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Sportsman's Warehouse looks past bankruptcy

The founder of Sportsman's Warehouse hopes it will be out of Chapter 11 bankruptcy by mid-August. But the outdoor and sporting goods retail chain will be under new leadership when it emerges.

Founder Stu Utgaard, who has been the company's chairman and CEO, said Thursday that Sportsman's Warehouse's largest investor, Seidler Equity Partners, plans to replace him.

The Marina Del Rey, Calif., private-equity firm held a 25 percent stake in the company before it filed for Chapter 11 protection in March. The chain operated 67 stores at its high-water mark. Twenty-six now remain, including a 45,200-square-foot store in the Delta Center on Delta Waters Road in northeast Medford.

Under the proposed restructuring plan submitted to a Delaware Bankruptcy court, Seidler Equity Partners will take on $12 million of the retailer's debt and effectively control the company.

"They've been a preferred shareholder and previously invested $75 million," Utgaard said. "They're writing a third check; it's a significant investment and hopefully they will be able to recover their investment."

Utgaard said Aug. 15 was the target date for ending the Chapter 11 status, but that could be delayed.

Telephone calls to Seidler Equity Partners' office and to its lawyers at O'Melveny & Myers LLP in Los Angeles were not returned.

Utgaard said he will have a senior management position in the restructured firm, but neither his new role nor his successor have been determined.

Since going into operation in 1996, Sportsman's Warehouse has sold about $3.5 billion in outdoor gear and built more than 5.2 million square feet of retail space.

Utgaard said his Midvale, Utah-based company was the victim of the credit crunch that followed the collapse of several major Wall Street investment banks last year.

"The whole thing was very avoidable," Utgaard said. "It was just one thing after another and roughly 3,500 people lost their jobs that didn't need to. It's very possible the whole company could have been lost, but at least we were able to save something."

Since October 2005, when bankruptcy laws went through major changes, a growing string of retailers — from Linen & Things and Circuit City to Joe's and Mervyn's — have closed. Although there are still legal challenges from creditors waiting to be heard by the court, Utgaard remained confident that Sportsman's Warehouse will survive.

"There haven't been any retailers emerge since 2005," Utgaard said. "We still hope to be the first."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.