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Golfsmith International Holdings Chapter 11 Bankruptcy Petition Filed

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Golfsmith International Holdings and 12 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 16-12033. The Company, which is a specialty retailer of golf and tennis equipment, apparel, footwear and related accessories, is represented by Mark D. Collins of Richards, Layton & Finger. The Company also announced its entry into a definitive asset purchase agreement for the sale (the “Golf Town Transaction”) of the Canada-based business of Golf Town Canada Inc. to an entity to be controlled by a purchaser group led by Fairfax Financial Holdings Limited and certain investment funds managed by Signature Global Asset Management, a division of CI Investments Inc. (CI).

The Company also announced that it has entered into a support agreement with Fairfax and CI, which collectively hold more than 40% of the Company’s second lien secured notes due 2018 with respect to a recapitalization and restructuring transaction of the U.S.-based business of Golfsmith International Holdings. Pursuant to the definitive asset purchase agreement, the purchaser will acquire substantially all of the assets of the Golf Town business, including the acquisition of certain leases, inventory and working capital assets. The Company intends to use these proceeds to repay a substantial portion of the Company’s first lien credit facility to reduce leverage and interest costs while the Company advances and implements the Golfsmith Transaction. Upon completion, the transaction will result in a deleveraging of the Golfsmith business through the cancellation of the existing Secured Notes and the issuance of new second lien notes and 100% of the equity in restructured Golfsmith to holders of the Company’s existing secured notes.

The new secured notes will have a principal amount of approximately $35 million, an extended maturity date and an option for restructured Golfsmith to pay interest in kind rather than in cash. The transaction will also include a refinancing of the remaining portion of the Credit Facility following its paydown from the proceeds of the Golf Town Transaction and an operational restructuring of the Golfsmith business that will result in the closure of certain underperforming stores and the sale of excess inventory. Pursuant to the support agreement, Fairfax and CI (together with other secured noteholders that enter into the support agreement) have agreed to support the transaction and work with the Company to advance, support and implement the Golfsmith Transaction. Concurrent with the Chapter 11 filings, Golf Town commenced proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice (Commercial List).

The Company is currently working with its first lien lenders to finalize the terms of a $135 million debtor-in-possession financing facility to provide funding to the business while the Company advances and implements the transactions. David Roussy, Golfsmith International Holdings’ C.E.O., comments, “We believe that the Golf Town Transaction and the Golfsmith Transaction provide an overall going concern solution for the Company’s operations and will provide Golf Town with a streamlined sustainable retail footprint and Golfsmith with an improved capital structure.”

Read more Golfsmith bankruptcy news.

The post Golfsmith International Holdings Chapter 11 Bankruptcy Petition Filed appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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