Billabong director explores buyout options
Billabong shares spiked 17% during Monday morning trading in response to the Australian surfwear company announcing that one of its directors was looking at a possible leveraged buyout. TPG Capital and Bain Capital both submitted bids of A$694 million ($709 million) for Billabong but withdrew last month after conducting preliminary due diligence.
According to a regulatory filing, Paul Naude has temporarily relinquished his roles at as a Billabong director and president of the Americas in order to hold discussions with potential debt and equity financiers about supporting a change of control transaction. He is acting independently of the board and company management.
After reaching A$0.87 shortly after the market opened, Billabong's stock closed at A$0.81, up more than 10% for the day. Prior to the announcement it was trading at A$0.74 and remains down nearly 54% year-to-date.
Billabong's market capitalization is A$388 million, a fraction of that implied by the A$1.45 per share in cash that TPG offered in July. The board initially rejected the offer on the grounds that it didn't reflect the true value of the company in a change of control situation.
Five months earlier, the private equity firm bid A$841 million only to be rebuffed. The downward revision came after a poorly received rights issue prompted a decline in Billabong's share price. The company posted a net loss of A$275.6 million for the 2012 fiscal year, compared to a profit of A$119.1 million 12 months earlier. It projects an EBITDA of A$100-110 million for the 2013 fiscal year.
TPG's due diligence issues were reportedly tied to doubts about medium-term earnings forecasts and the health of the core Billabong brand.
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