They may be buying Billabong (BBG) stock with their ears pinned back but the boys from Coastal Capital are facing disaster at Redbank Energy (AEJ).
The brains trust behind New York based hedge fund Coastal Capital – Vlad Artamonov and Todd Plusky – are burning cash at Redbank Energy, which owns the Redbank Power station in the NSW Hunter Valley.
Over the weekend, Redbank Project – a wholly owned subsdiary of the listed Redbank Energy and the entity that owns the power station – was placed into receivership after failing to repay a scheduled $3 million instalment to its banking syndicate by the end of September.
Redbank Energy yesterday requested a trading halt.
Unperturbed by the impending disaster at Redbank, Coastal has lifted its stake in Billabong in recent weeks and still has a Section 249D notice outstanding on the surfwear company to spill the board despite the recent bail-out agreement reached with Centrebridge Oaktree. That spill motion will be held in conjunction with the annual meeting and the scheme of arrangement meeting.
Billabong’s website has Coastal sitting on a 5% stake. But ASX notices have Coastal lifting its stake to 7.59% from 6.24% in recent weeks, raising questions about its possible motives
In 2010, Coastal employed similar tactics to its Billabong play when it bought an 18% stake in the beleaguered Alinta Energy in an attempt to stymie a debt for equity swap by Texas Pacific Group.
TPG took all the assets bar Redbank which it left for Coastal and remaining Alinta shareholders including Bronte Capital along with a pile of debt and total liabilities of $234.7 million.
Despite Redbank being in breach of its debt covenants for most of this year, Coastal fought off an attempt by a Singaporean based shareholder for board representation who was offering possible financial aid and a refinancing solution.