Billabong head to step down in $294 million refinancing deal
Investors associated with Altamont and Blackstone Group entered the agreement that will allow Billabong to repay in full its syndicated debt facilities. As part of the deal, Billabong will also sell its Dakine brand to Altamont for $70 million.
Even so, the Altamont consortium could expected to emerge with between 36 per cent and 40 per cent of Billabong as part of an options agreement under the refinancing package. The financing transaction will be subject to approval from existing Billabong shareholders, with a date for the meeting yet to be confirmed.
Stepping in to take charge of Billabong will be Scott Olivet, a former chairman and chief executive of US sportswear group Oakley. Mr Olivet has also held executive roles with Nike, heading up several of the group's key brands.
Altamont will also appoint two directors to the Billabong board.
Mr Olivet also agreed to acquire more than $2.5 million worth of Billabong shares.
Altamont Capital Partners describes itself as an investor in "change-intensive middle-market businesses".
The San Francisco private-equity firm owns or has large stakes in a range of US businesses, including one of the largest franchisees of the Taco Bell restaurant chain.
"The board believes that the Altamont consortium's refinancing, and the changes being announced provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces," Billabong chairman Ian Pollard said.
"The Altamont consortium presented the best available, certain and executable opportunity in these challenging circumstances," he said.
"The transaction reflects the Altamont consortium's confidence in the value of Billabong's brand."
Billabong has lost 76 per cent of its market value over the past year. It placed its shares in a trading halt on Tuesday, citing developments in refinancing and asset-sale plans. Billabong shares last traded at 25¢ before entering into the trading halt.
Billabong said last month it was looking to sell its Canadian retail chain West 49 after the company breached terms on its debt. Since then, the retailer has been in talks with Altamont over a possible refinancing and asset-sale deals to repay loans. Five members of its banking syndicate have already sold out of their loan holdings.
The company, whose market value rose as high as $3.8 billion in June 2007, is now valued at about $120 million after efforts to cut costs, including shutting stores, cutting staff, and selling new shares to raise cash. A slump in its home market and the weak European economy have weighed on earnings.
Billabong has $651 million in debt facilities due to be repaid by July next year, with $152 million of net debt drawn at the end of December.
Dr Pollard paid tribute to Ms Inman. "The board wishes to thank Launa for her contributions to the company and her resilience during the most difficult period in the company's history," he said.
Frequently Asked Questions about this Article…
Launa Inman will step down after 13 months in the role as part of a complex $294 million refinancing deal that brings in a consortium led by Altamont Capital Partners to refinance Billabong’s debts. The board thanked her for her contributions and resilience during a difficult period for the company.
The refinancing package, led by a consortium including Altamont Capital Partners (with investors associated with Altamont and Blackstone Group), will inject funds to allow Billabong to repay its syndicated debt facilities in full. The deal also includes asset sales and an options agreement that could give the consortium a significant equity stake.
Yes. As part of the package Billabong will sell its Dakine brand to Altamont for $70 million to help raise funds to refinance debt.
Under the options agreement in the refinancing package, the Altamont consortium could be expected to emerge with between 36% and 40% of Billabong. The transaction is subject to approval by existing Billabong shareholders.
Scott Olivet, a former chairman and chief executive of US sportswear group Oakley who has also held executive roles with Nike, will step in to take charge. He has also agreed to acquire more than $2.5 million worth of Billabong shares, and Altamont will appoint two directors to the Billabong board.
Billabong has lost 76% of its market value over the past year, placed its shares in a trading halt (they last traded at 25¢), and faces $651 million in debt facilities due to be repaid by July next year, with $152 million of net debt drawn at the end of December. The company has been cutting costs, closing stores and selling assets to raise cash.
Yes. The financing transaction will be subject to approval from existing Billabong shareholders. A date for the shareholder meeting had not been confirmed in the article.
Billabong said it was looking to sell its Canadian retail chain West 49 after breaching terms on its debt. The retailer has been in talks with Altamont over possible refinancing and asset-sale deals to repay loans, and five members of its banking syndicate have already sold out of their loan holdings.
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