Golf Town, Golfsmith talk C$150 million of five-year notes with 9.5% to 10% yield

By Cristal Cody

Prospect News, July 12 - Golf Town Canada Inc. and Golfsmith International Holdings, Inc. talked their C$150 million offering of five-year senior second-lien notes (B/DBRS B low) with a yield in the 9.5% to 10% area on Thursday, a syndicate source said.

The company has held a roadshow over the week in New York and Toronto.

Pricing is expected on Friday at the earliest.

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 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 two years. In 2014, the notes may be called at par plus half the coupon, in 2015 at par plus a quarter of the coupon and 2016 and subsequently at par.

The notes have a 101% change-of-control put; an equity claw 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, replace Golfsmith's existing ABL facility and 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. Golfsmith is an Austin, Texas-based golf retailer.

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