Callaway Golf greenshoe lifts 2.75% convertibles to $258.75 million

By Wendy Van Sickle

Columbus, Ohio, May 4 – Underwriters for Callaway Golf Co.’s 2.75% convertible notes due May 1, 2026 fully exercised their $33.75 million greenshoe, increasing the total deal size to $258.75 million, according to an 8-K filing with the Securities and Exchange Commission.

The company priced $225 million of the convertibles after the market close on Wednesday at par at the rich end of talk with an initial conversion premium of 30%, as previously reported.

Talk had been tightened to a coupon of 2.75% to 3% and an initial conversion premium of 30%, according to a market source.

Initial price talk was for a coupon of 3% to 3.5% and an initial conversion premium of 25% to 30%.

Goldman Sachs & Co. LLC and BofA Securities Inc. are joint bookrunners for the Rule 144A offering.

The initial size of the deal was $200 million with a greenshoe of $30 million.

The notes are non-callable until May 6, 2023 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

There is dividend protection.

In connection with the pricing of the notes, the company entered into capped call transactions with a cap price of $27.10, which represents a 100% premium over the last reported sales price of the stock.

Net proceeds are expected to be $250 million now that the greenshoe has been exercised in full.

Proceeds will be used to cover the cost of the call spread, for working capital and for general corporate purposes.

Callaway Golf is a Carlsbad, Calif.-based golf equipment and active lifestyle company.

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