Australian regulator declines PE request to delay Billabong deal
The Australian Government Takeover Panel - the country's takeover regulator - has declined a request from Oaktree Capital Management and Centerbridge Partners to delay a A$395 million ($359 million) refinancing deal for surf-wear company Billabong International.
The two US hedge funds, whose own refinancing proposals were turned down by Billabong, asked the Panel to intervene in the deal with Altamont Capital Partners on anti-trust grounds. They argued that some elements - including a substantial break fee - were "anti-competitive and coercive"
In a statement, the panel declined to stop the sale but said it would still investigate the deal. Billabong said it disagreed with the basis for Oaktree and Centrebridge's request.
The two funds had requested the panel delay a $294 million bridge facility and the sale of Billabong's DaKine brand to Altamont - both of which expected to take place this week - pending the results of an investigation.
Under the terms of the deal, announced last week, Billabong will issue share options for 15% of the company to an Altamont-led consortium - which includes The Blackstone Group's credit arm GSO Capital Partners - along with the sale of the DaKine business.
Billabong will also 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. Should the consortium exercise the options, it will end up with a 36.3-40.5% stake in Billabong, diluting the equity of existing shareholders, whose approval is needed for the deal to go ahead.
Oaktree and Centerbridge - 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.
On Thursday, Billabong said it had received a proposal from the two hedge funds after it had already entered into the binding agreement with Altamont.
The ailing company - saddled with debts from an ill-timed expansion - has struggled ever since its brand fell out of favor.
Back in February 2012, TPG Capital offered A$841 million for the company, 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.
Since then Billabong has issued a series of profit warnings. On Friday Billabong's shares ended up 9.6% at A$0.40, from a high of A$13.56 six years ago.
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