South Korean private equity firm Centroid Investment Partners will refinance its buyout loan for TaylorMade Golf Co. at lower costs just six months after its acquisition of the California-based golf equipment maker thanks to the significant improvement in the latter’s earnings for last year.
According to multiple sources from the investment bank industry on Thursday, Centroid Investment Partners is currently working with global investment banks to refinance $710 million senior debts and $220 million mezzanine funds raised for its acquisition of TaylorMade Golf last year.
JP Morgan leads the refinancing deal while Morgan Stanley and Bank of America jointly manage the deal.
Centroid Investment Partners said that global brokerages in the U.S. first contacted the PEF to propose the deal`s refinancing, citing the strong performance of TaylorMade Golf after the change of its owner.
Centroid Investment Partners took over TaylorMade Golf at $1.71 billion in August last year. Since the deal closing, the golf equipment brand has shown significant improvement in sales on the back of new golf ball and golf bag releases in global markets from the U.S. to Korea, Europe, Canada, and Australia during a pandemic restriction-driven golf boom.
Last year, TaylorMade Golf’s earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $220 million, nearly double from $113 million a year ago.
U.S. brokerages are known to have proposed new lower lending rates, which are expected to help Centroid Investment Partners to save about 20 billion won ($16.8 million) in annual interest for the acquisition fund. When Centroid Investment Partners acquired TaylorMade Golf last year, the interest rate for senior loans was in the upper 4 percent level while mezzanine loans in the mid 7 percent level.
This will also ensure more return for equity investors and improvement in TaylorMade Golf’s financial structure.
During the refinancing, Centroid Investment Partners will unify its investment tranche with all senior loans. Following the refinancing, the group of current lenders that composed of only local financial institutions – KB Kookmin Bank and Hana Financial Investment – will also be replaced with new investors from home and abroad.
By Cho Yoon-hee and Lee Eun-joo
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