Speculation is mounting that Billabong's two US private equity suitors have dropped their takeover offer price to as low as 80¢ a share, down from an initial proposal priced at $1.10, with the bidding team associated with Billabong executive Paul Naude tipped as a front-runner.
Billabong on Tuesday called for a trading halt in its shares while negotiations continued with its two private equity-led suitors, with the protracted negotiations and bidding process sending the share price on a roller-coaster ride and leaving shareholders clueless as to what was going on behind closed doors.
Billabong said the halt, its second in two weeks, and which is in place until Thursday, was necessary while it continued negotiations on potential takeover bids.
"Discussions in relation to these proposals remain incomplete and the company expects to make an announcement as and when discussions are complete," the company said.
One offer is from Sycamore Partners and Billabong executive Mr Naude; the other is from Altamont Capital and VF Corp, the US retailer behind brands such as Timberland, North Face and Vans.
VF Corp has said its only interest is in the Billabong brand. Altamont is interested in acquiring the rest of the business, which includes the vast retail network.
No one is expecting the two consortiums to maintain the $1.10 indicative price that each offered before conducting due diligence, but investors face worse scenarios than a lower bid price.
Credit Suisse recently reassessed the company's valuation on the basis that bids fail to emerge, giving it a weighted valuation of 59¢ a share.
Credit Suisse said there was a downside scenario in which earnings before interest, tax, depreciation and amortisation declined from guidance of $74 million this year to about $50 million in the 2015 financial year.
It said this was because of a reduction in wholesale earnings resulting from brand rationalisation.
"At $50 million EBITDA, equity value is zero," the broker said.
Last week, UBS raised the prospect that investors may be forced into raising more capital.
UBS retail analyst Ben Gilbert said the most likely outcome was a 91¢-a-share offer.
In the absence of a bid, though, Billabong might need a $100 million capital raising to fix the company's "stretched" balance sheet, Mr Gilbert said.
Billabong has a market value of just under $350 million.
Billabong shares, which last traded at 73¢, hit a low of 63¢ last month when doubts emerged about whether bids would result from due diligence.