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F&F ups investment in TaylorMade acquisition Outfit maker to inject $432 mil into acquisition

Translated by Kim So-in 공개 2021-07-29 07:53:09

이 기사는 2021년 07월 29일 07:51 더벨 유료페이지에 표출된 기사입니다.

South Korea’s mid-sized fashion company F&F will inject 500 billion won ($432 million) into Centroid Investment Partners’ acquisition of global golf equipment company TaylorMade.

F&F said in a regulatory filing on Monday that it has increased its investment in the deal to acquire TaylorMade from 400 billion won to 500 billion won. This has made the ratio of acquisition price to F&F’s total assets rise from 81.15% to 101.44%, meaning F&F’s investment of 500 billion won in the acquisition is larger than its total assets.

Centroid signed a stock purchase agreement with KPS Capital Partners, the largest shareholder of TaylorMade, in the first quarter of this year and sought for a strategic investor. Centroid picked The Nature Holdings as a partner for the acquisition. The Nature Holdings develops, manufactures and distributes fashion products under a variety of licensed brands including National Geographic, NFL, Jeep and Vera Wang.

But Centroid has faced a challenge in raising funds from institutional investors as some limited partners withdrew their initial investment plans. Despite Centroid’s request to increase the investment by 200 billion won, The Nature Holdings couldn’t make its decision.

Deep-pocketed F&F moved nimbly to seize an opportunity, approaching Centroid, and decided to invest 400 billion won in the deal.

F&F will invest in a private equity fund which will invest in a special purpose company established to acquire 100% of 19th Holdings Cooperatief U.A, which owns TaylorMade. F&F will invest 300 billion won in equity and the remaining 100 billion won in mezzanines in the 2.07 trillion won special purpose company.

F&F has recently decided to invest 100 billion won more in mezzanines. It seems F&F has accepted Centroid’s request for more investments.

The outfit maker, dedicated to licensed productions for brands like MLB and Discovery, has decided to team up with Centroid to expand its presence into the golf wear market.

The 500 billion won investment, however, is likely to be a burden on F&F. The clothing company said it planned to inject 100 billion won in cash and 300 billion won using short-term borrowings. But now that it decides to invest 500 billion won in the acquisition, the company has to increase its short-term borrowings to 400 billion won.

F&F said it plans to use a bridge loan to repay short-term borrowings from financial institutions. An interest expense incurred by the bridge loan and borrowings from financial institutions for less than one year is expected to be approximately 7.8 billion won per year.

The latest increase in short-term borrowings will push up F&F’s debt ratio from 52% to 175%. The company, which has maintained a stable financial status, has decided to move aggressively to expand its business through a leverage strategy.

“We plan to maximize the synergy effect by combining the TaylorMade’s brand power and the F&F’s management skills,” said an official at F&F. “We has decided to increase our investment to support Centroid’s mezzanine financing.” (Reporting by Seon-ho Kim)
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