True Temper Sports, Inc. Announces Successful Negotiation of Financial Restructuring Plan
MEMPHIS, Tenn., Sept. 30 /PRNewswire/ --True Temper Sports, Inc. ("True Temper" or the "Company"), the leading manufacturer of golf shafts and performance sports equipment, announced today that it has reached an agreement with its secured lenders, bondholders and shareholders to restructure all of its outstanding indebtedness and significantly reduce its overall loan balance. The agreement was reached after extensive, collaborative negotiations with the majority of its lenders during the spring and summer months of 2009.
The restructuring will result in over an 80% reduction of outstanding indebtedness, from the current level of nearly $275 million to a balance of less than $40 million. As part of the agreement, a group of the Company's current debtholders and capital partners have raised approximately $70 million in new equity that will be used to reduce indebtedness which will free up operating cash flow for future investments in growth and expansion. The new equity investors will partner with the current ownership group to ensure a smooth financial transition for the Company.
In order to consummate the restructuring, the Company intends to file a "pre-packaged" restructuring petition with the US Bankruptcy Court in Delaware. The filing is merely a mechanism to implement the agreed upon balance sheet restructuring, and will not impact the fundamental business of True Temper or its day-to-day operations. In addition, this pre-packaged filing will be made with all the necessary support from True Temper's lenders, and will have no impact on the Company's trade creditors, such as vendors and suppliers. The Company's management team, its Board of Directors, and its lenders elected to enact this process as the most efficient and expeditious way to affect the agreed upon financial plan. Company management fully expects to receive court approval for the prearranged financing plan, and anticipates exiting the court system within the next 45 to 60 days.
Commenting on the new capital structure, Scott Hennessy, President and CEO noted, "This is a very important day for our Company, as we have successfully reached an agreement to restructure our balance sheet and significantly lower our debt profile. This new financial template clearly allows for the acceleration of our global expansion plans, and for the continued growth of the True Temper business as the overall economy improves. I am pleased that we were able to work so closely with our current lenders and investors to reach an agreement that is beneficial for the Company in both the short and long term. I am encouraged that the plan was able to come together in a way that ensures our employees, customers, suppliers and underlying operations remain unaffected by this balance sheet only restructuring. As we have said many times during the past several months, True Temper has a very compelling and successful business, but clearly there were capital structure issues that needed to be addressed. We have now addressed these concerns, and will be much better positioned for our continued success."
Elaborating on the financial restructuring plan, Jason Jenne, Vice President and CFO commented, "One of our goals during this process was to ensure that day-to-day operations at True Temper remained unaffected by this back-office financial planning. I believe we were successful in that objective, as our plan provides for 100% payment of all current and future obligations to employees and suppliers, as well as the continued, uninterrupted operation of each of our manufacturing facilities around the world. In addition, the majority of the lenders that are actually impacted by our restructuring have demonstrated their continued commitment to the Company through their financial support in the form of a new and affordable long-term loan package, as well as their formal approval of the restructuring plan to be filed shortly with the court. Our current cash position, global working capital levels, and overall liquidity remain quite strong. In addition to the $70 million of new equity capital, we have also secured commitments from certain of our existing lenders for a new $12.5 million revolving credit facility in order to support our future business initiatives and strategic plans. Overall, following this restructuring we will be on the strongest financial footing in our two decades as a stand-alone company."
Looking towards the future, Mr. Hennessy noted, "Very shortly the completion of this financial reorganization will be behind us, and we can once again put all of our focus on continuing to grow True Temper's golf and performance sports businesses. We are encouraged by the recent signs of improvement in the global economy, and remain confident that our leadership market share position remains strong. We fully expect to see a continued recovery in our business during the remainder of 2009 and into 2010, and our new product lineup is one of the strongest in years. We are particularly encouraged by the new Project X(®)( )graphite golf shafts that have received unprecedented initial success on the professional tours, and GS85(®)( )and GS95(® )steel golf shafts that were recently launched to rave reviews in Asia and other international markets. Overall, our business strategy is clear and intact. We remain committed to providing all of our customers with the most technically advanced products the industry can offer, combined with world class customer service and operational excellence."
About the Company
True Temper is the leading manufacturer of golf shafts in the world, and is consistently the number one shaft on all professional tours globally. The Company markets a complete line of shafts under the True Temper(®), Grafalloy(®) and Project X(®) shaft brands, and sells these brands in more than 30 countries throughout the world. True Temper is proudly represented by more than 800 individuals in ten facilities located in the United States, Europe, Japan, China and Australia.
SOURCE True Temper Sports, Inc.