Golfsmith International Holdings, Inc., has filed a registration statement with the U.S. Securities and Exchange Commission relating to a proposed initial public offering of its common stock through which the company estimates raising $115 million. The company expects to trade on the NASDAQ under the symbol “GOLF.”
Golfsmith intends to use the funds from the IPO to retire $93.75 million aggregate principal amount at maturity of the company's 8.375% senior secured notes due 2009, which had an accreted value of $82.9 million as of February 28, 2006; to repay indebtedness outstanding under the company's existing senior secured credit facility, which had an aggregate principal amount of $5.8 million as of February 28, 2006; to pay a one-time $3.0 million fee to terminate a management consulting agreement with First Atlantic Capital, Ltd. upon completion of this offering. This agreement obligates Golfsmith to pay approximately $600,000 per year, plus expenses, to First Atlantic Capital, Ltd. until 2012; and for general corporate purposes.
Golfsmith International Holdings, Inc., is currently expected to offer all of the shares and will grant the underwriters a 30-day option to purchase additional shares up to 15% of the total offering size. Merrill Lynch & Co. and JPMorgan are acting as joint book-running managers for the offering, and Lazard Capital Markets is acting as co-manager.
The company intends to use the proceeds from the offering primarily to repay outstanding indebtedness.
For the fiscal year ended December 31, 2005, sales increased 9.3% to $323.8 million from $296.2 million during 2004. This sales increase was fueled by a 2.5% comparable sales increase in 2005 on top of a 0.7% comp increase in 2004. Gross profit increased 160 basis points as a percentage of sales to 35.7% from 34.2% a year ago. For 2005, the company posted net income of $3.0 million or 13 cents per diluted share after a net loss of $4.8 million or 21 cents per diluted share last year.
