Golfsmith International Holdings filed with the U.S. Bankruptcy Court a motion for authority to assume a restructuring support agreement and granting related relief.
The motion explains, “Immediately prior to the commencement of these chapter 11 cases, the Debtors entered into that certain Support Agreement, dated as of September 13, 2016, (the ‘Restructuring Support Agreement’) with Fairfax Financial Holdings Limited (‘Fairfax’) and CI Investments Inc. (‘CI’), holders of approximately 40% of the Debtors’ 10.50% Second Lien Notes due 2018 (the ‘Second Lien Notes’ and the holders of such Second Lien Notes, the ‘Second Lien Noteholders’).”
Court-filed documents continue, “Under the terms of the Restructuring Support Agreement, Fairfax and CI, in addition to other potential Senior Secured Noteholders…that hereafter agree to its terms (collectively, the ‘Supporting Noteholders’) will support the Golf Town Transaction and the Golfsmith Restructuring. The Restructuring Transaction, which will be implemented through a plan of reorganization (the ‘Plan’), provides for (i) an exchange of C$125.0 million Second Lien Notes (approximately $95 million in U.S. dollars) for US$35.0 million of new 12.0% second lien notes (the ‘New Second Lien Notes’) due three years from the effective date of the Restructuring Transaction; (ii) the distribution of 100% of the common share equity of the reorganized Debtors to the Senior Secured Noteholders; (iii) the refinancing of the Debtors’ existing first lien ABL credit facility (the ‘ABL Credit Facility’) with a new first lien asset based revolving facility for the reorganized Golfsmith, on terms acceptable to Golfsmith and the Supporting Noteholders; and (iv) existing shareholders will receive no distributions under the Plan.”
The motion continues, “The Restructuring Transaction would culminate in, among other things, a more than 60% reduction of the Debtors’ obligations under the Second Lien Notes and a maturity extension under the New Second Lien Notes of approximately 18 months. Further, the Supporting Noteholders have agreed that the reorganized Debtors may pay the 12.0% interest on the New Second Lien Notes as cash pay or payment-in-kind interest, at the reorganized Debtors’ option….Finally, assumption of the Restructuring Support Agreement does not preclude the Debtors from pursuing another transaction.” The Court scheduled an October 13, 2016 hearing on the motion.
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