Billabong: owners or receivers

An eerie silence hangs over crippled surfwear group Billabong International (BBG) and as each day passes, the chance of the company tipping into receivership increases.

After a flurry of activity last month - competing bids to restructure its debt, massive losses and a total writedown in asset values – nothing has been heard from the Gold Coast based group.

Even after demands a fortnight ago from a third US based hedge fund, Coastal Capital, for an extraordinary meeting to spill the board, no date for a meeting has been set.

Billabong directors obviously are feeling the heat. They've committed the company to a restructuring by American hedge fund Altamont only to have a better offer emerge from rival funds, Oaktree Centrebridge.

And while Altamont has dropped some of the more onerous conditions of its initial offer – following an appeal to the Takeovers Panel by Oaktree Centrebridge – the latter's refinancing deal appears to be a better option for shareholders, putting Billabong directors in a legal bind.

Having already accepted the Altamont deal, the directors have a fiduciary duty to shareholders to recommend what appears to be a superior offer by Oaktree Centrebridge or, at the very least, to  explain their reasons for rejecting it.

The competing hedge funds bought out Billabong's debt from the banking syndicate thus delivering the power to both to pull the plug on the company. At the moment, Billabong is operational only because of a bridging finance deal with Altamont that expires on December 31.

While the rival hedge funds both are offering $325 million refinancing packages, Oaktree Centrebridge are offering shareholders 36.1c a share, an 80% premium over Altamont's 19.9c a share. And the Oaktree consortium is offering shareholders the opportunity to buy new stock at 30c a share.

The company now appears to be caught in a high stakes tug-of-war (see Billabong poised for a turnaround). Billabong directors want Altamont to improve its offer while Oaktree Centrebridge are demanding acceptance. And if neither party blinks, or if the board continues to dither, the chances of a winding up lift as the end year deadline looms.

On top of all this, there has been a series of high profile but as yet unreported defections from the company. And Billabong's former American head Paul Naude – who spearheaded a failed buyout – recently joined forces with former chief executive Derek O'Neill to launch a new surfwear group.

Oaktree Centrebridge this morning claim to have hired an as yet unnamed surf industry heavyweight to run the recapitalised group, should it succeed, to counter Altamont's choice of Scott Olivet, the former head of surf group Oakley.

But time is running out. The Billabong board needs to make a decision.