Billabong International Ltd. (BBG), the surfwear company that’s lost 76 percent of its market value over the past year, will borrow $294 million to repay loans in a deal that could give 40 percent of its shares to a group led by Altamont Capital Partners.
Chief Executive Officer Launa Inman will be replaced by Scott Olivet, former chairman of sunglasses maker Oakley Inc., under the agreement announced to the Australian stock exchange today. Billabong will also sell its DaKine brand to Altamont for A$70 million ($64 million), the Gold Coast, Australia-based surfwear maker said.
The company, whose market value rose as high as A$3.84 billion in June 2007, was priced at about A$120 million before its stock was halted ahead of today’s announcement. It’s shut stores, fired employees, and sold new shares to raise cash as earnings slumped.
“They’re at the firesale point where they need to refinance the balance sheet,” Evan Lucas, a market strategist at IG Markets Ltd. in Melbourne, said by phone before the announcement. “They grew too fast and leveraged themselves too hard.”
A group associated with Altamont and Blackstone Group LP (BX)’s credit arm GSO Capital Partners will provide a bridging loan, which with cash from the DaKine sale, will repay A$289 million in Billabong’s syndicated debt facilities. The loan will also provide A$106 million for Billabong’s working capital.
The consortium will also be issued with share options and $40 million in convertible debt, which together could give it an ownership stake of between 36 percent and 40 percent. The options can be exercised for A$0.50 per share within seven years of being granted, for a cash value of A$42.3 million, Billabong said.
Jesse Rogers and Keoni Schwartz, co-founders and managing directors of Altamont, will be appointed to the board under the agreement, according to the statement.
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