Billabong strikes $331m refinancing deal with Altamont, Blackstone
Australian surf wear company Billabong has a reached an agreement with US private equity firm Altamont Capital Partners and Blackstone Group's credit arm GSO Partners for a A$395 million ($331 million) refinancing package.
The consortium will provide a bridge loan A$325 million with a further A$70 million being raised via the sale of the DaKine adventure sports brand to Altamont. The deal will also see the Billabong's chief executive Laura Inman leave after just 14 months in the role.
The combined amount will be used to repay Billabong's A$289 million syndicated debt facility while providing A$106 million of working capital to keep the business going while a long-term financing package is put in place.
Billabong will pay the consortium 12% interest on the bridge loan, and the five-year debt facility with which it will be replaced, from the end of the calendar year. The company will also issue up to 42 million options over Billabong shares. Should the consortium exercise the options, it will end up with a stake in Billabong of between 36.3% and 40.5%, diluting the equity of existing shareholders, whose approval is needed for the deal to go ahead.
Oaktree Capital and Centrebridge - which bought the majority of Billabong's debt from a bank syndicate earlier this month at 10-20% discount of face value - stand to collect as much a A$58 million profit on the deal.
As a condition of the deal Inman is being replaced by former Oakley chairman and chief executive Scott Olivet.
"The board believes that the Altamont consortium's refinancing, and changes being announced today, provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces," said Ian Pollard, chairman of Billabong in a statement.
Billabong's shares were trading at A$0.25 yesterday before the company requested a trading halt pending the announcement.
Back in February 2012, TPG Capital offered A$841 million, only to be rebuffed by shareholders. It returned six months later with a bid of A$694 million, which was matched by Bain Capital. Both subsequently withdrew after conducting preliminary due diligence.
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