HONG KONGâ€"Billabong International appears to have avoided a wipeout.
On Tuesday, the troubled Australian surf apparel company said it would replace its chief executive and had secured a financing package from private equity investors worth 395 million Australian dollars, or about $364 million, to help fund its working capital needs and pay down debt.
Billabong is getting a boost from Altamont Capital Partners â€" one of the two private equity companies that last month decided not to proceed with a joint takeover bid that had valued Billabong at about 290 million dollars.
Instead, Billabong said Tuesday it would secure bridge financing of 325 million dollars at a 12 percent annual interest rate, to be arranged by Altamont and GSO Capital Partners, the credit arm of Blackstone Group. In addition, the Billabong company will sell DaKine, its backpack and outerwear brand, to Altamont for 70 million dollars.
As part of the deal, Billabong will issue share options to Altamont and GSO representing a 15 percent stake. That stake may be increased to as much as 40 percent in the future as part of a long- term financing package that would include a convertible note and also a revolving credit line issued by GE Capital.
Billabong said it would replace its chief executive, Launa Inman, who has been in the job for about a year, with Scott Olivet, a former chief executive of Oakley, the sunglasses maker.
‘‘The changes being announced today provide the company with a stable platform and the necessary working capital to continue to address the challenges it faces,’’ Billabong’s chairman, Ian Pollard, said in a news release Tuesday. ‘‘We had highlighted the company’s debt issues previously and it was imperative to deliver a refinancing that retained an opportunity for shareholders to participate in the future of the company.’’
Founded in 1973 by Gordon Merchant, a surfer who started out making board shorts in the kitchen of his home on the Australian Gold Coast, Billabong has found itself swimming against the current in recent years as sales plunged and its market value shrank.
Only 16 months ago, Mr. Merchant snubbed a takeover offer from TPG Capital that valued Billabong at 851.4 million dollars, or about 3.30 dollars per share, saying then that even an offer of 4 dollars per share ‘‘would still represent a discount on the true value of Billabong.’’
Billabong’s shares have fallen 76 percent in the past year and last changed hands at 25 Australian cents apiece. They were suspended from trading on Tuesday pending the financing announcement.
