CARLSBAD, Calif., April 29, 2020 /PRNewswire/ -- Callaway Golf
Company (NYSE: ELY) announced today its intention to offer, subject
to market and other conditions, $200,000,000 aggregate principal amount of
convertible senior notes due 2026 (the "notes") in a private
offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities
Act"). Callaway also expects to grant the initial purchasers of the
notes an option to purchase, for settlement within a period of 13
days from, and including, the date notes are first issued, up to an
additional $30,000,000 principal
amount of notes.
The notes will be senior, unsecured obligations of Callaway,
will accrue interest payable semi-annually in arrears and will
mature on May 1, 2026, unless earlier
repurchased, redeemed or converted. Noteholders will have the right
to convert their notes under certain circumstances and during
specified periods. Callaway will settle conversions by paying or
delivering, as applicable, cash, shares of its common stock or a
combination of cash and shares of its common stock, at Callaway's
election. The notes will be redeemable, in whole or in part, for
cash at Callaway's option at any time, and from time to time, on or
after May 6, 2023 and on or before the 40th scheduled trading
day immediately before the maturity date, but only if the last
reported sale price per share of Callaway's common stock exceeds
130% of the conversion price for a specified period of time. The
redemption price will be equal to the principal amount of the notes
to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. The interest rate, initial
conversion rate and other terms of the notes will be determined at
the pricing of the offering.
Callaway intends to use a portion of the net proceeds from the
offering to pay the cost of the capped call transactions described
below, and the remainder for working capital and other general
corporate purposes. If the initial purchasers exercise their option
to purchase additional notes, then Callaway intends to use a
portion of the net proceeds from the sale of the additional notes
to enter into additional capped call transactions as described
below and the remainder for working capital and other general
corporate purposes.
In connection with the pricing of the notes, Callaway expects to
enter into privately negotiated capped call transactions with one
or more dealers, which may include certain initial purchasers or
their affiliates and/or one or more financial institutions (the
"option counterparties"). The capped call transactions are expected
to cover, subject to anti-dilution adjustments substantially
similar to those applicable to the notes, the number of shares of
Callaway's common stock underlying the notes. If the initial
purchasers exercise their option to purchase additional notes,
Callaway expects to enter into additional capped call transactions
with the option counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to Callaway's common stock upon any
conversion of the notes and/or offset any potential cash payments
Callaway is required to make in excess of the principal amount of
converted notes, as the case may be, upon conversion of the notes.
If, however, the market price per share of Callaway's common stock,
as measured under the terms of the capped call transactions,
exceeds the cap price of the capped call transactions, there would
nevertheless be dilution and/or there would not be an offset of
such potential cash payments, in each case, to the extent that such
market price exceeds the cap price of the capped call
transactions.
In connection with establishing their initial hedges of the
capped call transactions, the option counterparties or their
respective affiliates expect to enter into various derivative
transactions with respect to Callaway's common stock and/or
purchase shares of Callaway's common stock concurrently with or
shortly after the pricing of the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of Callaway's common stock or the notes at that time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Callaway's common
stock and/or purchasing or selling Callaway's common stock or other
securities in secondary market transactions following the pricing
of the notes and prior to the maturity of the notes (and are likely
to do so during any observation period related to a conversion of
notes). This activity could also cause or avoid an increase or
decrease in the market price of Callaway's common stock or the
notes, which could affect the ability of noteholders to convert the
notes, and, to the extent the activity occurs following conversion
or during any observation period related to a conversion of notes,
it could affect the number of shares of Callaway common stock and
value of the consideration that noteholders will receive upon
conversion of the notes.
The offer and sale of the notes and any shares of common stock
issuable upon conversion of the notes have not been, and will not
be, registered under the Securities Act or any other securities
laws, and the notes and any such shares of common stock cannot be
offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws. This press
release does not constitute an offer to sell, or the solicitation
of an offer to buy, the notes or any shares of common stock
issuable upon conversion of the notes, nor will there be any sale
of the notes or any such shares of common stock, in any state or
other jurisdiction in which such offer, sale or solicitation would
be unlawful.
About Callaway Golf Company
Callaway Golf Company (NYSE: ELY) is a premium golf equipment
and active lifestyle company with a portfolio of global brands,
including Callaway Golf, Odyssey, OGIO, TravisMathew and Jack
Wolfskin. Callaway manufactures and sells premium golf
clubs, golf balls, golf and lifestyle bags, golf and lifestyle
apparel and other accessories.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance, prospects or growth
and scale opportunities, including statements relating to the
anticipated terms of the notes being offered, the completion,
timing and size of the proposed offering, the intended use of the
proceeds and the anticipated terms of, and the effects of entering
into, the capped call transactions described above, are
forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect,"
"estimate," "could," "should," "intend," "may," "plan," "seek,"
"anticipate," "project" and similar expressions, among others,
generally identify forward-looking statements, which speak only as
of the date the statements were made and are not guarantees of
future performance. These statements are based upon current
information and expectations. Accurately estimating the
forward-looking statements is based upon various risks and
unknowns, including market conditions, market interest rates, the
trading price and volatility of Callaway's common stock and the
risks and uncertainties relating to Callaway's business, including
those related to the COVID-19 pandemic, which may cause disruptions
to business operations, production delays, closures of
manufacturing facilities, retail locations, warehouses and supply
and distribution chains and related decreases in customer demand
and spending, and the other risks and uncertainties described in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2019, and Forms 10-Q and
8-K subsequently filed with the Securities and Exchange Commission.
Callaway may not consummate the proposed offering described in this
press release and, if the proposed offering is consummated, cannot
provide any assurances regarding the final terms of the offer or
the notes or its ability to effectively apply the net proceeds as
described above. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date hereof. Callaway undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated
events.
Contacts:
|
Brian
Lynch
|
|
Patrick
Burke
|
|
(760)
931-1771
|
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SOURCE Callaway Golf Company