Australian surfwear company Billabong in A$395 mn debt refinancing deal

Billabong International Ltd today agreed to an A$395 million ($359 million) debt refinancing from a group that includes its former suitor Altamont Partners, who will effectively take control of the Australian surfwear company.

Billabong would also sell its DaKine clothing and accessories brand to Altamont Partners for A$70 million ($64 million) and issue share options in exchange for the bridge loan facility.

The Queensland-based company said it had entered into agreements with US private equity firms Altamont and Blackstone Group to immediately repay its syndicated debt facilities in full, while providing a long-term financing package to keep the business operating.

The immediate refinancing will be by way of a bridge financing by group of the Billabong's existing syndicated debt facilities and the sale of the DaKine brand. The long term financing will be by way of a term loan and convertible note provided by the group, and a revolving credit facility provided by GE Capital.

Altamont and Blackstone could end up owning as much as 40.5 per cent of Billabong if they opt to exercise all the options and preference share issues.

The options can be exercised for A$0.50 per share within seven years for a cash value of A$42.3 million, Billabong said in a statement.

As a condition precedent to financing, chief executive Launa Inman will step down just after 14 months in the role, and the board will appoint Scott Olivet as CEO and managing director of Billabong.

Last month, the struggling surfwear company said that it had ended talks with potential suitors and was looking at asset sales and refinancing to keep itself afloat. (See: Australian surfwear company Billabong ends takeover talks)

A consortium comprising Paul Naude, director and president of Billabong's US unit and private equity firm Sycamore Partners and another consortium made up of firm Altamont and US clothing group VF Corp had in December 2012 tabled an $544 million indicative bid without conducting due diligence.

After going through Billabong's books, the Naude consortium had lowered its offer to A$287 million, while the Altamont consortium's offer was around A$250 million.

Billabong's stock has tumbled from a high of A$14.06 in 2007 to A$0.25 today. 

After rejecting a A$3.30 a share or $$904 million offer from TPG Capital in 2012, the company has restructured by cutting costs, reducing headcount, selling some brands and closed more than 140 of its 634 stores.

Apart from the Billabong brand, the company sells surfwear and accessories under the Palmers Surf, Honolua Surf, Swell.com, Von Zipper, Kustom (footwear), Nixon, Xcel Wetsuits and Tigerlily brands, and also Element skate clothing and hardware.

Billabong's products are licensed and distributed in more than 100 countries through specialised boardsports retailers and through the company's own branded retail outlets.

The majority of it's A$1.79 billion revenue is generated through wholly-owned operations in Australia, Japan, New Zealand, South Africa and Brazil.