Billabong's $560m wipeout
Struggling surfwear group Billabong is expected to unveil huge write-downs leading to a $560 million full-year loss on Tuesday morning, with the company's future still in doubt as rival private equity funds wrestle over competing refinancing deals.
Analyst consensus is for Billabong, which owns a global portfolio of surf, streetwear and fashion brands, to report a pre-abnormal profit of $10.2 million with investors eager to get more clarity about management's strategic direction of the business in the wake of tough trading conditions.
In February Billabong revealed sales and earnings collapses across its core markets of the Americas, Europe and Australasia had decimated its business, triggering more than half a billion dollars in impairment charges and write-downs. It reported a loss of $536.6 million for the December half.
But any discussion about the resuscitation of the business is expected to be crashed by private equity bidders and their advisers who have been jostling for nearly a year to seize control of Billabong.
The battle has intensified over the past 10 days after a successful bid from Altamont Capital and Blackstone was reworked following an adverse ruling from the Takeovers Panel, only to be trumped a few days later by rival suitors Centerbridge Partners and Oaktree Capital, who claim to have put up a better deal for Billabong and its shareholders.
Billabong has said it will be moving ahead with the $US325million refinancing proposal from Altamont and Blackstone with documents to be prepared for a shareholder vote by October.
However, Centerbridge and Oaktree have fired back, saying their fresh proposal, delivered to Billabong directors last week, is a vastly better offer in terms of the takeover premium extended to shareholders, the level of debt to be left in the group and the interest rate it would charge on its loan component.
Centerbridge and Oaktree are working intensively to push Billabong directors to consider their deal, also claiming they could wrap up the details and finalise a recapitalisation within days.
The duo claim they would allow acting Billabong boss Scott Olivet - installed by Altamont - to remain at the helm if their offer succeeds. However, it is believed Mr Olivet has told Billabong directors he would not work with Centerbridge and Oaktree and would resign.
Meanwhile, shareholders seeking some hope of a resurrection of Billabong's fortunes will be updated on trading conditions for the surf and streetwear market when the fiscal 2013 results are released.
A previous strategic plan delivered by former CEO Launa Inman aimed to simplify the business, leverage its brands, improve the retail performance and effect supply chain efficiencies.