Moody’s changes Calloway view to negative

Moody’s Investors Service said it changed the outlook to negative from stable and affirmed Callaway Golf Co.’s corporate family rating at B1 and probability of default rating at B1-PD. Moody’s additionally affirmed the company’s senior secured term loan B rating at B1. The company’s speculative grade liquidity is unchanged at SGL-2.

Callaway plans to acquire the remaining 86% of equity of Topgolf International, Inc. it does not already own in an all-stock transaction valued at $1.7 billion.

“The negative outlook reflects Callaway’s diminishing ability to deleverage to below 5x debt/EBITDA within the next 12 to 18 months as the company plans to invest in the expansion of Topgolf venues rather than reduce debt. Based on the company’s initial investment plans, Moody’s expects Callaway’s debt to EBITDA to remain elevated at around 5.5x by the end of 2021 and only decline to below 5x by 2022,” the agency said in a press release.

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