It’s on. As predicted by Eureka Live last Monday, greenmailer Coastal Capital has launched an offensive to spill the Billabong (BBG) board before Altamont Capital can cement control.
The obscure New York based group lodged a Section 249D notice on Billabong on Friday morning with a proposal to dump the entire board including the chairman Ian Pollard, but with the exception of major shareholder and founder Gordon Merchant and Colette Paull.
While there is no apparent connection between Coastal and the Centrebridge Oaktree alliance, which also is attempting to wrest control of the surf wear group, the alliance no doubt will claim the move by a major shareholder as vindication that its rival offer for Billabong is superior.
Both offers are for $325 million of debt and equity but the Centrebridge Oaktree alliance claims that it is share price purchase is far more generous than Altamont’s, while the loan component has a much less onerous interest rate (see Billabong poised for a turnaround).
The Billabong board has been under fire for prematurely accepting the Altamont offer, which was modified after Centrebridge Oaktree complained to the Takeovers Panel.
The rival hedge funds have both attempted to keep Merchant onside, given his 15% stake is vital to their success.
Coastal Capital emerged with a 5% stake less than a fortnight ago amid the frenzied share trading that took place after both hedge fund groupings snapped up the debt from Billabong’s banking syndicate at a discount and then formulated their refinancing plans.
Oaktree last year took control of the Nine Entertainment in a similar swoop, buying up the debt at a discount, muscling out the hopelessly indebted private equity owner CVC Asia Pacific – which bought the network from James Packer for more than $5 billion – and then swapping the debt for equity in a refinancing.
It now is in the delicate process of refloating the television network for an optimistic $3 billion.
Coastal has had mixed success in Australia. Best known for its failed attempt to stymie the restructure of Alinta Energy in 2010, the group ended up in control of the shell which was left with just one asset, the Hunter Valley coal fired power station Redbank.
Now known as Redbank Energy (AEJ), the ASX listed group has had its own problems.
It has yet to refinance its own debt since an agreement with its banking syndicate expired on May 31 and the Coastal Capital led board recently was forced to repel an attack by a Singaporean major shareholder to install its own director.
It is also in a legal dispute with Ausgrid over payments following an outage at the power station in January 2012.
Redbank shares were suspended this morning because its accounts have yet to be finalised.