The never-ending battle for control of troubled surfwear group Billabong, now almost entering its second year, has taken another twist after an activist New York hedge fund demanded a shareholder meeting to dump the board and derail an already partially executed $325 million rescue deal.
But as more bidders for the crippled Billabong come crashing through the front door, key managers of the retailer are leaving by the back, with two executives from the company's Von Zipper fashion sunglasses brand resigning last week, adding to the two who jumped ship only a week before.
Von Zipper vice-president Vince De La Pena and Rob Riese, a founder and the director of design and merchandising, reportedly resigned last week, at a time when the brand is one of the better performers for Billabong and when the rest of its surf and streetwear businesses are mired in red ink.
Earlier, Terry Strumpf, Billabong's vice-president of merchandising and design and president of the Xcel brand, walked out, as did senior design director Rob McCarty.
Meanwhile, the takeover activity swirling around Billabong continues, with warring hedge funds and advisers elbowing each other to seize control of the retailer which last week posted a full-year loss of $859.5 million on the back of nearly $1.2 billion in accumulated write-downs.
Coastal Capital International, run by US analysts-turned-investors Vlad Artamonov and Todd Plutsky, who have a history of swooping on vulnerable Australian companies, has emerged as the latest trying to ride the Billabong wave. Appearing on the register with a 5 per cent stake in August, Coastal is now seeking to eject the entire Billabong board other than founder Gordon Merchant and Colette Paul, and then appoint its own representatives.
Messrs Artamonov and Plutsky, who run their hedge fund from Midtown Manhattan just a short stroll from Central Park, are also seeking to amend Billabong's constitution around the approval of future debt and equity refinancing arrangements. This is presumably a last-minute attempt to impede a shareholder vote in October on a recapitalisation offer from private equity players Altamont and Blackstone.
The plan is understood to be designed to stymie the proposal from Altamont. Altamont and its partners have already extended a $325 million loan to Billabong and will seek shareholder approval in October for an equity deal as part of the recapitalisation package.
Coastal is thought to be supporting a rival recapitalisation plan from thrice-rejected suitors Centerbridge Partners and Oaktree Capital, who themselves are working behind the scenes to win over Billabong directors to support their deal.
Billabong said Coastal had used its 5 per cent stake to call for a general meeting at which it will seek to dump directors and alter the company's constitution. A notice of meeting would need to go out within 21 days and be held within two months.
Billabong said its directors and advisers were reviewing Coastal's request and the resolutions.
"The board does not anticipate that this action by Coastal Capital International will cause any delay or deferral of the company's process to complete the long-term financing," Billabong said.
Altamont said in a statement that it was focused on completing its deal with Billabong.
"The Altamont consortium transaction means Billabong, after many months of uncertainty, finally has a clear path towards the future and to realising the tremendous potential we see in its portfolio of exceptional brands."
Long-suffering shareholders in Billabong at least had some joy from the multiple vultures now circling the sickly retailer, with shares surging nearly 24 per cent on the Coastal pitch before closing up 6¢, or 14 per cent, at 48.5¢.