Billabong leaves suitor standing at altar
Billabong announced on Thursday it had walked away from a recapitalisation offer from private equity players Altamont and Blackstone, which had looked like a done deal, and into the embrace of a rival proposal from private equity duo Centerbridge Partners and Oaktree Capital Management.
Apart from triggering a flurry of new paperwork, refinancing and share issues, this would mean that present CEO designate Scott Olivet, who was aligned with Altamont, has resigned and a new boss appointed to run the surfwear group.
Since May 2012 Billabong has had four chief executives, entertained four takeover proposals, lost four directors, issued three profit downgrades and had two chief financial officers.
Neil Fiske, a 24-year veteran of the retail sector and former boss of US apparel label Eddie Bauer, will now take the CEO's chair.
Billabong chairman Ian Pollard said he hoped the latest twist in the company's protracted saga would be the last, allowing management to focus on the job at hand at turning round the fashion group.
"It's been a huge distraction," he said. "We have appointed Neil as chief executive, we have the financing in place ... and so we are ready."
Mr Pollard said he and the board had worked for a nearly a year to guide Billabong through countless takeover proposals, management departures and restructures. "Basically it's been seven days a week since I joined the board 11 months ago, and not only for me ... [it's] been like that for so many people."
Under the new proposal with Centerbridge and Oaktree, Billabong will receive a $386 million loan, issue a $135 million equity placement to the private equity investors and make a $50 million rights issue available to shareholders. Billabong will then be able to repay an existing $315 million bridge loan facility from the Altamont consortium, which was struck in July.
Billabong said Centerbridge and Oaktree would be allowed three representatives on the board, with two sitting directors to resign.
Spurned suitor Altamont provided a curt response to their last-minute dumping: "The Altamont consortium can confirm that it has declined the board's request to revise the terms of its financing commitment and that it is no longer pursuing long-term financing with the company."
Frequently Asked Questions about this Article…
Billabong walked away from a recapitalisation offer from Altamont and Blackstone and accepted a rival proposal from Centerbridge Partners and Oaktree Capital Management. The change triggered fresh paperwork, refinancing and a leadership shuffle at the surfwear group.
Neil Fiske, a long-time retail executive and former boss of US apparel label Eddie Bauer, has been appointed as Billabong's new chief executive. Scott Olivet, who had been aligned with the Altamont proposal and was the CEO designate, resigned after the company accepted the Centerbridge and Oaktree proposal.
Under the new proposal, Billabong will receive a $386 million loan, issue a $135 million equity placement to the private equity investors, and make a $50 million rights issue available to shareholders. The package will allow Billabong to repay an existing $315 million bridge loan facility provided by the Altamont consortium.
Centerbridge and Oaktree will be allowed three representatives on Billabong’s board. As part of the arrangement, two sitting directors will resign to make room for those private equity representatives.
Altamont provided a curt response saying it declined the board’s request to revise the terms of its financing commitment and confirmed it is no longer pursuing long-term financing with the company.
The $50 million rights issue will be made available to existing shareholders, giving them the opportunity to participate in the equity raise. The article does not provide pricing or detailed terms, only that the rights issue forms part of the new financing package.
Yes. Since May 2012 Billabong has gone through multiple upheavals: four chief executives, four takeover proposals, four director departures, three profit downgrades and two chief financial officers, highlighting a period of ongoing management and corporate instability.
Investors should note that Billabong’s board says the financing is in place and a new CEO has been appointed to focus on turning around the business. Given the company’s recent history of takeovers, management changes and profit downgrades, everyday investors may want to monitor execution of the turnaround plan, updates on the rights issue and any further board or financing developments.
Call 1300 880 160
Start a chat
Schedule a call
