By Cristal Cody
Prospect News, July 13 - Golf Town Canada Inc. and Golfsmith International Holdings, Inc. sold a downsized $125 million of six-year senior second-lien notes (/B/DBRS B low) at par to yield 10½% on Friday, an informed bond source said.
The notes due July 24, 2018 priced at a spread of 919.4 basis points over the Government of Canada benchmark.
The offering included 125,000 units, each 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 halfthe 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.
| Issuers: | Golf Town Canada Inc. and Golfsmith International Holdings, Inc.
|
| Guarantors: | 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
|
| Amount: | C$125 million
|
| Maturity: | July 24, 2018
|
| Securities: | Senior second-lien notes
|
| Bookrunners: | Scotia Capital Inc., TD Securities Inc. and BMO Capital Markets Corp.
|
| Co-managers: | HSBC Capital (Canada) Inc. and National Bank Financial Inc.
|
| Coupon: | 10½%
|
| Price: | Par
|
| Yield: | 10½%
|
| Spread: | 919.4 bps over Government of Canada benchmark
|
| Call feature: | Non-callable for three years; at par plus half the coupon in 2015; par plus a quarter of the coupon in 2016; at par in 2017 and subsequently
|
| Canada call: | Canada Bond Yield plus 50 bps
|
| Change-of-control option: 101%
|
| Equity claw: | For up to 35% in first three years at par plus coupon
|
| Pricing date: | July 13
|
| Settlement date: | July 24
|
| Ratings: | Standard & Poor's: B
|
| DBRS: B
|
| Distribution: | Rule 144A, Canada
|
| Price talk: | 10¼% to 10½%
|
| Marketing: | Roadshow
|
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