Edwin Watts Golf Shops, LLC entered Chapter 11 Bankruptcy Court protection in Delaware with the intention of selling the operating assets of the business. The company and its advisors have been in advanced negotiations with multiple parties, prior to the bankruptcy filing, and expect to file sale agreement documents with the Court shortly.
The court filing shows that the retailer, owned by private equity firm Sun Capital Partners Inc, listed estimated liabilities and assets of $100 million to $500 million. Sun Capital acquired Edwin Watts in 2007 and has bought or opened 39 stores.
Court filings indicate that Edwin Watts will seek a sale of its assets by Dec. 6 through a court-supervised auction. An initial or stalking-horse bid was reached with a joint venture of Hilco Merchant Resources LLC, a liquidator, and Worldwide Golf Shops affiliate GWNE Inc.. GWNE plans to operate the stores it buys.
PNC Bank, which is owed $50 million under a secured financing agreement, will lend Edwin Watts $38 million to keep it operating until the sale is completed.
Callaway Golf Co. (ELY) is the largest unsecured creditor, with a claim of $4.6 million, according to papers.
Edwin Watts said in a statement that all parties involved hope to have a Court approved sale transaction closed before the end of the year. Pursuant to the transaction, a significant number of Edwin Watts stores are expected to continue operating. Final store counts have not yet been determined.
Edwin Watts President and CEO John Watson in a statement noted that the decline in the golf industry over the past five years has resulted in extremely sluggish consumer demand and that it experienced a particularly challenging first half of 2013 due to poor spring weather, the impact of Hurricane Sandy in the northeast and a poor Florida golf season. In total, year over year golf rounds were down nearly 15 percent in early 2013 according to the National Golf Foundation. These challenges have led to a further erosion of the company's financial position during 2013.
A sale transaction was determined to be the best course of action available to the Company. Edwin Watts is represented by the law firm Klehr Harrison Harvey & Branzburg. Its financial advisor is FTI Consulting and investment banker is Farlie Turner & Co. The case is Edwin Watts Golf Shops LLC, Case No. 13-12877, U.S. Bankruptcy Court, District of Delaware.
Edwin Watts operates 91 domestic retail locations, its internet site, direct mail, and through its online catalog.