CEO signs off as Billabong stays afloat
How do I feel? I'm sad in the sense that I've fallen in love with Billabong, but it's the right thing for the company. My most important job was to make sure that this company had a future . . . and we've achieved that. Launa Inman, outgoing CEO
Investors piled into Billabong stock on Wednesday after a $294 million refinancing deal with Altamont Consortium was unveiled late on Tuesday.
The shares soared by up to 46 per cent and closed 34 per cent higher at 33.5¢. Last month, Billabong shares fell to a record low of 13¢, not long after takeover talks collapsed. They traded as high as $14.06 in May 2007.
"For six months, I've known that if we were able to get this deal across the line, I would be moving on," Ms Inman said on Wednesday.
"Altamont had always made it clear that if they did a deal with us ... that they wanted to put Scott [Olivet], who they've had a very good relationship with for over 20 years, in as the CEO.
"I'm sad in the sense that I've fallen in love with Billabong, but it's the right thing for the company, and that was my most important thing. My most important job was to make sure that this company had a future as a going concern and we've achieved that."
Ms Inman is expected to depart Billabong with up to $4.6 million after just over a year at the helm. She had a base salary of $1.3 million, with other short and long-term incentives as well as a termination agreement subject to board and shareholder approvals.
Analysts welcomed the buyout, saying while it was costly - with shareholders diluted and the firm saddled with higher interest payments - it removed significant risk.
They hailed incoming chief executive Scott Olivet, former chairman and chief executive of US sportswear group Oakley, as having the necessarily experience in action sports brands to boost Billabong's chances of a turnaround.
Citi analyst Craig Woolford upgraded Billabong from neutral to buy and said that while Citi was never concerned about Billabong's brand potential it had been concerned about its solvency.
"We believe that risk is now greatly diminished. It will be a difficult journey and there are no quick fixes, but the board has avoided insolvency with an improved management team in our view," Mr Woolford said.
JPMorgan consumer analyst Shaun Cousins upgraded Billabong to neutral. He said while he expected the share price to remain volatile, it was likely to increase even after being adjusted for dilution.
UBS analysts Ben Gilbert and Paul Wong said they were waiting on the outcome of an meeting between shareholders and the company before adjusting their estimates, describing the deal as complex and posing a variety of outcomes.
Mr Woolford said the complex refinancing deal would be costly for ordinary shareholders, with their interest in the business diluted to, at best, 64 per cent of the company and, at worst, 50 per cent.
Billabong, valued at $3.84 billion at its peak in 2007, posted a record loss of $536.6 million in the first half this year as it wrote off most of the value of its main brand.