Billabong head to step down in $294m lifeline refinancing
Investors associated with Altamont and Blackstone Group entered the agreement that will allow Billabong to repay in full its syndicated debt facilities. As part of the deal, Billabong will also sell its Dakine brand to Altamont for $70 million.
Even so, the Altamont consortium could expected to emerge with between 36 per cent and 40 per cent of Billabong as part of an options agreement under the refinancing package. The financing transaction will be subject to approval from existing Billabong shareholders, with a date for the meeting yet to be confirmed.
Stepping in to take charge of Billabong will be Scott Olivet, a former chairman and chief executive of US sportswear group Oakley. Mr Olivet has also held executive roles with Nike, heading up several of the group's key brands.
Altamont will also appoint two directors to the Billabong board.
Mr Olivet also agreed to acquire more than $2.5 million worth of Billabong shares.
Altamont Capital Partners describes itself as an investor in "change-intensive middle-market businesses".
The San Francisco private-equity firm owns or has large stakes in a range of US businesses, including a large franchise of the Taco Bell restaurant chain.
"The board believes that the Altamont consortium's refinancing, and the changes being announced provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces," Billabong chairman Ian Pollard said.
"The Altamont consortium presented the best available, certain and executable opportunity in these challenging circumstances," he said.
"The transaction reflects the Altamont consortium's confidence in the value of Billabong's brand."
Billabong has lost 76 per cent of its market value over the past year. It placed its shares in a trading halt on Tuesday, citing developments in refinancing and asset-sale plans. The shares last traded at 25¢.
Billabong said last month it was looking to sell its Canadian retail chain West 49 after the company breached terms on its debt. Since then, the retailer has been in talks with Altamont over a possible refinancing and asset-sale deals to repay loans. Five members of its banking syndicate have already sold out of their loan holdings.
The company, whose market value rose as high as $3.8 billion in June 2007, is now valued at about $120 million after efforts to cut costs, including shutting stores, cutting staff, and selling new shares to raise cash.
Billabong has $651 million in debt facilities due to be repaid by July next year, with $152 million of net debt drawn at the end of December.
Dr Pollard paid tribute to Ms Inman.
"The board wishes to thank Launa for her contributions to the company and her resilience during the most difficult period in the company's history," he said.
Frequently Asked Questions about this Article…
Launa Inman will step down after 13 months as part of a complex $294 million refinancing package. The deal, led by a consortium headed by Altamont Capital Partners, is designed to inject funds into Billabong to refinance its debts and restructure the business, and the leadership change is part of the broader transaction and board changes announced.
A consortium led by private-equity firm Altamont Capital Partners, with investors associated with Altamont and Blackstone Group, will provide the refinancing. The package includes cash to repay syndicated debt in full, the $70 million sale of the Dakine brand to Altamont, and an options agreement under which the consortium could emerge with about 36–40% of Billabong, subject to shareholder approval.
Scott Olivet, former chairman and CEO of Oakley (and a past executive with Nike), will step in to take charge of Billabong. Altamont will also appoint two directors to the Billabong board, and Mr Olivet has agreed to buy more than $2.5 million worth of Billabong shares. These changes are part of the refinancing package.
Under the refinancing deal Billabong will sell Dakine to Altamont for $70 million, which is intended to help repay debts and improve short-term liquidity. For investors, this is a material asset sale that contributes to the broader restructuring and refinancing aimed at stabilising the company's finances.
Billabong has $651 million in debt facilities due to be repaid by July next year, and had $152 million of net debt drawn at the end of December. The company placed its shares in a trading halt while refinancing and asset-sale plans are finalised and has suffered a significant decline in market value over the past year.
Over the past year Billabong has lost about 76% of its market value. The company said its shares were last trading at 25 cents when placed in a trading halt. Its market capitalisation has fallen from highs of about $3.8 billion in June 2007 to roughly $120 million more recently, after cost cuts, store closures and share raises.
The financing transaction is subject to approval from existing Billabong shareholders. A meeting to vote on the proposal is required, but a date for that meeting had not been confirmed at the time of the announcement. Other next steps include completion of the Dakine sale and implementation of the board and management changes.
Altamont describes itself as an investor in 'change‑intensive middle‑market businesses' and the consortium said the transaction reflects confidence in the value of Billabong's brand. For everyday investors, this means a private‑equity led restructuring could stabilise the business but may also lead to significant ownership changes, dilution or asset sales—outcomes that shareholders will vote on.
Call 1300 880 160
Start a chat
Schedule a call
