[9/14/16] Golfsmith International Inc. is planning to file for court protection from its creditors as early as Wednesday with a restructuring plan that calls for store closures in the U.S. and the sale of its Canadian retail chain.
The Austin, Texas-based specialty golf retailer plans to seek creditor protection under chapter 11 in of the U.S. bankruptcy code and Canada’s Companies’ Creditor Arrangement Act, according to people familiar with the matter.
The filings include an agreement to sell its Canadian chain of about 50 stores, operating under the brand Golf Town, to two of its largest creditors, these people said. The buyers are Toronto fund manager CI Financial Corp. and Fairfax Financial Holdings Ltd., controlled by Canadian financier Prem Watsa.
CI Financial and Fairfax, which own about 40% of Golfsmith’s secured debt, have agreed to support Golfsmith’s move to seek court protection from its creditors in the U.S. and Canada.
The Canadian chain is healthier than its U.S. counterpart because it has a larger market share in a less crowded golf retail sector.
U.S. stores have suffered because of either over saturation in certain markets or being too large in general, said a person close to the matter.
As part of the bankruptcy filing, Golfsmith will likely close some of these U.S. locations, as well as a small number of stores in Canada, the person added. The company also plans to renegotiate some of its leases with landlords, the person said.
Golfsmith has been in advanced discussions with potential bidders for its U.S. chain of about 100 stores, but according to one person familiar with these talks, a sale was unlikely unless the company closed a number of its stores and trimmed its debt…CONTINUE READING