Twice-spurned private equity suitors Centerbridge Partners and Oaktree Capital have lobbed a last-minute rescue deal before the directors of struggling surfwear group Billabong in an attempt to derail a $US325 million ($361 million) counter proposal from Altamont and wrest control of the retailer.
In the latest and protracted tit-for-tat battle between the rival private equity consortiums - now in its ninth month - Centrebridge and Oaktree have released details of a fresh proposal that they believe trumps that of Altamont and will save Billabong $143 million.
Altamont, which has joined with US investor giant Blackstone, still remains in the box seat. Despite its recapitalisation deal for Billabong being reworked this week after an appeal by its main rivals to the Takeovers Panel, it has been approved by Billabong directors and is set to go before shareholders before the end of October.
But an ambitious grab for control of Billabong launched on Friday afternoon could now slow that process down, or even knock out Altamont's deal completely, with Centerbridge and Oaktree trumpeting a proposal they claim will save the surfwear group between $119 million and $143 million and represents an 81 per cent premium to Altamont's 20¢ per share offer.
They would deliver a bridge loan to refinance Billabong's current $325 million loan with Altamont, at a 12 per cent interest rate to mature on March 31, 2014. An equity placement and rights issue would be used to pay down debt to $157.5 million. The duo claim Altamont's proposal would leave Billabong with much higher debt of $276 million.
New debt under the Centerbridge and Oaktree deal would have an interest rate of 13.5 per cent - payable in cash and kind. A placement to Centerbridge and Oaktree would be struck at 35¢ a share and the rights issue to existing shareholders at 30¢ a share.
This would leave Centerbridge and Oaktree with a 39.7 per cent stake in Billabong.
The Centrebridge and Oaktree consortium believes the company has a well-recognised portfolio of brands with great future potential.
"For the company to overcome the numerous strategic and balance sheet issues it is facing, it needs the right strategy, capital structure and strategic partners with demonstrable track records in investing and building value in the retail and consumer industries," the partners said.
Centerbridge and Oaktree said they have provided details of the new offer to the Billabong board and have engaged with candidates to fill the CEO role at the surfwear group in the event new boss Scott Olivet - installed by Altamont - is unable to continue in his role.
Billabong has backed the Altamont deal and is preparing documents for a shareholders' meeting in October.