ASA won't back Coastal Capital

Shareholder group on the fence as Billabong investor lashes refinancing plan.

The Australian Shareholders' Association has distanced itself from Billabong International's (BBG) newest minority shareholder, Coastal Capital International, which has described a $395 million rescue package as “extremely unfavourable” and is seeking a board spill to stop the retailer entering into a “sub-optimal” deal, the Australian Financial Review reports.

ASA chairman Ian Curry told the newspaper the association did not support Coastal’s call for the removal of Billabong directors and was not opposed to a $395 million debt and equity package offered by the Altamont consortium.

“We are not saying one or the other [proposal] looks better, we are only saying they should be evaluated and rejected or recommended,” Mr Curry said.

“If shareholders are going to be asked to vote on the Altamont proposal they should know why it’s the best ­proposal if there are other proposals submitted,” he said.

Coastal said Billabong was "unwisely proceeding with a rushed Altamont transaction on extremely unfavourable terms, when there is an opportunity to improve the transaction significantly by being patient, delaying a decision and fully evaluating competing proposals".

The deal would dilute value for existing shareholders and should require their approval as a prerequisite, Coastal said.

Billabong has struck a refinancing deal with United States private equity firm Altamont (see Billabong poised for a turnaround), but hedge funds Centerbridge Partners and Oaktree Capital have offered a rival recapitalisation bid they claim would see the retailer up to $143 million better off.