Callaway Golf enters up to $75 million credit facility via BofA

By Jennifer Chiou

New York, July 6 - Callaway Golf Co. entered into a loan and security agreement with Bank of America, NA as administrative agent and collateral agent and Merrill Lynch, Pierce, Fenner & Smith Inc. as lead arranger and bookrunner, providing for an up to $75 million senior secured asset-based revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The borrowers include Callaway Golf Sales Co., Callaway Golf Ball Operations, Inc. and Callaway Golf Canada Ltd. Callaway Golf Interactive, Inc. and Callaway Golf International Sales Co. are the guarantors.

The facility is comprised of a $62.5 million U.S. facility, of which $20 million is available for letters of credit, and a $12.5 million Canadian facility, of which $5 million is available for letters of credit. Both portions are subject to borrowing base availability.

On June 29, the company announced that it was developing a restructuring plan to improve operational effectiveness and reduce costs. Also on that date, George Fellows resigned from his positions as a director and as president and chief executive officer of the company.

The board of directors appointed Anthony S. Thornley as interim president and chief executive officer. Thornley resigned from his position as a member of the audit committee and the nominating and corporate governance committee.

The revolver replaces the company's existing credit agreement from 2004 that was scheduled to come due on Feb. 15, 2012. The new loan will mature on June 30, 2016.

Borrowings under the U.S. facility will bear interest at Libor for a 30-day interest period plus 100 basis points and an applicable margin ranging from 125 bps to 175 bps depending on the company's availability ratio. For the Canadian portion, it will be Cdor, or the Canadian Dollar Bankers' Acceptances, with a one-month interest period plus 105 bps and an applicable margin ranging from 125 bps to 175 bps depending on the company's availability ratio.

There are unused fees ranging from 37.5 bps to 50 bps.

The filing stated that Callaway has the right at any time to request up to $285 million of incremental commitments under the ABL facility.

In other news, on July 1, Thomas Yang resigned, effective July 8, from his position as senior vice president, international.

Carlsbad, Calif.-based Callaway is a maker of golf clubs and equipment.

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