Billabong surges on Altamont move

Stock soars 32% after US private equity firm takes effective control of embattled retailer.

Investors have cheered a move by US private equity firm Altamont Capital Partners to take effective control of embattled surfwear retailer Billabong.

Altamont will buy out the company's debt and oust its chief executive Laura Inman.

Shares in the retailer soared 32% to 33 cents at 1500 AEST, against a benchmark rise of 0.01%. They touched a high of 36.5 cents in morning trade.

More than 76.02 million Billabong shares had changed hands in mid-afternoon trade.

Altamont's two founding partners will join Billabong's board under the deal, which will see the private equity firm take a stake of up to 40% of the group in exchange for $325 million in debt refinancing. Billabong's board has agreed to sell the bag and outerwear business, Dakine, to Altamont for $70 million.

As a condition of the deal CEO Laura Inman is to leave the company and will be replaced by Scott Olivet, the former CEO and Chairman of sunglass and sportswear giant, Oakley.

The news came as Billabong emerged from a trading halt after extended talks on asset sales and refinancing options with Altamont and alternate suitor Sycamore Partners.

"This financing package is intended to provide Billabong with a flexible capital structure to allow it to stabilise the business, address its cost structure, and pursue a strategy to grow the business," the group said.

The company's chairman Ian Pollard said the Altamont deal was the best available option for Billabong, which had also been in negotiations with another US private equity firm.

"The board believes that the Altamont consortium's refinancing, and the changes being announced today, provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces," he said in a statement.

"We had highlighted the company's debt issues previously and it was imperative to deliver a refinancing that retained an opportunity for shareholders to participate in the future of the company."