MAG Group files Chapter 11

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PRESS RELEASE | 11.15.17 | MAG GROUP

Motorsport Aftermarket Group Implements Debt Recapitalization
Over $300 Million of Debt to be Eliminated; Operations Unaffected
Customer Services Continue Uninterrupted

Coppell, TX – November 15, 2017 – Motorsport Aftermarket Group (“Company” or
“MAG”), a leading independent manufacturer and distributor of branded aftermarket
products and online retailer for the powersports industry, today announced it is
implementing a comprehensive, consensual recapitalization to eliminate approximately
$300 million in debt through a debt for equity exchange supported by in excess of 90
percent of the principal amount of the Company’s prepetition first lien secured lenders,
and its asset-backed lenders.

“Through this process, which we have been working very hard on with our key lenders to
accomplish over the past month, we will de-lever our balance sheet allowing us to more
effectively compete in today’s evolving powersports market. MAG’s businesses will
continue to operate unaffected and the Company has sufficient liquidity to fund
operations. Customer service and sales will continue, employees will receive wages and
benefits as before, and vendors and suppliers will be paid in the ordinary course of
business going forward,” said CEO Andrew Graves.

To implement the recapitalization, the Company and certain of its affiliates have filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in
the District of Delaware. The Company expects to move through the process quickly, and
emerge in the first quarter 2018 as a stronger, better capitalized and competitive
company.

To support operations through this process, MAG has secured up to $135 million in
debtor-in-possession (DIP) financing from certain of its current secured lenders.
“The U.S. Powersports market has been in persistent decline for the past few years. In
response, MAG has been working diligently to adjust to the changing landscape and has
implemented many initiatives to parallel today’s market. Unfortunately, the Company’s
long-term debt continues to be an impediment to success,” added Graves. “As such, we
believe that by availing the Company to the chapter 11 process, MAG has chosen the
most efficient and expeditious way to right-size our balance sheet for the long term so
that we remain an industry leader for many years to come. We and our key creditors are
committed to what will hopefully be a short bankruptcy case.”

Key Elements of the Recapitalization:
Employee wages and benefits will be paid in full in the ordinary course
without interruption.
Customer orders will be fulfilled consistent with past practice without delay
or disruption.

Vendors and suppliers will be paid timely and in full going forward.
Company will emerge with new owners and a new board of directors.
Monomoy Capital Partners, BlueMountain Capital and Contrarian Partners will lead the
new owners group, and have deep experience in consumer products and lifestyle
companies including distribution, retail and manufacturing. “We are encouraged to have
access to the resources the new owners bring, by their passion for the powersports
industry, and for their shared vision for MAG’s future. Looking forward, MAG will be able
to more aggressively capitalize on market and growth opportunities given our strong
balance sheet post recapitalization,” said Graves.

“Importantly, MAG is very appreciative of its employees who have remained committed
and professional during what has been a challenging few years. Moreover, we are grateful
to our valued vendors and suppliers who have remained our partner, and we thank our
customers who continue to trust and rely on us. We look forward to continuing to work
together for many years to come,” added Graves.

Court filings as well as other information related to the restructuring are available at
www.donlinrecano.com/vhc or by calling the restructuring information hotline, (800) 581-
5607 (toll free in North America) or (212) 771-1128 (International). Inquiries may also be
submitted via e-mail to vhcinfo@donlinrecano.com.
Proskauer Rose LLP and Cole Schotz P.C. are serving as legal counsel and AlixPartners
LLP is serving as financial advisor to MAG.

 

About Motorsport Aftermarket Group
Our mission is to build a group of brands and businesses that are recognized for quality,
performance and innovation to meet the demands of powersports enthusiasts. Since
2000, Motorsport Aftermarket Group (MAG) has built a portfolio of the most desired
brands in the motorsport parts and accessories aftermarket. No other industry participant
owns as many dominant brands. Each MAG company is a leader in its market segments.
The MAG companies enjoy long histories of leadership and innovation, some dating back
to the 1960s. MAG’s businesses are operated worldwide and are focused on innovation,
creative freedom and to be connected to their customers. Our teams also work together
in product design and development, marketing and advertising, and special events to take
advantage of our combined experience and resources. The MAG group office provides
support in the areas of business development, finance, sourcing, information technology,
sales, marketing and administration that is unmatched in the industry. For more
information on MAG, visit www.maggroup.com.

Brands involved are:

Velocity Holding Company, Inc.

Velocity Pooling Vehicle, LLC

DFR Acquisition Corp.

Ed Tucker Distributor, Inc.

J&P Cycles, LLC

Kuryakyn Holdings, LLC

MAG Creative Group, LLC

MAGNET Force, LLC

Motorcycle Superstore, Inc.

Motorcycle USA LLC

Motorsport Aftermarket Group, Inc.

Mustang Motorcycle Products, LLC

Performance Machine, LLC (owns Roland Sands Design)

Ralco Holdings, Inc.

Rally Holdings, LLC

Renthal America, Inc.

Tucker Rocky Corporation

Tucker-Rocky Georgia, LLC

V&H Performance, LLC (Vance & Hines)