DBRS lowers Golf Town, Golfsmith to CCC (high)

DBRS said it downgraded the issuer rating of Golf Town Canada Inc. and Golfsmith International Holdings, Inc. to CCC (high) from B as well as its senior secured second-lien notes rating to CCC (low) from CCC (high).

The recovery rating remains at RR6.

The agency subsequently placed the ratings under review with negative implications.

The company has engaged Jeffries LLC and Alvarez & Marsal to explore strategic alternatives, including the possible sale of the company or its assets, which is indicative of the Ontario Municipal Employees Retirement System’s (Omers) interest in exiting the business.

DBRS said the downgrade and the review status reflect the heightened probability of a transaction in which bondholders will not receive a return of their full principal. In addition, the actions reflect the uncertainty surrounding the proceeds from and the timing and structure of any transaction (sale, restructuring or bankruptcy filing), the agency said.

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