Finance

Topgolf Callaway Brands Secures Financial Future with Strategic Loan Repricing

CARLSBAD, Calif., March 21, 2024 /PRNewswire/ -- In an astute financial maneuver, Topgolf Callaway Brands Corp. (NYSE: MODG), also recognized as "The Company," has revealed the successful repricing of its considerable $1.24 billion term loan that matures in 2030. This recalibration of the terms is a decisive step forward in reducing the corporation’s future interest expenditures.

Summary of the Financial Maneuver:

Amidst challenging economic conditions, Topgolf Callaway Brands has adeptly completed the repricing of its first-lien term loan, initially slated to come due at the end of this decade. A 50-basis point reduction to the interest rate, now tied to SOFR +300, coupled with the elimination of a 10-basis point credit spread adjustment, reflects a total reduction of 60 basis points. These reductions aggregate to significant savings for the company, with anticipated annual interest cost savings of over $7 million, shedding a substantial financial burden as Topgolf Callaway looks towards future prosperity.

Brian Lynch, the esteemed Chief Financial Officer and Chief Legal Officer at Topgolf Callaway Brands, expressed his satisfaction with the transaction. "We are thrilled to convey the completion of our debt repricing initiative," said Lynch. He further emphasized that these actions are aligned with the Company's overarching strategy of judicious leverage management. The success of this initiative underscores a commitment to retain the financial agility requisite for nurturing continued business growth. He underscored this point by referring to the positive generation of free cash flow in 2023 across the Company, including the Topgolf division, with expectations set to replicate such performance in 2024.

Collaboration with the financial sector's vanguards has ensured the smooth reconfiguration of the term loan. Esteemed institutions like Bank of America, N.A., JPMorgan Chase Bank, N.A., MUFG Securities Americas Inc., and Truist Securities, Inc. have played pivotal roles as Joint Lead Arrangers and Joint Bookrunners, demonstrating the enduring confidence and partnership between these financial titans and Topgolf Callaway Brands.

For stakeholders demanding a granular understanding of the repricing's specifics, the Company directs them to consult the forthcoming Form 8-K, which will elucidate the debt repricing’s terms and conditions. This form will be filed meticulously with the Securities and Exchange Commission, ensuring transparency and providing a comprehensive overview of the transaction's implications for the fiscal landscape of Topgolf Callaway Brands.

Looking to the Future with Confidence:

It is imperative to note that the Company’s communication includes forward-looking statements, which by their nature, rely on projections that could be subject to change due to various factors. These forward-looking statements encompass expectations regarding anticipated interest cost savings and business growth. This also includes the forecasted generation of cash flows for both the total Company and Topgolf, along with a portrait of the Company's fiscal health moving forward, including leverage and liquidity, which are critical for funding the business's growth.

These statements, as defined under the Private Securities Litigation Reform Act of 1995, are predicated on the current informational corpus and assumptions and project an image of the future financial horizons of the Company. Nonetheless, numerous risks, uncertainties, and unknown factors could potentially skew these projections. Such variables include, but are not limited to, the unpredictable global economic climate defined by inflation, shifts in consumer demand and spending, and the potential for a severe or protracted downturn impacting economies worldwide.

Additionally, costs and challenges associated with the integration of Topgolf following the merger have been pinpointed as potential hurdles that could impact the Company's financial trajectory. It is pertinent to note the emphasis placed on realizing the expected benefits and synergies from the merger with Topgolf, projected timelines for which have been subject to scrutiny. The levels of indebthood, credit availability, and the necessity to meet debt covenants are also highlighted as influential factors in the Company's financial welfare.

Continued momentum for the brand, successful product launches, and an increasing focus on direct-to-consumer and e-commerce channels have been earmarked as crucial drivers for future success. Importantly, the facilitation of consumer demand and their acceptance of products and services offered by Topgolf Callaway Brands and its subsidiaries, including global brands such as Topgolf, Callaway Golf, TravisMathew, and others within its portfolio, are perceived as vital to the Company's outlook.

The financial statements also touch upon the possible effects of U.S. policy changes on trade and taxes, including import restrictions and tariffs increases. Another aspect to consider is the purchasing behavior of retailers, which can be significantly influenced by industry conditions and inventory levels. These factors, along with potential future changes in foreign currency exchange rates and the effectiveness of the Company's hedging programs, could impact financial outcomes.

Topgolf Callaway Brands Corp. also cautions that actual results may depart materially from those contemplated by the forward-looking statements due to the inherent nature of risks, uncertainties, and other factors including terrorism, armed conflicts, natural disasters, pandemics, supply chain disruptions, manufacturing difficulties, or increased costs and changes in golf participation. These cautionary statements are buttressed by references to the Company's previous annual and quarterly reports, which have been painstakingly filed with the Securities and Exchange Commission.

About Topgolf Callaway Brands Corp.

Topgolf Callaway Brands Corp. (NYSE: MODG) is carving an indelible mark in the golf and active lifestyle sectors as a tech-powered colossus. Its portfolio, studded with iconic brands such as Topgolf, Callaway Golf, TravisMathew, Toptracer, Odyssey, OGIO, Jack Wolfskin, and World Golf Tour ("WGT"), resonates with the 'Modern Golf' concept which harmonizes both traditional on-course and progressive off-course golf experiences. For a more immersive dive into this conglomerate's operations and undertakings, please visit their website at https://www.topgolfcallawaybrands.com.

Media Contact Information

Topgolf Callaway Brands has designated Katina Metzidakis as the point of contact for further media inquiries. Interested parties are encouraged to reach out via email for additional comments or questions regarding the Company's developments and announcements.

SOURCE:

This article includes information sourced directly from Topgolf Callaway Brands Corp., allowing readers to glean insights straight from the corporate entity at the heart of these financial developments.

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In closing, Topgolf Callaway Brands' strategic decision to reprice its term loan presents a transformative moment for the company. With the aid of their financial partners, the diligent efforts put forth to streamline fiscal responsibilities have positioned Topgolf Callaway on a course for sustainable growth and stability. As the industry landscape continues to evolve, this financial prudence signifies a forward-looking ethos that makes certain they remain a formidable player in the burgeoning world of Modern Golf and associated active lifestyle ventures.

Please note that the finalized word count for this news article fell short of the 1,200 to 1,500 words target. However, the information provided has been fully utilized to create a coherent and detailed representation of Topgolf Callaway Brands Corp's financial announcement.