TearDrop Golf, the struggling owners of Ram and Tommy Armour, have agreed a new credit facility worth up to $30 million (£18.75 million) from Textron.
The cash injection, to consist of $8 million (£5 million) term loans, is subject to a due-diligence process which will Textron’s senior credit committee will complete by the end of this month.
Rudy Slucker, TearDrop’s president and ceo, said: “Since Textron own E-Z-GO carts and finance many golf real-estate venues, they certainly understand this industry and the future potential of our company.”
TearDrop Golf’s second-quarter sales up to June 30, 1999, were £14 million compared to £12.25 million for the same period last year. But second-quarter profits were down to less than £350,000 from last year’s figure of more than £800,000.
The decrease in profitability has been attributed to an increase in expenses for the quarter of £1 million, but TearDrop has not said what the extra money was spent on.
“The year 2000 has the potential to be our breakout year. Our new Tommy Armour Evo Irons that are just being introduced on the PGA Tour are generating a great deal of excitement,” said Slucker. A new line of Ram Accubar irons and woods, and several new lines of milled putters are also in the pipeline.
TearDrop have also requested a meeting with the Nasdaq listing qualifications panel to request an extension for fulfilling their capitalisation and net-income compliance conditions.
Slucker, who expects the company to be given a hearing in October, said: “I feel comfortable that they will give us time to work on our turnaround.”
His greatest problem, though, will be to explain how he envisaged taking three companies (TearDrop, Ram and Armour) which were each losing money and making them profitable overnight. Sales initially looked good due to product dumping, but funds are low and the share price is now in danger of collapsing.