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Billabong enters recapitalization, names CEO


Industry Updates

Neil Fiske named CEO while recapitalization agreement aims to pay back Altamont

Surfersvillage Global Surf News, 19 September, 2013 : - - Billabong International Limited announces that it has entered into binding agreements with certain entities affiliated with Centerbridge Partners, L.P. and Oaktree Capital Management, L.P. in relation to a long term financing to recapitalise the Company and provide Billabong with a stronger balance sheet and capital structure to allow it to stabilise the business, address its cost structure, and pursue a strategy to grow the business.

The agreements will enable Billabong to repay in full its existing US$294 million (A$315 million) bridge loan facility from the Altamont Consortium1 which was entered into on 16 July 2013.

The agreements include:

- a 6 year senior secured term loan of US$360 million (A$386 million) (“New Term Debt”);

- a A$135 million equity placement to the C/O Consortium (the “Placement”) and, following the Placement, a A$50 million non-underwritten, renounceable rights issue available only to shareholders other than the C/O Consortium (the “Rights Issue”, and together with the Placement, the “Equity Raising”), the proceeds of which will be used to repay2 up to US$172 million (A$185 million) of the New Term Debt with no prepayment premium; and

- 29.6 million options issued to the C/O Consortium exercisable at A$0.50 per share.

In addition to this financing, Billabong retains the previously announced commitment from GE Capital to provide an asset-based multi-currency revolving credit facility of up to US$140 million (A$150 million) (“Revolving Facility”). In order to adequately reflect the C/O Consortium’s significant investment in the Company, the C/O Consortium will be permitted to nominate representatives to the Board of Billabong.

The Company notes that both members of the Consortium have long track records of successfully investing in and partnering with retail and other businesses in achieving operational turnarounds.

The Company also announces that it has appointed Mr. Neil Fiske as Chief Executive Officer and Managing Director of Billabong. Mr. Fiske is a proven and industry-respected executive who brings to Billabong a strong combination of world-class strategy and successful execution experience as a CEO in retail and the active outdoor category.

“In fully evaluating the competing refinancing proposals, on a range of factors, the Board determined that the C/O Consortium proposal was in the best interests of the Company, its shareholders, its employees and other key Billabong stakeholders, on both economic terms and in providing near term certainty.

The proposal was significantly improved compared to the C/O Consortium’s previously announced proposal and offered lower financial leverage and cheaper cost of funds with lower equity dilution than the Altamont proposal plus the ability for existing shareholders to participate alongside the C/O Consortium via the rights offering,” said Billabong Chairman Dr. Ian Pollard.

“As Billabong continues to restructure its operations globally, the need for immediate long-term funding certainty and a strong financial base from which to reinvigorate an iconic group of brands is best met by entering into this agreement now

Source: Billabong

Author: Maria Manning

Tags: Billabong, Altamont,

Industry: Surfersvillage


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