American Golf in £7m debt for equity swap with bank
NATWest has swapped £7.4m of debt for a near 30% stake in North West retail chain American Golf Discount as part of a refinancing deal.
The Warrington company’s major shareholder, private equity firm LDC, has also pumped in £4.9m cash for working capital and to fund future expansion.
In addition, a further £6.8m of loan notes “owed to existing shareholders” – which is likely to be LDC – has been converted into shares.
The refinancing was agreed on January 12 this year, newly publlished accounts for parent company AGDC Holdings Ltd state.
The figures – covering the year to January 25 2009 – also reveal the company breached its banking covenants last January.
Sales in the period rose from £64.2m to £67.6m, while EBITDA dippled 10% to £3m from £3.3m the prior year. Losses before tax rose from £5.9m to £6.9m.
Nat West – part of Royal Bank of Scotlland – has taken a 29.5% stake in the company in respect of £7.4m of mezzanine debt.
Such a practice is becoming increasingly common where fundamentally sound operating businesses are hampered by too much debt.
As a result the group’s borrowings have been redcued from £33.1m to £27.6m.
In a statement in the accounts, directors said: “As a result of this refinancing the level of debt has been signifcantly reduced following the debt to equity conversion and injection of additional funds.
American Golf owns 80 stores in the UK and Ireland. It was founded by entrepreneur Howard Bilton in 1981.
LDC’s Birmingham office bought a controlling stake in a £40m deal in August 2004.
