Billabong International Ltd. (BBG), the Australian surfwear company that’s fielded five takeover and refinancing offers since February 2012, said its fourth-largest shareholder is seeking a board shakeup. The stock surged.
Coastal Capital International Ltd., with a 5 percent stake in the business, wants to appoint directors and have all other board members removed except founder Gordon Merchant and his friend Colette Paull, the Gold Coast, Australia-based company said in a statement. The stock rose 14 percent to close at 48.5 Australian cents in Sydney, its biggest gain in two weeks.
The plan is a challenge to Altamont Capital Partners, a fund which has two representatives on Billabong’s seven-person board and leads a group providing a $294 million bridging loan to the company as part of a refinancing plan. Billabong’s losses tripled to A$860 million ($771 million) and its namesake brand was valued at zero in annual results announced last week.
“The deal that Altamont is offering is very, very heavily weighted in their favor,” Evan Lucas, a market strategist at IG Markets in Melbourne, said by phone, referring to the investment group. “As 5 percent shareholders, Coastal Capital are certainly entitled to ask if the board has been operating in the interests of shareholders.”
Billabong is also studying a separate refinancing plan from a group including Oaktree Capital Management LP and Centerbridge Partners LP, which the group says would save as much as A$143 million in interest over five years.
Coastal Capital, whose managing partners Vlad Artamonov and Todd Plutsky are board members of power station company Redbank Energy Ltd. (AEJ), has also demanded a shareholder meeting to vote on resolutions including an amendment to Billabong’s constitution so that future debt or equity financing plans are subject to a shareholder vote. Artamonov didn’t respond to an e-mail sent outside of work hours.
A notice to call the meeting must be issued within three weeks, according to Billabong spokesman Chris Fogarty.
The Coastal Capital action isn’t expected to “cause any delay or deferral of the company’s process to complete the long term financing,” the surfwear company said in the statement today.
The company’s board and chairman Ian Pollard “will act within their fiduciary duties and are fully evaluating both proposals appropriately,” Fogarty said, referring to the Altamont and Oaktree-Centerbridge refinancing plans.
Altamont’s offer is “in the best interests of the company, its shareholders, its employees and all other stakeholders,” Altamont said in an e-mailed statement today.
Billabong, Australia’s largest surfwear company, has been been fielding takeover or refinancing proposals for all but five weeks of the time since Launa Inman took over as chief executive officer in May 2012. Inman stepped down last month and the company appointed Peter Myers as acting CEO until discussions about former Oakley Inc. chairman Scott Olivet assuming the role are finalized.
The business spent A$23 million on consulting and banking costs in relation to its takeover and refinancing proposals, greater than the value of its earnings before interest and tax.
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