Golf Town, Golfsmith price C$125 million; primary slows, calendar stays light in July

By Cristal Cody

Prospect News, July 13 - Golf Town Canada Inc. and Golfsmith International Holdings, Inc. on Friday brought the second Canadian high-yield deal for the week just completed with an offering of $125 million of six-year senior second-lien notes.

The deal was downsized from C$150 million on additional equity investment from Golf Town owner Omers Private Equity and price talk widened from 9½% to 10% to a new range of 10¼% to 10½% as terms were finalized.

The deal from Golf Town and Golfsmith follows Baytex Energy Corp.'s C$300 million offering on Tuesday of 6 5/8% debentures due 2022 that continue to climb higher in secondary trading.

Details of CIT Canada Equipment Receivables ULC's C$514.732 million offering of senior and subordinated notes emerged on Friday. The company held a roadshow earlier in the month for the deal.

Other than the Golf Town and Golfsmith sale on Friday, the market saw little activity, a bond source said.

"It's pretty quiet. Provinces have been pretty quite this week, same as corporates," the source said. "We don't really foresee a very busy week [ahead]. Basically, just status quo."

A deal is expected mid-week from Richmond, B.C.-based Great Canadian Gaming Corp., which is holding a roadshow for a C$400 million offering of senior notes (B1/BB+/) in New York and Toronto through Tuesday.

An offering also may come in the week ahead from Bangkok, Thailand-based PTT Exploration & Production PCL, according to a bond source. The company (Baa1/BBB+/) started a roadshow on Wednesday in Canada.

The market also is gearing up for Tuesday's monetary policy rate announcement from the Bank of Canada, which is expected to leave the overnight rate unchanged at 1 %.

Canadian high-grade and high-yield bond spreads ended mostly unchanged on the day, bond sources said.

The Markit CDX Series 18 North American investment-grade index came in 1 basis point to a spread of 112 bps.

Canadian government bonds closed lower. The 10-year note yield rose 1 bp to 1.64%. The 30-year bond yield closed flat at 2.25%.

Golf Town, Golfsmith price

In Friday's primary action, Golf Town Canada and Golfsmith International sold a downsized $125 million of six-year senior second-lien notes (/B/DBRS B low) at par to yield 10½%, an informed bond source said.

The notes due July 24, 2018 priced at a spread of 919.4 bps over the Government of Canada benchmark.

The offering included 125,000 units with 70% issued by Golf Town and 30% issued by Golfsmith.

The deal initially was sized at C$150 million with a five-year maturity and talked to yield 10¼% to 10½%. The size was reduced because Omers Private Equity, owner of Golf Town, plans to invest an additional C$25 million.

Scotia Capital Inc., TD Securities Inc. and BMO Capital Markets Corp. were the bookrunners. Co-managers were HSBC Capital (Canada) Inc. and National Bank Financial Inc.

The issue is guaranteed by Golf Town Canada Holdings Inc., Golf Town USA Holdings Inc., the issuers, Golf Town USA Inc. and existing restricted subsidiaries and certain future restricted subsidiaries.

The notes are non-callable for three years. In 2015, the notes may be called at par plus half the coupon, in 2016 at par plus a quarter of the coupon and 2017 and thereafter at par.

The notes have a 101% change-of-control put; an equity claw up to 35% in the first three years at par plus the coupon; and a Canadian call at the Canada Bond Yield plus 50 basis points.

Proceeds will be used to repay debt, replace the existing Golfsmith ABL facility and return capital to shareholders.

Markham, Ont.-based Golf Town plans to acquire Austin, Texas-based specialty golf retailer Golfsmith.

CIT Canada sells three tranches

Terms of CIT Canada's offering of C$514.732 million in three tranches of series 2012-1 senior and subordinated notes emerged on Friday.

The deal included C$176.73 million of class A1 senior notes due July 22, 2013 (DBRS: AAA) priced at par to yield a spread of 75 bps over the Canadian bond curve, a bond source said.

The C$307.122 million tranche of class A2 senior notes due Dec. 20, 2016 (DBRS: AAA) priced at par to yield a spread of 115 bps over the bond curve.

The final tranche of C$30 million of class B subordinated notes due Nov. 20, 2019 (DBRS: A) were pre-placed and priced at par.

The deal was offered as a private placement in Canada and under Rule 144A in the U.S. markets.

Merrill Lynch Canada Inc., RBC Capital Markets, BMO Nesbitt Burns Inc. and CIBC World Markets Inc. were the bookrunners.

The asset-backed notes are secured by a pool of Canadian technology and office equipment and transportation and construction loans and leases acquired by CIT Canada.

CIT Canada is the Canadian financing arm of New York-based CIT Group Inc.

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