Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment to Jack Wolfskin Purchase Agreement
On January 3, 2019, Callaway Golf Company (Callaway), Paw Luxco III S.à.r.l. (the Seller) and Callaway
Germany Holdco GmbH (a wholly owned subsidiary of Callaway formerly known as Mainsee 1185. V V GmbH) (the Purchaser) entered into an SPA Amendment, Waiver and Locked Box Deed (the Amendment) related to the Share Sale and
Purchase Agreement by and among Callaway, the Seller and the Purchaser, dated as of November 29, 2018 (the Purchase Agreement), in respect of Callaways agreement to acquire the Jack Wolfskin business. Pursuant to the
Amendment, the parties agreed to amend or waive certain notification periods,
pre-closing
covenants and conditions under the Purchase Agreement in order to effectuate the closing on January 4, 2019. The
parties also agreed to a locked box mechanism, which provides for the calculation of certain purchase price adjustment inputs and the economic transfer of the Jack Wolfskin business from the Seller to the Purchaser as of January 1,
2019.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the
full text of the Amendment, which is filed as Exhibit 2.1 to this Current Report on Form
8-K
and is incorporated herein by reference.
Term Loan Credit Agreement
To pay the
purchase price under the Purchase Agreement, on January 4, 2019, Callaway entered into a Credit Agreement (the Credit Agreement), by and among Callaway, the lenders party thereto from time to time (the Term Lenders) and
Bank of America, N.A., as administrative agent.
The Credit Agreement provides for a Term Loan B facility in an aggregate principal amount
up to $480 million (the Term Loan Facility), which was issued less $9.6 million in original issue discount. Such amount may be increased pursuant to incremental facilities in the form of additional tranches of term loans or new
commitments, up to a maximum incremental amount of $225 million, or an unlimited amount subject to compliance with a first lien net leverage ratio of 2.25 to 1.00.
Loans under the Term Loan Facility bear interest at a rate per annum equal to either, at Callaways option, the LIBOR rate or the base
rate, plus 4.50% or 3.50%, respectively.
The Credit Agreement contains customary representations and warranties and customary affirmative
and negative covenants, including, among other things, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. Events of default
permitting acceleration under the Credit Agreement include, among others, nonpayment of principal or interest, covenant defaults, material breaches of representations and warranties, bankruptcy and insolvency events, certain cross defaults or a
change of control.
All obligations of Callaway under the Term Loan Facility are jointly and severally guaranteed by its domestic
subsidiaries, subject to certain customary exceptions (the Guarantors). The obligations and guaranties under the Term Loan Facility are secured by a security interest in substantially all assets of Callaway and the Guarantors, with
priority of the security interest of the Term Lenders and the ABL Lenders (as defined below) subject to the terms of a customary intercreditor agreement.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated herein by reference.
Amendment to ABL Loan Agreement
In
connection with its entry into the Purchase Agreement and the Credit Agreement, on January, 4, 2019, Callaway entered into a Second Amendment to Third Amended and Restated Loan and Security Agreement (the Second Amendment), by and among
Callaway, the other borrowers party thereto, the other obligors party thereto, the lenders party thereto (the ABL Lenders) and Bank of America, N.A., as administrative agent, which amends