs as its CFO and Chief Operations Officer to Hong Kong-based Hop Lun.

In other words, Otto clearly has the chops when it comes to selling a company.

Previously, Otto had served in CFO and COO roles for such CPG (Consumer Products Good) brands as Z Gallerie, Hudson Jeans, Seven For All Mankind, and Affliction Holdings.

The Coming Transition of Kent Outdoors?

Interestingly, buried in the 10th paragraph of the release announcing the $100 million credit facility is this little tidbit:

"In connection with the investment of capital and the management team coming onboard, the Company performed a strategic review of its operating units and determined that it would continue to seek a buyer for its bike business, Kona (Bicycles). This move allows the Company to direct its resources toward investment in its key water sports businesses."

[NOTE: Hold onto that quote for a moment.]

Separately, while researching what the sale of Kona Bicycles might mean to all parties, I discovered that several cycling media properties had reported that the company unceremoniously tore-down its display/booth at the Sea Otter Classic on Wednesday, April 17th, one day before the event officially began.

And of course, Kent Outdoors' announcement of Rob Otto as its new CFO occurred one day before Kona's disengagement from Sea Otter Classic.

As noted above, Otto joined Kent Outdoors after completing the sale of RW Designs, which happened in December 2023.

Presuming you're still following along with this somewhat meandering write-up, please note again the final sentence in the quote above:

"This move allows the Company to direct its resources toward investment in its key water sports businesses."

So what does that mean?

As it turns out, when someone cycles through the 17 outdoor / recreation brands under the Kent Outdoors umbrella, the vast majority are clearly in the "water sports" arena — but three of those owned brands are not in water sports area, specifically

1. Arbor Collective (snow and skate sports, apparel, and accessories);
2. Arctic Shield (outdoor hunting apparel); and (as noted previously),
3. Kona Bicycles.

So, asked differently — What is the meaning of this sentence from the news release? [See below.]

"This move allows the Company to direct its resources toward investment in its key water sports businesses." (Again, emphasis added.)

Does it mean Kent Outdoors is looking to sell or unload these two other businesses / brands on top of its planned sale of Kona?

Or is it that the firm plans to let Arbor Collective and Arctic Shield survive on their own without any capital infusion via the new $100 million credit facility?

Or perhaps, could this sentence have a totally different meaning?

The reality is ...

I. Just. Don't. Know.

To be clear, I've tried (unsuccessfully) several times to contact Kent Outdoors, but

• The firm doesn't include a phone number on its website, and
• Its news releases do not include any email addresses or phone numbers for Kent employees.

As it turns out (as shown below), the company is not currently registered as a business in the state of Utah, so there's no contact info to find there either.

I've also reached out via social media to both Otto and Lee Belitsky, Kent's Executive Chairman and President since February 2024, but no response so far.

I also got no response from Sewall Capital either, owner of Kent Outdoors, at least as of October 2023. [NOTE: Then again, there's also some evidence online that suggests that Sewall has sold off its ownership stake of Kent Outdoors.]

To be clear, I was successful in reaching an individual who works for a PR firm that Kent has used at least twice in the past nine months. Unfortunately, he explained that his firm had nothing to do with either

• The $100 million credit facility announcement, or
• The news release announcing the hiring of Otto as Kent's new CFO.

But he did say he would reach out to his contacts at Kent to let them know I was trying to get clarification for this story.

Unfortunately, that was ~10 days ago, and since then ... crickets.

Anyway ... any Kent exec in a position to respond to my questions, I'd love to hear from you at David.Politis@UtahMoneyWatch.com.

And for Utah Money Watch readers, if you have any insights (on or off the record), I'd love the feedback.

Thanks.

PUBLISHER'S NOTE

This article was originally published and distributed to our Subscribers at approximately 6:15pm MT on Tuesday, 21 May 2024.

However, if you are seeing this report for the first time sometime after this date, you can ensure you are notified immediately when we publish future news stories by subscribing, FOR FREE, to Utah Money Watch.

Doing so takes less than 30 seconds and can be done on any page on the Utah Money Watch website.

Simply,

1. Click on a Blue & White "Subscribe" button on any Utah Money Watch webpage,
2. Enter in your name in the proper field in the popup window that appears on-screen, and
3. Enter your preferred email address in the proper field too.

That's it. And "Yes," it really is that simple.

And ... it IS free.

So please subscribe today; doing so helps show the value of Utah Money Watch to potential sponsors.

Thank you.

Team Utah Money Watch