Billabong International
Recommendation
Billabong International has announced a $225m six for seven non-renounceable entitlement offer pitched at $1.02 per share; a whopping 44% discount to the share price prior to the announcement. New chief executive Launa Inman plans to shut 140 stores by 30 June 2013, and use the proceeds of the capital raising to reduce debt. The company also announced yet another profit downgrade, and the share price is now trading below the offer price. That means eligible shareholders can buy shares cheaper on market than through the entitlement offer.
Billabong still isn't out of the woods. It still has debt, and plenty of long term leases that the company is unable to walk away from. But given the massive fall in the share price, new management and rationalisation of stores, we're going to reassess the company to see if Inman's turnaround plans are worthy of your capital. Until we publish our findings next week, with the share price falling 67% since Billabong: Four unpleasant facts from 21 Feb 12 (Avoid – $2.81), we’re switching to UNDER REVIEW and won’t be publishing a recommendation guide in the interim.