S&P Global Ratings raised its debt ratings on Topgolf, which is owned by Callaway Golf, due to Callaways’ move to suspend an opportunistic refinancing transaction that would have enabled it to consolidate all of the group’s debt at the parent level.
S&P raised its issuer credit rating on Topgolf to ‘B’ from ‘B-‘ to reflect its strategically important status to its group and its recent upgrade of Callaway. At the same time, the rating agency raised its issue-level ratings on Topgolf and Callaway’s existing debt instruments by one notch following its review of the recovery prospects for the term loan facilities that it expects will remain outstanding.
S&P also withdrew its ratings on Callaway’s previously proposed transaction
S&P said the higher issuer credit rating on Topgolf follows a recent upgrade of Callaway due to its improved operating performance and group prospects.
S&P said, “We continue to view Topgolf as strategically important to Callaway because it remains important to the group’s long-term strategy and is unlikely to be sold. Topgolf demonstrated stronger operating results through the fourth quarter, including both a solid increase in its top-line revenue and an improvement in its operating efficiency that led to elevated EBITDA. Still, we expect Topgolf will continue to burn cash through the next year as it further invests in venue expansions.
“The stable outlook on Topgolf reflects our view that it is a strategically important subsidiary of Callaway as well as our forecast for continued revenue and EBITDA improvements at both Topgolf and Callaway.”
