Golf Town and Golfsmith talk C$150 million five-year secured notes with 9½% area yield

By Paul A. Harris

Portland, Ore., July 11 - Golf Town Canada Inc. and Golfsmith International Holdings, Inc. talked their C$150 million joint offering of five-year senior second-lien notes (B/DBRS B low) with a yield in the 9½% area on Wednesday, according to a market source.

The offering, a joint issue which has 70% of the deal being issued by Golf Town and 30% by Golfsmith, is set to price by the end of the July 9 week.

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

The notes are non-callable for two years. In 2014, the notes may be called at par plus ½ the coupon, in 2015 at par plus ¼ the coupon and 2016 and thereafter at par.

The notes have a 101% change-of-control put; an equity clawback of up to 35% in the first two 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, to replace the existing Golfsmith ABL facility and to return capital to shareholders.

The deal comes as Golf Town plans to acquire U.S. specialty golf retailer Golfsmith International for $6.10 a share, an acquisition that will make it the world's largest specialty golf retailer with 143 stores in Canada and the United States.

Markham, Ont.-based Golf Town is owned by Omers Private Equity. Austin, Texas-based Golfsmith is a 40-year specialty golf retailer.

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