I'm honestly surprised this deal ended up closing

This is the press release from Advance: LINK. It is hard for the casual reader like me to seperate Wanda from Ironman, but that is now a done deal! Andrew Messick resigned from Wanda and will continue to lead Ironman Group as CEO, which is good news.

Yeah, the buyers paid 730m but after Wanda paid the debt and other working capital items, there was only 380m left for Wanda. This is a pretty standard acquisition.

---

---

"Only those who risk going too far can possibly find out how far one can go." T.S. Elliot | Cycle2Tri.com
Sponsors: SciCon | | Every Man Jack

So if you listen to the latest Triathlon Teran video where he whines about WTC and I believe mentions that they were basically only making enough $$ to pay interest on the huge loans taken out in the past (by the new owner, funny enough..).......I guess that means WTC should now be able to be a lot more profitable moving forward.

Given Covid 19, I don't think this is exactly the best business environment for a type of business that requires large gatherings.

So moving forward seems more like a large question mark.

---

https://www.strava.com/...tes/zachary_mckinney

You'd have to assume they've factored in the short term disruption and lack of cash flow. Probably played a big part in the decision to pay down debt and reduce the ongoing interest burden...not to mention they'll likely be able to leverage the business in a better rate environment when races become practical again.

"So does that mean the purchase price they got it for basically takes care of all the debt that WTC has had all these years, so fresh start? Correct, I know nothing about this business stuff...."

No. the article says nothing about where the buyer funds came from.

For all we know - they could have borrowed to buy the Company.

Yeah true. It would be interesting to see their sensitivity analysis in their financial model.

---

https://www.strava.com/...tes/zachary_mckinney

Echoing CPT, you are correct. Typical acquisitions are considered "Cash Free and Debt Free". You use the cash in the business to pay down the debt and the proceeds from the sale to pay down any remaining debt and deliver the company without any long term liabilities to the new owners.
New owners would most likely have financed the $730m purchase price with some combination of debt and equity so not exactly a fresh start but it will be cleaner than the hole that Wanda was in. The new debt profile will (should) be able to be serviced by the projected cash flows of WTC, including adjustments for the COVID environment and hopefully they have learned from Wanda's mistakes.
Post closing purchase price adjustment is just the dollar difference between the balance sheet at the time the purchase price is agreed and the balance sheet when the transaction is closed and the company is delivered.

Wanda did not pay the debt. The press release states the $730 million is the *enterprise value* which means Equity plus debt minus cash. The $380 net proceeds means they deducted the debt (not paid it) and made other adjustments (working capital most typically) from the enterprise value. The cash and debt stay on IM balance sheet. I'm not sure what the debt is now but if it is 200 - 250 as I've seen mentioned elsewhere then the adverse change adjustment is around $150 million (working capital adjustments are usually not that large). Another way of looking at it is the buyers paid $380 plus the debt ($200?) = $580. BTW, "debt" means borrowed funds not all those entry fees they are sitting on. Those are prepaid revenues that they should be booking as current liabilities and which they are probably using to keep the place afloat. Or the new owners are paying the bills and preserving our fees? Sure

I've come across a number of "Unfortunately, my time with The IRONMAN Group came to an end last Wednesday" posts on Linked in.

I’m not sure if this is a direct correlation in the sale/purchase of Ironman but rather the current climate of the pandemic. My LinkedIn feed has been slammed with posts like that. I work for a major retailer and it’s not looking good for many companies right now.

---

USAT Level II- Ironman U Certified Coach

Agreed, its just hard to ignore the timing.

So many people in business can tell you stories, Sold to the capital/equity group on Monday, entire Sr leadership team sacked Friday.

"Hey Bill, so glad to have you on board, we really believe in what your doing and hope you can help us steer this ship in the right direction"
*Reviews Bill's severance agreement 2hrs later*

what do you think IM should do? there's no racing this year. it's just like if IM owned a worldwide chain of kissing booths. their business is kind of like the airlines, except the airlines have some passengers. what would you do if this business were yours? what is your plan?

---

Dan Empfield
aka Slowman

In general he would be incorrect. As a Shareholder of Wanda Sports Group I can tell you that until COVID, the mass-participation part of the business was making money hand over fist. But the gorilla on the balance sheet was InFront which is impacted much more right now than WTC was.

---

Washed up footy player turned Triathlete.

Sorry Dan, I forgot to put in a disclaimer I'm referring to when a company has new equity/capital owners they can't sack people fast enough - even when the money is rolling in.

Be it they bought an annuities funds company, or a biomed company, and still have enough cash to buy a small country but opt to eliminate 100 positions within the first few days of ownership without even finding out where these people fit and contribute in the organization.

But I'm sure I'm just imagining that and it never happens. I'm sure I don't personally know anyone who's mindlessly been let go by new owners. I'm sure they just didn't have a plan and heck even deserved it....

i'm familiar with the paradigm you describe. i've seen it many times over my lifetime, and it never sits well with me. but this isn't the typical scenario, where there is no global event to justify the layoffs. it's pretty clear that there's not going to be any racing this year. this changes the calculus. so, again, the plan? i'm pretty sure the existing management knows how these folks contribute to the organization. what's the plan to pay these folks? where's the revenue coming from?

---

Dan Empfield
aka Slowman

" except the airlines have some passengers."
------------------------------------------
and a government bail out.

---

David
* Ironman for Life! (Blog) * IM Everyday Hero Video * Daggett Shuler Law *
Disclaimer: I have personal and professional relationships with many athletes, vendors, and organizations in the triathlon world.

We could argue that air transport is an essential service and to some degree, although a culprit in the global spread is also needed for when things resume. The German Govt bailed out Lufthansa, but the Canadian Govt is not giving Air Canada or Westjet (and others) any extra program beyond what other companies get (last time I looked, but things may have changed). Here in Canada, we absolutely need the airlines to exist as they are the lifeline to many norther communities, and frankly Canada can't operate without air transport given the vast distances in between cities. We can definitely operate without Ironman races. Ironman employees in Canada could get partially saved. Here companies whose revenues dropped more than 30% in March onwards from their Jan and Feb average revenue are eligible for a 75% wage subsidy on the first ~$50K of income of an employee.

There are some technicality on how the revenue is recognized. I don't know how they did it traditionally and if they did cash based revenue recognition or if it was tied to their actual events (recognizing revenue when the event happens or when the entry is sold). So they may or may not have ended up being eligible.

I'm not sure, but I think David's point is that it's unfair to hold ironman to special scrutiny. I read today that dunkin is closing 800 locations. Who thinks it'll keep those folks on the payroll? United is furloughing a third of its pilots. so are other airlines. I promise you, IM does not want to lay off any of its staff. It didn't hire these folks just to lay them off.

---

Dan Empfield
aka Slowman

KS - can you explain the adverse change adjustment? Why would the debt not be higher and same as the BS/EV?