Callaway to issue common shares in exchange for 7.5% convertibles

By Toni Weeks

San Luis Obispo, Calif., Aug. 15 - Callaway Golf Co. said it will issue 3,392,263 of its common shares in exchange for 233,843 7.5% series B cumulative perpetual convertible preferred shares.

The company entered into separate, privately negotiated exchange agreements as part of its turnaround plan.

"Retiring the preferred stock is an important part of our turnaround plan and one that provides significant benefits to the company and its shareholders," president and chief executive officer Chip Brewer said in a press release. "The transactions not only will lower the company's cost of capital but also will be accretive to earnings on an annualized basis.

"We may redeem the balance of the preferred stock at any time and look forward to retiring the balance at the appropriate time, subject to market conditions, and thus completing this phase of our turnaround plan."

The series B preferreds have a conversion price of about $7.05 per share and a liquidation preference of $100 per share.

The company will also pay to the exchanging holders cash dividends through Dec. 15 on any exchanged preferred shares.

The exchange transactions are expected to close on Aug. 20, after which 183,796 preferred shares will remain outstanding.

Based in Carlsbad, Calif., Callaway manufactures and sells golf clubs and golf balls.

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