Specialty golf retailer Golfsmith International Inc filed for Chapter 11 bankruptcy on Wednesday and agreed to sell its Canadian retail chain to a group led by Fairfax Financial Holdings Ltd and a unit of CI Investments Inc.
Golfsmith listed both its assets and liabilities at between US$100 million and US$500 million, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.
The company said it plans to sell itself as a going concern and partially liquidate the business. However, if the plan fails, the company plans a full liquidation.
Golfsmith said its Canadian retail chain, Golf Town Canada Inc, had also commenced creditor protection proceedings under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice.
Austin, Texas-based Golfsmith said it was working with its first-lien lenders to finalize the terms of a US$135 million debtor-in-possession financing facility.
The company owes its biggest unsecured creditor, Callaway Golf Co, US$5.5 million.
Fairfax and CI, which together hold more than 40 percent of Golfsmith’s second-lien secured notes due 2018, will help Golfsmith recapitalize and restructure its U.S. business.
The Wall Street Journal had earlier reported that Golfsmith will file for creditor protection in the United States and Canada as early as Wednesday.
The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 16-12033.
Update: Golf Town, a portfolio company of OMERS Private Equity (OPE) since 2007, combined with Golfsmith International in 2012. The deal had a total consideration of about US$163 million.
OPE has since been the owner of the merged business.
(Reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Max Rossi