Billabong moves to reduce debt
Surfersvillage Global Surf News, 20 June, 2012 : - - Billabong hopes to raise $225 million to strengthen the company as it embarks on a transformation strategy. The company will issue new shares to existing shareholders at a 44 per cent discount to current prices, and use the funds to reduce its debt from $325 million to about $100 million.
Billabong also warned that 2012 pre-tax profit for the 12 months to June was expected to be between $130 million and $135 million, below previous guidance of about $157 million. No dividends are expected to be paid for the second half of 2011/12 or the first half of 2012/13, the company said.
The capital raising plans come as chairman Ted Kunkel flags he will step down after the AGM in October. The chair of the board audit committee, Allan MacDonald, will also leave the company. Last month then chief executive Derek O’Neil exited the company. Billabong has or will be losing three of its most senior executives.
Overseas market conditions have been challenging in recent months. In Europe, sovereign debt issues are having a significant adverse impact on consumer confidence and demand. Sales in Canada were subdued and below expectations, and in the USA a poor winter impacted the DaKine snowboard, ski and surf accessory business, Billabong said.
In Australasia, consumers continue to be very cautious given the weak global macroeconomic climate, Billabong said. This has resulted in a significant reduction in summer product shipments in June. Heavy discounting has also impacted the performance of Billabong stores, but online sales continued to be strong, it said. Billabong is closing up to 150 under-performing stores and sold its Nixon watch brand to pay down debt.
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Source: Financial Newsletter
Author: The Editors