CARLSBAD, Calif., April 30, 2020 /PRNewswire/ -- Callaway Golf
Company (NYSE: ELY) announced today the pricing of its offering of
$225,000,000 aggregate principal
amount of 2.75% 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"). The offering size was increased from the
previously announced offering size of $200,000,000 aggregate principal amount of notes.
The issuance and sale of the notes is scheduled to settle on
May 4, 2020, subject to customary
closing conditions. Callaway also granted 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 $33,750,000 principal
amount of notes.
The notes will be senior, unsecured obligations of Callaway and
will accrue interest at a rate of 2.75% per annum, payable
semi-annually in arrears on May 1 and
November 1 of each year, beginning on
November 1, 2020. The notes will
mature on May 1, 2026, unless earlier
repurchased, redeemed or converted. Before February 1, 2026, noteholders will have the right
to convert their notes only upon the occurrence of certain events.
From and after February 1, 2026,
noteholders may convert their notes at any time at their election
until the close of business on the second scheduled trading day
immediately before the maturity date. 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 initial conversion rate is
56.7698 shares of Callaway's common stock per $1,000 principal amount of notes, which
represents an initial conversion price of approximately
$17.61 per share of Callaway's common
stock. The initial conversion price represents a premium of
approximately 30% over the last reported sale of $13.55 per share of Callaway's common stock on
April 29, 2020. The conversion rate
and conversion price will be subject to adjustment upon the
occurrence of certain events.
The notes will not be redeemable at Callaway's election before
May 6, 2023. 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.
If a "fundamental change" (as defined in the indenture for the
notes) occurs, then, subject to a limited exception, noteholders
may require Callaway to repurchase their notes for cash. The
repurchase price will be equal to the principal amount of the notes
to be repurchased, plus accrued and unpaid interest, if any, to,
but excluding, the applicable repurchase date.
Callaway estimates that the net proceeds from the offering will
be approximately $217.3 million (or
approximately $250.0 million if the
initial purchasers exercise their option to purchase additional
notes in full), after deducting the initial purchasers' discounts
and commissions and Callaway's estimated offering expenses related
to 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. These activities may affect the trading
price of Callaway's common stock and the initial conversion price
of the notes.
In connection with the pricing of the notes, Callaway entered
into privately negotiated capped call transactions with one or more
dealers, which included certain initial purchasers or their
affiliates and/or one or more financial institutions (the "option
counterparties"). The capped call transactions will 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 cap price of the capped call transactions will initially be
$27.10 per share, which represents a
premium of 100% over the last reported sale price of Callaway's
common stock of $13.55 per share on
April 29, 2020, and is subject to
certain adjustments under the terms of the capped call
transactions.
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
completion of the offering, the expected amount and intended use of
the net proceeds 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, the satisfaction of the closing conditions related to
the offering 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 offering described in
this press release and, if the 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