Callaway Golf Company (NYSE:ELY) today announced that it has priced and
increased by $15 million its previously announced private offering of
preferred stock. Callaway will issue $125 million principal amount of
7.50% Series B Cumulative Perpetual Convertible Preferred Stock, $0.01
par value, with a liquidation preference of $100 per share. The Company
also granted the initial purchasers a 30-day option to purchase up to an
additional $15 million of the preferred stock. The preferred stock will
be resold to a group of qualified institutional buyers pursuant to the
Rule 144A exemption from registration under the Securities Act of 1933,
as amended. The sale of the preferred stock is expected to close on June
15, 2009. The Company will pay cumulative dividends on the preferred
stock from the date of original issue at a rate of 7.50% per annum of
the $100 liquidation preference per share, subject to adjustment in
certain circumstances.
The preferred stock will be convertible, at the holder’s option, in
certain circumstances, into common stock of Callaway at an initial
conversion rate of 14.1844 shares of Callaway’s common stock per share
of preferred stock, which is equivalent to an initial conversion price
of approximately $7.05 per share, or a conversion premium of
approximately 19.1% based on the last reported sale price on the New
York Stock Exchange of $5.92 per share of Callaway’s common stock on
June 9, 2009.
The Company may also elect, on or prior to June 15, 2012, to mandatorily
convert some or all of the preferred stock into shares of Callaway’s
common stock if the closing price of the Company’s common stock has
exceeded 150% of the conversion price for at least 20 of the 30
consecutive trading days ending the day before the Company sends the
notice of mandatory conversion. If the Company elects to mandatorily
convert any preferred stock, it will make an additional payment on the
preferred stock equal to the aggregate amount of dividends that would
have accrued and become payable through and including June 15, 2012,
less any dividends already paid on the preferred stock.
The Company estimates that the net proceeds from this offering will be
approximately $119 million in cash, exclusive of net proceeds
received if the initial purchasers exercise the over-allotment option in
full, after deducting estimated discounts, commissions, and expenses.
Callaway intends to use the net proceeds of this offering to pay down
the Company’s revolving line of credit, which the Company believes will
enable it to retain the credit facility’s currently favorable terms and
avoid the need for an amendment of such terms.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities (including the shares of
common stock into which the securities are convertible) and shall not
constitute an offer, solicitation or sale in any jurisdiction in which
such offer, solicitation or sale is unlawful. The preferred stock and
the underlying common stock issuable upon conversion have not been
registered under the Securities Act or any applicable state securities
laws and may not be offered or sold in the United States, absent
registration or an applicable exemption from such registration
requirements.
About Callaway Golf
Through an unwavering commitment to innovation, Callaway Golf Company
(NYSE:ELY) creates products and services designed to make every golfer a
better golfer. Callaway Golf Company manufactures and sells golf clubs
and golf balls, and sells golf accessories, under the Callaway Golf®,
Odyssey®, Top-Flite®, Ben Hogan® and uPro™ brands in more than 100
countries worldwide. For more information please visit www.callawaygolf.com
or Shop.CallawayGolf.com.
Important Notice Regarding Forward-Looking Statements
The statements in this press release regarding the proposed private
placement and its terms, including the proposed use of proceeds, and the
line of credit are forward-looking statements that involve risks and
uncertainties, including, but not limited to, market conditions and the
price and market for the securities being offered, a significant decline
in revenues or further weakening of economic conditions and foreign
currency exchange rates and the Company’s ability to comply with the
financial covenants of its line of credit. The forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from those stated in any forward-looking statements
based on a number of factors. For additional information concerning
these and other risks and uncertainties that could affect these
statements and the Company’s business, see the Company’s Current Report
on Form 8-K, filed on June 8, 2009, as well as other risks and
uncertainties detailed from time to time in the Company’s reports on
Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the
Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the date hereof. The Company 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.
