An investor group led by Fairfax Financial Holdings Ltd. and CI Investments Inc. have contracted a deal to buy Golf Town Canada Inc. as its U.S. parent Golfsmith International Holdings reforms its debt under court protection from creditors.
The deal is slated to close on Oct. 31. Fairfax and CI already own 40% of the debt of Golfsmith International, Golf Town’s U.S. parent. Golf Town presently has 55 locations in Canada and 109 stores in the United States, however, that number is anticipated to shrink as all Golf Town locations not included in Wednesday’s deal will be closed. It’s not instantaneously clear how many Golf Town locations the two Canadian investment firms are purchasing.
Ontario pension fund manager OMERS acquired Golf Town in 2007 on an open market for $240 million, and afterward joined U.S. based Golfsmith to the company for an extra $97 million US in 2012.
As specified by bankruptcy filings, Golfsmith today has liabilities of up to $500 million US. The chain is filing for creditor fortification in the U.S. and Canada.
The chain was caught up in an industry-wide financial crisis following a period of swift expansion. Despite the fact that golf is still a popular leisure activity in Canada and the U.S., numerous attire makers and sellers and individual courses have closed in recent years.
“Golf Town appeared to buck that trend for the past 15 years,” said Marvin Ryder, a marketing professor at the DeGroote School of Business at McMaster University in Hamilton. “We saw Nike get out of the business earlier this year, so it’s no wonder to see a retailer is hurting, there’s just not enough request to carry that big of a chain.”
Ryder said he reasons there’s possibly a future for the chain, but on a much smaller scale. “The big-box store model requires a big turnover of equipment, shoes and clubs,” he said.
Although there are additional rounds of golf being played today than any time in recent memory, those rounds are to a great extent being played by the same individuals as couple of new players are taking up the game. That infers less demand for golf apparel and equipment that stores, for example, Golf Town offer.
J C Loum