American Golf restructures debt after tough year

American Golf

RETAILER American Golf has completed a major financial restructure after a turbulent year which saw heavy losses and it breach its banking covenants.

Newly-filed accounts by the private equity-owned, Warrington-based business, reveal that Sun Capital Partners, which has owned the company since December 2011, has pumped in £5m more to bolster its balance sheet. 

The accounts for parent company AGDC Holdings for the year to July 27 2014, saw losses rocketing from £316,000 to £8.4m, despite revenues leaping from £111m to £172.5m.

The group, which trades online and through 103 stores, blamed a “static market and mixed weather” for its poor performance.

American Golf is currently being run by former Jessops and Dreams executive Alan Fort. He joined the business, initially on an interim basis last summer, after the departure of former chief executive Kevin Styles and CFO Stuart Owens. 

In his business review of the trading period, Fort said: “In anticipation of further growth from the market the business invested heavily in stock. Unfortunately, owing to the mixed wearther and lower partication, sales did not materialise at the expected level and the business in response discounted product heavily, which negatively impacted profitability.

“As a result of these difficult trading conditions the company had to borrow an additional £6m from its holding company in July 2013. In addition the company has been in breach of its banking covenants during 2014. These breaches were waived by the company’s banker….but the business had continue discounting heavily in the period to january 2015 to clear old stock.”

He added: “It became clear that for the company to maintain the confidence of its suppliers, credit insurance and other key stakeholders the business needed to address its finance structurte and required a further injection of cash.”

This process was completed in March 2015, he reveals: “On March 6 the group completed a restructure and refinancing with its bankers and shareholders.

“As a result there was a deed of novation in respect of the £6m loan notes and the £6m downstream loan. An additional loan agreement in respect of a £5m downstream loan was granted by WTS Bidco; the new parent company, for which AGDC Holdings granted a debenture in favour of WTS Bidco and provided a cross guarantee.”

Daniel Gathercole, head of marketing at American Golf said in a statement the group is looking to the future with confidence.

“We’re in a strong position to focus on the long term future of the business and the future of the game of golf. We will open two or three new stores before the end of the year, we’re opening the American Golf Academy and we’ve made significant investment in our existing stores. 

“Our flagship events for the year like the Junior Championship and 9 Hole Championship will strengthen the industry as a whole and place us at the heart of a brighter future for the game.”