BREAKFAST DEALS: Altamont's 360

Billabong International is still talking, but not about takeovers. The iconic company has been consigned to begging for refinancing deals and asset sales. Nathan Tinkler has come to an agreement of sorts with Blackwood Corporation as his Whitehaven stake remains subdued. Meanwhile, we’ve received yet more news about a potential Rio Tinto asset sale and insurance broker Steadfast Group, chaired by dealmaking legend Frank O’Halloran, is making progress towards an IPO.

Billabong International

This morning, Billabong International has a market cap of just $110.16 million against $200 million in debt. Unsurprisingly, the board is looking at asset sales and a capital restructure.

Yesterday, Billabong confirmed the inevitable. After 16 months of takeover approaches from this suitor and that brand, the iconic company is simply too shaky to take on.

With yet another profit downgrade, Billabong shares tanked almost 50 per cent to finish at a disastrous 23 cents a pop. As Business Spectator’s Stephen Bartholomeusz pointed out yesterday, the share price is now so low that it makes an equity raising almost impossible for Billabong to complete.

Billabong chief Launa Inman has some clear air to execute her four-year turnaround plan, but there are two items on the agenda to get Billabong stable.

Billabong confirmed that it has put its Canadian action sports chain West 49 on the chopping block. The network of stores includes 70 shops, along with 18 Amensia-branded stores, six Billabong stores and two Element stores.

But the company is also talking to the financial backers of the two bids, Altamont Capital Partners and Sycamore Partners, about “alternative refinancing and asset sale transactions” that have been presented to the board.

“The refinancing is intended to provide the company with a comprehensive solution and an appropriate capital structure, allowing it to continue its reform agenda,” said chairman Ian Pollard.

“It’s our intention to conclude these discussions as soon as practically possible while aggressively reducing costs across all our global operations.”

Concluding negotiations as quickly as possible has not been Billabong’s strong suit in recent times, largely because it has always been at the mercy of the party it’s negotiating with.

The question shareholders will be rightly asking is whether there’s anything to be gained from hearing out the two US-based investors.

They’ve been given enormous amounts of time to… not table a takeover offer. Why would Billabong shareholders want their management to waste any more time with these investors that have done nothing but take the company for a ride?

One would hope that Altamont and Sycamore, both US-based, have given some solid hints that smaller asset sales would secure good terms or that the refinancing package would have a sporting chance of being sustainable.

Give them a week to put a proposal on the table. Two at the most. If they don’t have a good idea of what they think they can do with Billabong after months of looking into the books, they’re hilarious.

It could be indicative of the reluctance of other lenders to give Billabong better terms than the $200 million in debt that it’s currently dealing with. But it’s still an uncomfortable relationship for shareholders whose hopes were lifted with an 'indicative' $1.10 a share last year by these same two parties.

It’s easy to conceive a scenario where the lenders use this opening to push for a debt-to-equity swap, just like the US hedge funds did with Nine Entertainment and its former owners CVC Asia Pacific.

Those guys were utterly wiped out on their multi-billion dollar investment in Nine. Billabong’s remaining shareholders could be headed the same way.

Nathan Tinkler, Blackwood Corporation

Troubled coal magnate Nathan Tinkler has managed to win himself another deadline.

ASX-listed Blackwood Corporation has halted liquidation proceedings against Tinkler’s Mulsanne Resources over an outstanding debt of $28.4 million. Mulsanne was supposed to hand over the money in exchange for a one-third stake in the company.

Tinkler now has until June 30 to come up with about half that – $12 million. If he doesn’t, the liquidation push will recommence on July 1.

The difference here is that Tinkler won’t be collecting that one-third stake in Blackwood. The agreement is for a termination of the share placement agreement.

So he’s got to scramble for $12 million for nothing.

Just while we’re on Tinkler, his 19.4 per cent stake in Whitehaven Coal is worth $438.44 million at current prices.

Tinkler has stated in court that his debts total something like $500 million, though some media reports put that figure at $700 million.

Rio Tinto

Rio Tinto boss Sam Walsh assured investors last month that asset sales were on the cards, but they would have to wait a bit longer for some hard news.

“Please be assured the moment we have something to announce we will,” said the news boss.

As it turns out, leaks about Rio Tinto’s asset sales have been coming pretty consistently over the last few weeks.

In mid-May we heard that private equity giant Kohlberg Kravis Roberts has lobbed a bid for Rio Tinto’s 80 per cent stake in the Northparkes copper-gold mine in central New South Wales. That could raise up to $US1 billion ($1.03 billion) according to estimates.

Just yesterday, Bloomberg reported that Rio Tinto has hired Morgan Stanley to dust off the plans for a float of its diamond business after failing to get a bidder on the line. That could generate up to $US2.2 billion.

This morning, Reuters is reporting that Rio Tinto has shortlisted about half a dozen suitors for its majority stake in the largest iron ore producer in Canada, the rather sensibly named Iron Ore Co of Canada.

One source told the newswire that Rio Tinto values IOC at $US8 billion and is seeking between $US3.5 billion and $US4 billion for its stake.

It seems that when Walsh does update the market, it won’t be one thing he’ll be telling shareholders, but many things.

Wrapping up

Insurance broker Steadfast Group looks like it will start pre-marketing for a $350 million float towards the end of June, according to The Australian Financial Review.

The newspaper says Steadfast, now chaired by QBE Insurance legend Frank O’Halloran, isn't far off with joint lead managers JPMorgan and Macquarie Capital just finalising their broker research. After that, they can start flogging the float.

ASX-listed Red Minerals has signed a memorandum of understanding with Chinese interests that will deliver $US550 million in debt funding for the anticipated $US800 cost of its Hillside copper mine on South Australia’s York Peninsula.

And finally, Investa Office Fund has capped off its 12-year $US125 million private placement in the US.