Callaway Golf Company has entered into separate, privately-negotiated exchange agreements pursuant to which it will issue 3.39 million shares of the company's common stock in exchange for 233,843 shares of the company's outstanding 7.50 percent Series B Cumulative Perpetual convertible preferred stock.
The convertible shares has a conversion price of approximately $7.05 per share and a liquidation preference of $100 per share. The Company will also pay to the exchanging holders cash dividends through Dec. 15, 2013 on their shares of Preferred Stock surrendered in the Exchange Transactions. The Exchange Transactions are expected to close on Aug. 20, 2013. Upon the closing of the Exchange Transactions, 183,796 shares of the Preferred Stock will remain outstanding.
“Retiring the preferred stock is an important part of our turnaround plan and one that provides significant benefits to the Company and its shareholders,” commented Chip Brewer, President and Chief Executive Officer. “The exchange transactions announced today are a good step in that direction. These transactions not only will lower the Company's cost of capital but also will be accretive to earnings on an annualized basis. We may redeem the balance of the preferred stock at any time and look forward to retiring the balance at the appropriate time, subject to market conditions, and thus completing this phase of our turnaround plan.”
