UPDATE: Tennis Giant Prince Sports Files For Bankruptcy

Prince Sports Inc. filed for bankruptcy protection Tuesday after reaching a deal to be taken over by Authentic Brands Group LLC, which recently bought up Prince's debt.

Prince, which started in the 1970s as a manufacturer of tennis-ball machines, has become a prominent maker of tennis rackets and balls pioneering oversize and long-body tennis racquets, along with equipment for other racket sports. It has sponsored some of tennis's best-known athletes, including Jennifer Capriati, Patrick Rafter and Martina Navratilova. Though it lost Maria Sharapova to Head NV in January 2011, it currently sponsors Nikolay Davydenko and Gael Monfils.

In the past decade, Prince has changed hands through a series of private-equity deals, getting acquired most recently in 2007 by Nautic Partners LLC. Nautic bought Prince from Lincolnshire Management Inc., which had purchased Prince in 2003 from apparel company Benetton Group SpA.

In court papers filed with the U.S. Bankruptcy Court in Wilmington, Del., the company blamed increased competition amid the economic downturn for the start of its financial woes, causing Prince to begin marketing itself. Prince in 2010 attempted to sell the rights to its brands and its Chinese operations, hiring UBS AG to manage the sale, but didn't receive an acceptable bid.

Instead the company decided to change its brand and advertising strategy by upgrading products in hopes of increasing market share in an industry where it competes with sporting retailers Head NV and Wilson Sporting Goods Co., which both offer a wider range of products, and Dunlop International.

Prince tried again to sell in October 2011. Robert W. Baird & Co. found nine potential buyers interested in buying the whole company and was in discussions in March with three possible purchasers, who would have paid "substantially less than the existing amount of debt," according to court papers.

Its tennis unit recorded $59 million in sales in 2011, accounting for 83% of the company's revenue, according to a bankruptcy-court filing. Just over half of Prince's sales come from North America.

The company has a book value of $54.2 million and about $65 million in debt to Authentic, plus $12 million in debt to vendors and other payables, the filing said.

Authentic, a brand development and licensing company, in March purchased the debt from Madison Capital and General Electric Co.'s (GE) GE Capital unit and said it would acquire the whole company. The debt will be swapped for Prince's entire equity.

Authentic, owned by private equity firm Leonard Green & Partners L.P., owns or licenses the intellectual property rights for the estates of Marilyn Monroe and Bob Marley, mixed martial arts brand TapouT and clothing brand Silver Star.

Prince is slated to make its debut appearance in bankruptcy court Wednesday.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

-By Stephanie Gleason, Dow Jones Daily Bankruptcy Review; 202-862-1347; [e-mail]