Billabong Get Thrown a Lifeline
After three years of relentless sharemarket drama and hawkish interest from private equity groups Billabong appear to have been thrown a lifeline – albeit one with severe conditions attached. Overnight US private equity group, Altamont, arranged a $395 million financing deal for the once-mighty Australian company.
The deal, which includes sale of DaKine for $70 million, gives Billabong $395 million to repay debt and provide short term working capital. In return Billabong will pay Altamont 12% interest yearly meaning Billabong have very little time to turn the business around. Altamont will also receive two positions on Billabong's board of directors.
The make up of the company will also change under the deal with CEO of 14-month standing, Launa Inman, replaced by former Oakley chairman, Scott Olivet.
The change also makes Paul Naude's position untenable. Naude took leave from his role as head of US operations to lead a potential takeover with New York-based private equity firm, Sycamore Partners. Naude had been with Billabong for over 25 years.
For Billabong founder Gordon Merchant, who infamously refused to accept a $3.30-a-share offer from private equity group TPG early last year, the Altamont deal will see his worth dip even lower. Once the majority shareholder, Merchant is likely to see his 14% holding reduced to as little as 9 per cent, a stake worth about $11m at 25c a share.
For the professional surfing community it's unclear what the ramifications of the deal will be although immediate changes are unlikely. This is the last year surf companies are expected to foot the bill of WCT events but current licensees get first right of refusal for the naming rights when ZoSea assume control next year. Naming rights are just $1 million compared to the current $3.5 million for running a WCT, instantly saving Billabong $7.5 million on the WCT alone (Billabong currently license three WCT events). Therefore a sudden withdraw from next month's Billabong Tahiti Pro and the season ending Billabong Pipeline Masters would be very drastic. Cuts to professional surfing rosters appear more likely.
The deal looks more like a hand around the throat than a hand up!
.... and share price is up 45% to 36c in the first few hours of trading today. Wonder how long the upward trend will last?
And now the analyses start coming through.
"Flinn said it was not clear who Billabong was targeting, the chain having missed or perhaps underestimated the 'hipster' movement."
Actually, that's something they should be happy about.
Interesting - the day after they accepted Altamont's offer, Billabong received an unsolicited proposal for refinancing from lenders.
Ben I'm thinking we will see some hipster styling out of the major brands before much longer. In fact I think a careful inspection of their existing ranges would reveal some beard compatible items.
I am not so sure either that it is only a fashion phenomenon, sometimes cultural shifts are first noticed through fashion when they really represent significantly different ways of thinking and behaving. Certainly I have noticed that the hipsters have a much more chilled out attitude in the water than previous generations (or fashions). It could a rebellion against that macho tattooed style which was so popular for a while and it's accompanying aggro. Hmm I haven't shaved for a few days, I reckon I could squeeze into some skinny jeans........now where did I leave those Buddy Holly glasses?
They should take the Oaktree deal if possible.
As a layman with only a rudimentary knowledge of the financial machinations of big business, it appeared to me that Altamont and GSO were waiting and waiting and waiting until Billabong was on it's knees, ready to swallow whatever load was stuck in front of it.
These banks shit me to no end, using other peoples money to grow fatter and fatter with nothing given back EVER! Sure Merchant was a fool in rejecting that offer way back then, but maybe he saw the sum total of his lifes work being more valuable than that?
Altamonts offer may have saved the company but at what cost? They could have charged just double the current market rate of interest and still made a killing. These people are just loan sharks beneath a shiny facade and dare I say it, not so far removed from their criminal brethren.
Right from the beginning, I was one of the few that didn't want to see Billabong go under. Too many Aussie companies have fallen into the hands of foreign ownership. Their owners listen to the ilk of the Perrin Bros. and the like and wind up losing the lot to thieves like Altamont. Sure they're greedy and stupid and some say they get what they deserve, but along with them go the workers and everyday people.
Don't they teach business ethics anymore?
Yeah it's all very interesting. Unfortunately, Billabong had put themselves in a position where they had very little bargaining power, so this is probably the best outcome of all (for the company).
Still, there's no guarantee that this plan will work either - the retail market is not great and there's a lot of work to be done to implement their new strategy.
Actually, that's an interesting point. Will they continue Launa's program or will Scott Olivet bring a brand new strategy to the table?
For reference, it's worth reading back on articles from last year shortly after Launa took over at the helm:
"Inman believes she can add another $65 million to EBITDA by brand building. She has identified the brands that she believes will deliver the bucks: Billabong ($25 million) and three smaller brands: Element, DaKine and RVCA ($40 million).
This defines Inmanâ€™s solution as essentially a marketing one. She wants to convert awareness of the brand into sales. In Australia 86% of people know the brand, but 46% have actually bought it. The number that Inman is interested in is the 53% who would consider buying it in the future.
In America, 47% of the population have heard of Billabong, and only 14% have ever bought it. Itâ€™s a big opportunity, in Inmanâ€™s view."
Solid profitable corporations are refinancing their long debt at rates close to 3%.... Consumers as well.
BBG's long term paper @ 12% tells one all they need to know.
That, and the fact that the hipster look has peaked like a dot com bomb.
Now this is an interesting curveball. The two lenders who made an alternative offer for Billabong on Wednesday (Oaktree Capital Management and Centerbridge Partners) have asked the Federal Government to investigate the Altamont deal, saying it could be anti-competitive.
VF Corp have finally spoken up about the Billabong deal (although, Bloomberg have turned a one-sentence quote into an article that otherwise rehashes old news).
"VF balked at Billabongâ€™s asking price after evaluating the finances and operations of the companyâ€™s namesake brand, Steven Rendle, a VF vice president, said in an interview."
$100 board shorts, $400 wetsuits that only last one winter.There`s a couple reasons that I will not be buying Billabong any time soon. Let`s face it,what kid wants too wear the same clothes as their parents ? So in a tough retail market, with very cheap online sales, good luck turning Billabong around.
Following on from Friday's news where the two major lenders appealed the Altamont deal, the Australian Shareholders' Association has stepped in to say that "the panel should declare the break fee to be 'unacceptable'."
"The challenge centres on a 35 per cent interest rate levied on a $44 million convertible loan held by Billabong, which will be charged until shareholders approve the deal, and a reported $65 million break fee which it will have to pay if it scraps the deal with Altamont."
This company will simply not lay down and die. There have been bids, withdrawals, new deals, counter deals, battle and fight after fight by suitors who are all clearly opportunists seeking to extract the greatest profits at the expense of staff, shareholders, customers, suppliers and anyone else tied up with this whole nightmare .
The Altamont deal provides an instant quick fix and still may just fall over the line if the tribunal and the Hedge funds walk away. The interest rates are criminal, obscene and one wonders why the Board caved in and unanimously agreed to the deal at 12% knowing full well that the bong could not pay 7% previously, the 35% interest on the convertible note until the refinance gets shareholder approval is a guaranteed back door entry to ensure an absolute controlling interest as interest payments that cannot and will not be met are converted to equity to tighten the stranglehold. It is much like throwing someone a life buoy if they are drifting alone in the ocean and having a team in a life boat following alongside pushing their head underwater and holding it there whilst they hang on to the life buoy till they finally capitulate and say uncle or whatever might be appropriate under the circumstances.
The hedge funds are shirty because they get their money back but cannot get their grubby hands on the spoils.
Altamont get a $65 million payout if the hedge fund deal gets up as their slice of the pie because they don't want to miss
out on their slice. It is all just a game, a game for big stakes. Dakine was bought for $100 million and being sold for $70 million in a better state than when they bought it in 2008 ...
Billabong is worth far more BROKEN UP AND SOLD OFF...the sum if the parts is greater than the whole....
The bank consortium need to hold their heads in shame...the damage has been done they wont come back to play again. The Directors need to take positive and evasive action but do it now they don't have four years they have never had four years the group is struggling to stay afloat ...FIX IT ..all they are doing is letting the vultures DO WHAT THEY SHOULD BE DOING TO EARN THEIR MASSIVE BOARD FEES.and to he'll with staff, shareholders and everyone else. I have never seen a more pathetic group of individuals that are supposed to be business leaders. It is the blind leading the blind and that is no way a slight on vision impaired people. These people have demonstrated over bd over again they don't have a clue as to what they are doing. All they have succeeded in doing is hand over a valuable company to slick corporate raiders who have now succeeded in trapping it, cornering it, and who will now proceed to devour it ripping it apart to satisfy their insatiable lust for profit at any cost.
I had some confidence it could have been fixed...it was never going to be easy but it was fixable....that option has now vanished in my opinion and to all shareholders I feel very sorry and sad for you particularly if you are holding at anything over 20 cents a share. Billabong is not like Oakley ...some people need to understand that.
"All they have succeeded in doing is hand over a valuable company to slick corporate raiders who have now succeeded in trapping it, cornering it, and who will now proceed to devour it ripping it apart to satisfy their insatiable lust for profit at any cost." Isn't this how the whole mess started Uncouth?
You are right Mick. History shows us time and time again mistake after mistake is often repeated. We can all
learn something from this debacle and perhaps the greatest thing to learn is that somebody can fix this to see that this never happens again . It is radical thinking, it is outside the box thinking and it is courageous thinking ( a bit of a worry for Minister Jim Hacker and Sir Humphrey Applebey fame)
Since companies began it has always been ONE VOTE PER SHARE, he that controlleth the votes controlleth the company which is well and good but in public listed companies that generally amounts to the top 100 or so institutions that hold 60% or more of the voting rights and the remaining thousands, 20400 in Billabongs case end up with little or no say because the companies fate rests with the big guys.
The institutions will generally support the incumbent Board every time keeping the old school tie and club handshakes alive and well or worse they won't cast their votes at all.
Shareholders need the right to VET every major company decision with a ONE VOTE PER SHAREHOLDER DECISION OF A MAJORITY POSITION OF VOTES CAST.
Monumental decisions of investing $700 million of borrowed funds to purchase GOODWILL would not get past first base if shareholders were presented with the facts BEFORE the decision is made.
Without telegraphing specific acquisition targets the numbers and details need to be disclosed and the effects forva sensible decision by all shareholders on the future of their company. It can easily be done, just needs the gumption to actually do it.
Boards need to be accountable. If they get it wrong and they do they need to be removed and replaced and this has to happen over and over again until they get it right ...No more FREE RIDES..PERFORM OR YOU ARE OUT.
It requires BRAVE AND COURAGEOUS change...something politicians are loathe to do.
WHAT HAVE THE ROMANS EVER DONE FOR US!!!!!????
Erm. Well, there is the two-strikes rule. And sections 180 through 184 of the Corporations Act. And ASIC. And the ASX and its myriad listing rules. And the Foreign Investment Review Board. And the Takeovers Panel. And the ATO. And the Australian Shareholders Association, etc, etc, et al.
U-B, I get that you're pissed off at your deal not getting up, but shouting about the need for more regulation is pointless. Australia has never been so over-regulated. And the regulators can't even enforce the current framework let alone deal with its further expansion.
It's damn silly to shout about deals and decisions going sour after good, sound thinking has been chucked out the window in favour of the wishful version. Back in 2007, when BBG announced its plans to go vertical, the few naysayers who spoke of BBG's need to stick to its knitting were well and truly drowned out by the footsteps of the slavering hordes racing to buy into the promised pot of gold. Pity it turned out to be fools gold.
I happen to still think that capitalism is the best way to lift global living standards. Appropriately regulated, transparent markets and well-funded regulators are critical pieces in ensuring that efficiency is properly balanced against fairness, and that benefits accrue to more people than less.
But I do not agree that over-regulation will achieve optimal or even good results: boards need to spend more time on making better decisions than on covering their silly arses.
Rather, what IMHO we desperately need is better financial education and greater shareholder and rights holder engagement, including but not just with the trustees of our super funds.
I agree with your comments.... whaaaat.
Less regulation is what I advocate and no amount of regulation can or will prevent mistakes, errors of judgement, poor decisions or greed. My point is the present system isn't working.
The Herr Clark voting system elects our politicians on somebody else's preferences how stupid is that ...it shores up poor performers by creating alliances (deals) It should be primary votes first past the post.
The shareholders are rewarded by a dividend based on their shareholding. If it were one vote per shareholder good Boards producing results would not be voted out but rabbits could be removed before they do too much damage that is the crux of my diatribe. I certainly don't have the resources to take on billabong, I am not and have never been a shareholder...As a business owner my interest is in the strategies and failures of the bong and trying to come up with a workable viable plan to fix the mess they are in.
The final outcome has never been in my hands or anyone else for that matter.
The players all of them will milk it dry until there is nothing left, the golden handshakes for a company in this condition is scary and legal..what hope for common sense.
Can we also agree that common sense is not that common?
And, Paul Naude has now left Billabong (as expected).
"Paul Naude has resigned as an employee and board member of Billabong to pursue other opportunities, Billabong said Monday."
BBG shares now up to 54c, quite a respectable increase since the takeover deal was finalised (up 77 per cent since July 16!).
Lots of favourable headlines making the rounds in the last week or so too, like "Billabong buoyancy", Billabong shares rise while CEO lies in wait", "Billabong makes a splash as stocks enjoy bumper month", etc.
But to put things in context, on April 10, SMH reported "Billabong slumped as much as 30 per cent to a record low of 53.5 cents after entering talks on a $287 million takeover".
So, a share price of 54c is all relative depending on when you bought.
Will be interesting to see how things pan out over the coming months.
bbg asx - trading at 63cents.
'Billabong said it had no idea what was the behind the share-price surge, which saw the company's shares jump from 44.5c last Thursday to an intra-day high of 65c yesterday before closing up 6.78 per cent at 63c.
But analysts said it was likely hedge funds were jumping on the stock in an attempt to derail a refinancing deal stitched up with US private equity firm Altamont Capital Partners and GE Capital.
Yesterday, Coastal Capital Investment was revealed as a substantial stakeholder in Billabong after buying more than 23 million shares.
Coastal Capital has past form in acquiring stakes of companies involved in debt-for-equity deals.
"The last time we heard from Coastal was 2011 when they attempted to derail the TPG-Alinta Energy debt-for-equity deal."'
it's still a shark pit . be careful .
"Paul Naude, a former president of Billabong, has plans for his own surfwear company. Naude hopes to have clothing in stores by next February."
Wow. That's a quick turnaround! Wonder if he's starting a new label or reinvigorating an old one?
"EMBATTLED surfwear group Billabong says it is weeks away from finalising its debt rescue package after removing controversial clauses including a $65 million break fee.
The removal of the break fee effectively puts Billabong back on the table for counter offers, potentially from debt providers Oaktree Capital Management and Centerbridge Partners."
Sell the company to Bob Hurley on the cheap. And be done with it already.
Doing so would insure that the company will be successful, profitable, and around forever.
"Centerbridge Partners and Oaktree Capital have made a rival recapitalisation offer to Billabong that they say will save the company up to $143 million compared to the deal it has already agreed with rival US fund Altamont."
"Billabong is reportedly set to ignore calls from the Australian Shareholders Association to delay its $325 million deal with US private equity firm Altamont Partners and consider a rival bid from two rival US funds."
Meanwhile... "Oaktree and Centerbridge have upped the ante on Billabong's board by telling them they can close their $325 million debt and equity financing for the distressed surfwear retailer this week."
"Billabong may face class action"
"Billabong admits its brand is worthless". That's the second incredible Billabong headline for this morning (see above for the other one).
"Billabong has posted a loss of $860m million for the year to June, more than three times its market value."
A good summary of how things have changed
Billabong paid advisers and consultants over $23 million in the last financial year. Meanwhile, they lost $860 million during the same period. Imagine how much they would've lost if it weren't for that helpful 'advice'.
You are absolutely right Stu imagine how much they could have saved if they had spent twice as much on expert advice.......parasites often feed on dying animals.
Since Monday BBG shares have dropped around 17c (or about 28%), currently sitting at 43.5c. Will be interesting to see how things go between now and the shareholder's meeting in October.
There's a really interesting article on the current state of Billabong here (with regards to the various private equity group offers): http://www.lexology.com/library/detail.aspx?g=e1bf0e89-ab67-4b3e-8623-ab...
Billabong is "still considering a competing proposal from the Centerbridge and Oaktree consortium despite entering into "revised commitment letter and certain other ancillary transaction documents" with the Altamont consortium for long-term financing."
It just won't stop... "A New York based hedge fund with a $10 million stake in Billabong has called for the removal of directors from the troubled surfwear brand, apart from the founding shareholders."
Love the statement from the chairman basically saying without the money we were gone.
"We've entered into a transaction with Altamont, which has already delivered important value to our shareholders and has enabled us to meet our financial commitments,'' Mr Pollard said
Surfing the debt wave
Stu, maybe you and the Swellnet staff can do another BBG article retake. One that possibly shows what may have been lashed to the end of that "lifeline"....
Trust me, I keep trying but every time I get to the last paragraph the story changes again: another buyer, more legal action, new conditions. Think we'll stick with the links till the story settles.
According to Business Spectator (via AFR), "Oaktree and Centerbridge have secured a senior surf industry executive who would become head of Billabong if their offer for the company is approved".
However, they "cannot publicly name the proposed chief executive because of the individual's ties to an existing employer".
Interesting stuff. I wonder who they've roped in?
Yet again youve put your finger on the pulse. Its me. They love and want me. Lil ole me. Because Ive got what it takes to put the Bill back in abong. Ive got loads of great ideas. Ideas like pants but with shorter legs. Ive even got a name for that one â€“ Notlongs. Ideas like kilts not quite to the knee â€“ Upskirts. Switching from wool footy jumpers to a radical new fabric I saw when I worked for Frank B â€“ its called nylon. Warm yet sticky. And it can be hosed down at the end of a hard day in the canoe shaping room. Much like meself.
Its ideas like these and many more Ive been mulling over that will restore a great Australian ikon.
That and my humble approach to motivating people â€“ Im really great at it. People can achieve so much amasing stuff if you just put your mind to it. Look at me. I said â€“ LOOK AT ME.
All you bloody fuckwits who think you know better. your wrong. All of you. Especially you Brutus. Iâ€™ll show you. Reckon you know a thing or two about shaping? Where does the outrigger figure in your gun boards, eh? Nowhere, thats where. Becuase you have no vision. Your captive to the Western mindset and white colonial thinking.
Keep your eyes on this space. Swellnet will be the first choice destination for the new marketing campaign. Notlongs and Upskirts â€“ must wear clothes for all good outrigger riders.
â€“ remember where you all were when you read this. Unless your sitting on the loo.
What a twist! "Billabong International Ltd's board will recommend the latest takeover proposal from Centerbridge-Oaktree to its investors, The Australian Financial Review reports."
So after all the hoo-hah, the Altamont proposal - with Scott Olivet at the helm - is sunk?
Now, if we recall Business Spectator two days ago: "Oaktree and Centerbridge have secured a senior surf industry executive who would become head of Billabong if their offer for the company is approved."
However they could not "publicly name the proposed chief executive because of the individual's ties to an existing employer".
Key phrase here is "senior surf industry executive".
So today, Billabong have announced "the appointment of a new chief executive, Neil Fiske, former head of clothing brand Eddie Bauer and the Bath and Body Works group."
According to his LinkedIn profile, as CEO and President of Eddie Bauer, Fiske "launched First Ascent line of expedition gear and the Sport Shop label for hunting and fishing".
The Eddie Bauer website says that the brand "offers signature outerwear, apparel, outdoor gear, and accessories."
"Senior surf industry executive"?
And just to clarify - the proposal of a 'senior surf industry executive' was widely reporter across business media on Tuesday. For example, BRW's headline:
"Mystery surfwear guru key to Oaktree and Centerbridgeâ€™s Billabong bid"
"Mystery surfwear guru"?
Had a quick glance thru the Company Ann.
Looks like a reasonable deal IMO, better than Altamont route which had part funding in the form of a bridging loan @ 30% from memory, that's loan shark stuff.
This C&O has funding at 11.9%, with option for 6% cash and 5.9% Payment in Kind. Also existing shareholders are offered participation in a placement @ 28c.
Heavy dilution again about another 100%, but much of C&O's equity looks to be held in escrow for 2 years.
Interesting reading on Page 8 of the Announcement, Annexure C. - Key Terms of Neil Fiske's Employment. No mystery surfwear guru in sight, which is a good thing IMO, puts and end to the boys club and brings in some serious biz operators.
That's how you go when an organisation has suffered a catastrophic near death event. For now, 'Bong lives to fight another day.
BILLABONG International's long-suffering shareholders will be offered a chance to invest alongside the company's newly appointed saviours, Centerbridge Partners and Oaktree Capital Management, after an unpopular rescue plan was dumped in favour of a $386 million-plus deal with the previously spurned suitors.
In yet another twist in the drawn-out battle for control of the surfwear maker, the Billabong board has accepted what it has described as a "significantly improved" recapitalisation proposal from the Centerbridge-Oaktree consortium, which was lobbed after the struggling surfwear group had already entered into an exclusive $325m refinancing arrangement with a rival consortium led by Altamont Capital.
Billabong announced yesterday that it had reached binding agreements with affiliates of Centerbridge and Oaktree that would provide it with a six-year senior secured term loan of $386m, plus a further $135m via an equity placement.
The deal will enable the company, whose tenuous financial state was reinforced by last month's unveiling of a $860m annual loss, to repay in full an existing $315m bridge loan to Altamont and immediately pay down a portion of the new debt facility.
Billabong chairman Ian Pollard yesterday described the Centerbridge-Oaktree proposal as superior to the Altamont deal.
Dr Pollard said he was confident that the 11th-hour deal would finally mark the end of the battle over the iconic company.
"This is a turning point for the company," he told The Australian. "We'll now be back focused on business with a clear direction (and) new leadership. I must say, I'm looking forward to it."
However, Dr Pollard dismissed suggestions that Billabong had been able to secure an improved deal only following outside intervention, which effectively had opened the door to competing offers.
"It wasn't possible originally because, for whatever reasons, we weren't given a proposal (by Centerbridge and Oaktree) that had any numbers in it," he said. "We couldn't deal with anything that didn't have numbers in it . . .
"We had to deal with the only executable transaction." Last month Billabong was forced to revise significantly the structure of its original deal with Altamont, after Oaktree and Centerbridge lodged a complaint with the Takeovers Panel.
The panel took exception with various aspects of the deal, including the original $65m break fee, labelling it as a "lock up device" that would deter rival proposals. As a result, the penalty for walking away was substantially reduced. Billabong now will be required to pay Altamont only a $6m break fee.
Dr Pollard said the Centerbridge and Oaktree consortium had improved its original pitch significantly after several weeks of negotiations, with the clincher being its agreement to a $135m equity placement at a higher price -- 41c a share, up from 35c -- as well as the inclusion of a heavily discounted rights offer to existing shareholders at 28c a share. The consortium also will be issued with 29.6 million options exercisable at 50c a share.
As a result, the consortium will emerge with between 33.9 per cent and 40.8 per cent of the company, compared with up to 44.3 per cent initially proposed.
The consortium also will have the opportunity to appoint three directors to the Billabong board and has produced a candidate for the vacant chief executive's position in the US-based Neil Fiske, a highly regarded retail executive who specialises in turnarounds.
Mr Fiske, a former chief executive of clothing chain Eddie Bauer, will fill the shoes of Billabong's previously anointed chief executive, former Oakley and Nike executive Scott Olivet, who had indicated that he would not proceed in the role if the Altamont deal did not go ahead.
The Altamont consortium yesterday issued a statement confirming that it had "declined the board's request to revise the terms of its financing commitment". It said it was no longer pursuing long-term financing with the company.
Billabong shares closed yesterday at 47.5c, up 2.5c.
Dr Pollard said he hoped shareholders would support the deal.
With the positive news on the Centerbridge and Oaktree deal, why the drop in share price today, I'd have thought it'd be heading the other way?
"We had to deal with the only executable transaction."
That should read: "execrable".
Share price probably fell in anticipation of the new stock arriving on the market, which won't happen immediately, since it needs shareholder approval at probably a convened extraordinary general meeting (yet to happen.)
That said, bulk of the new stock will be issued to C&O @41c, and held in escrow for over 2 years. IE: that won't be tradeable till released there after.
The other new stock @ 28c placement to existing holders, some might be eyeing that off, thinking they will get on cheaper than the current price 45c. That is often the case in these sorta situations. Without getting too technical, share price is likely settle somewhere between the 40c-ish and new 30c public placement price (the higher end of, IMO). It's slightly more technical than that, but the best I can explain in my cowboy terms.
Again in my cowboy opinion, the blood is still there (obviously), but will now stop gushing. As they say, Blood in the streets, or water, is the best time to buy. They still have good revs, if not somewhat downsized. DO YOUR OWN RESEARCH, before buying, selling or holding.
Good luck to Billabong post catastrophy, love 'em or hate 'em, it's hard to see the surfing landscape without Billabong.
aw forgot, to say. Some will exit purely due to the dilution. That will account to some shareprice slide short term, from here it's up to the new regime to make it work.
C&O have collectively ~90 billion under management. They aren't amateurs.
Thanks for that Sid, I don't dabble in the markets but on the info above, if I had to, I'd be investing a little in BBG.
craig, isonia isn asx. sid what do you think ?
BBG shares closed at 42c, down 11.5% for the day.
gotta expect that with such massive dilution coming down the line. It will also give short sellers, CFDs etc. fresh ammo to ply their wicked ways regardless of the Co. being, or being percieved as, less weak and wounded.
Don't forget GM has been heavily diluted also, he'll most likley be wanting to recover his % holding.
No doubt price will thrash around whilst company settles. Watch this space.
Years after this whole ball of fuckery finally comes to a close, and some great investigative journalist writes the definitive book on BBG, can't think of a better title than...
Lawyers, Guns, and Money.
They'll find the answers in the data, personalities and heresay aside.
In all catastrophies, whether it be airline crashes, financial disasters or whatever, the principles of risk management are the same.
The data never lies.
BBG is currently down a further 4.76%, sitting on 40c right now.
There's an interesting quote in an article published in The Australian on Saturday: "And while incoming boss Neil Fiske is highly regarded in the North American retail industry, particularly as a turnaround specialist, he is a relative unknown in the board sports industry."
So much for the "Mystery surfwear guru" and "Senior surf industry executive".
Interesting discussion in this article re: Billabong's sale of Nixon as well.
Billabong Europe's General Manager has quit (Franco Fogliato, who had been with the company for more than 10 years).
It's only the last few years that I've started paying attention to the stock market, mainly as a result of watching the unfolding saga of the surf brands. And I gotta say some of the information pushed by 'financial advisers' is astounding. How's this take on Billabong and Rip Curl by The Motley Fool's Darryl DatÃ©-Shappard:
"Even if Billabong or Rip Curl are not the hot brand names they once were, they still can develop and merchandise up and coming new names, and apply their business and market experience to existing and new markets. As the US and Europe begin to recover, watch for signs of improving revenues and profits, and ride the wave from there if they look good."
Another long-time Bong executive has departed: "Richard Sanders, the top sales executive for the Billabong brand in the Americas, has left the company after 25 years".
BBG share price has been steady at 36c for the last few days.
BBG's down 5.5% for the day, ending the week at 34c. Been a slow steady drop since Monday.
BBG have appointed Ed Leasure as acting President of the Americas, which accounts for their share price increase over the last week or so (currently 41.5c).
Ed co-founded Cocoa Beach-based Quiet Flight Surfboards 34 years ago with his brother Jim (team riders riders including Slater and the Hobgoods). In more recent years he's been running BBG's East Coast retail operations.
Dunno about the rest of yers, but I like the sound of this guy's name better than I liked Ted's.
Leasure Wear cf. Kunkel Trunks. No contest.
And I gather his brother, Pablo, is big in the adult toy business. Mebbe a new Bong range in the offing.
If Billabong keep pushing guys like Creed McTaggart, things will continue to get worse. Life's better in boardshorts? Well maybe try and pull a pair on and actually go surfing instead of snorting cones and spewing rainbows on magazine covers. Hardly a sound investment.
Billabong has sold West 49 to fashion retailer YM Inc.
"YM Inc, known for its stores including Stitches, Sirens, Urban Planet and Bluenotes, will purhase 92 West 49 retail stores across Canada for approximately C$9-11 million".
Billabong previous purchased West 49 in an "all cash deal valued at C$83.2 million"
West 49 were distressed assets that should never have been bought in the first place, thats what I cynically thought at the time. Rung true in the end.
BBG has also unloaded another 10 stores.
Bridging Loan (read Loan Shark Loan) has been retired,
And C.Paull has stepped down from board.
It's a start.
Can this drag on any further?
"A meeting to approve Billabong International's long-awaited bailout has been postponed until next year, after the Australian Securities & Investments Commission apparently rejected an independent expert's report into the proposed $386 million refinancing deal."
... And BBG shares are down 6.5% after the first day of trading following the news. This could take quite some time to resolve so it'll be interesting to see if there's any long term effects.
Shop-Eat-Surf noted this morning: "Scott Olivet has officially joined Altamont as an operating partner. In addition to his new role at Altamont, Scott will also serve as Chairman of both Dakine, which Altamont recently acquired from Billabong, and of Mervin."
So essentially, Altamont pitched for Billabong with Olivet slated as new CEO, but then lost the deal to Oaktree/Centerbridge.
Before the pitch, Altamont had already acquired Dakine from Billabong. And then after losing the BBG pitch, they then picked up Mervin from Quiksilver (noted here).
And at the end of it all, Olivet is now Chairman of both Dakine and Mervin.
"Proxy adviser ISS will release a report on Monday raising major concerns about Billabong’s remuneration policies and resolutions to be put to shareholders at the annual meeting on the Gold Coast on December 10."
.... and BBG shares are now at 30.5c, which is down some 28% in the last three weeks (they were 42.5c on Nov 4th). Will be interesting to see what transpires at the AGM in a fortnight.
Seems to be a generally favourable response to the AGM. CCI failed in their move to oust several board members, including chairman Ian Pollard.
And the new CEO Neil Fiske said "product lines would need to be reduced by 25 to 30 per cent. Our mantra is fewer, bigger, better."
.. and BBG's up to 43c. That's quite a rebound since last week.
"A three-pronged approach unveiled yesterday will focus on three brands, Billabong, Element and RVCA. The company’s suite of other brands will be divided into growth opportunities and those to be offloaded. The strategy is expected to cut more than a quarter of the company’s products with final plans expected over the next month-and-a-half."
So, which of the following brands will they be looking to sell out of Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, Nixon, Xcel, Tigerlily and Sector 9?
bbg asx @ 50c.
Todays close 65 cents.
Graham Stapelberg - Billabong's Global Vice President of Marketing - has just announced he's left BBG and taken up a full time position with the ASP as "Chief Strategy Officer".
Stapelberg was previously the ASP's CEO from 1994 to 1998.
Oaktree Capital and Centerbidge Partners now own 40% of Billabong. BBG chairman Ian Pollard also says “We still face a number of hurdles in our reported profitability".
your'e doing yeoman's work, Ben. thanks for keeping everyone updated.
Bong are now reportedly considering selling their e-commerce websites SurfStitch and Swell.com.
Interesting to revisit this forum thread, after what BBG announced y'day.
Looks like the market likes the news too. Share price bounced to 75c earlier today, levelling out at 72c. Hasn't been this high since May 2013.
"Billabong posts $126m half year loss".
BBG shares are down almost 20% today, currently sitting around 60c.
Billabong shares went into a trading halt late Thurs (Feb 20) after they announced $50 million rights issue, but came back on the market this morning.
And things just don't get any better.
Wow. That's a major distraction for BBG.
However, I can't help but think that this situation has some similarity to my comments in this thread (re: Quiksilver investigation by a securities firm and shareholder rights firm).
Isn't this possibly just advertorial for Slater and Gordon?
As it is, BBG shares have been steady today (despite this news) around 60c.
Could be Ben but maybe they smell blood.
Lawyers, guns, money...
And business liability insurance.
"Billabong has confirmed that it issued over 112 million ordinary shares under a retail entitlement offer, raising approximately $31m.
The surfwear, accessories and action sports apparel brand issued the shares at 28 cents each well below its current share price of around 50 cents."
Something going on at BBG? A couple of flat months below fifty cents has suddenly changed with the share price rocketing up almost 10% today (now 57c).
Nothing that Treasury Wine has garnered a nice buyout bid, punters may be thinking/speculating BBG may about to catch one as well.
Good luck with that dead cat bounce.
Interesting news from the Billabong camp - SurfStitch have bought "Billabong's 51 per cent stake in SurfStitch Australia and Europe and Billabong's North American online business, Swell.com, for about $35 million".
"The purchases were funded by new SurfStitch investors – including blue-chip Australian and overseas institutions – who came on board earlier this month hoping to get a piece of the action if SurfStitch pursues an initial public offering later this year."
The BBG press release to ASX says that "The sale will allow the Company to narrow its strategic focus and to invest in building its mono-brand ecommerce and omni-channel businesses."
Although the sale happened yesterday, BBG's share price has remained largely unchanged since.
BBG shares dropped to 55c last week but have perked back up this week, currently trading at 65c. Not sure for the reason (doesn't seem to be any recent news of relevance) but it's certainly a positive sign for them.
Billabong shares have been pretty steady for the last three months or so (currently around 64c) but there's been some positive press today from CEO Neil Fiske:
"TROUBLED surf wear retailer Billabong says its brand will grow in the US for the first time in many years after 14 per cent sales growth in first quarter wholesale in the market."
No news from Billabong for a couple of months, but the six monthly report to December was released today which has mixed results - profit is up but sales are falling:
"Global surf, ski and skate wear retailer Billabong International was back in the black in the December half with a $25.7 million net profit, but underlying earnings continued to slide as sales went backwards in Australia, the Americas and Europe."
"Billabong International has reported its first annual profit for four years - a bottom-line net profit of $4.15 million - after stabilising sales and slashing costs to reinvest into its key Billabong, RVCA and Element brands."
I suppose any profit is better than none but to turn over a billion dollars and make 4 million is 0.4 of 1% profit margin. That's about as slim as you could be. Like my local bakery doing $1000 in a day and making $4 profit.
At today's AGM, Bong reported lower earnings ($2.5 million down on the same time last year), and subsequently their share price - which has slowly climbed over the last four months - dropped almost 23% on the news. Now sitting 16c lower at 54c.
Interesting - yesterday BBG shares were 48c, now they're $2.58.
The reason is: "The Gold Coast-based surfwear giant has all but assured that its shares will rise to around $3 this week after a shareholder vote approved the consolidation of shares at the rate of one for every five owned."
"Chairman Ian Pollard says the share consolidation was needed to bring the number of shares issued by Billabong to 'more appropriate for the size the company.'"
To put this in perspective though, prior to Tuesday's AGM (where BBG reported lower earnings, and the share price dropped), each BBG share would have been worth $3.50. So, they've dropped almost $1 since.
BBG shares continue to slide. They've dropped from $2.58 at the end of November to $2.04 at close of trade Friday (though, in early trading this morning they've bounced 3.4% to $2.11).
However to put it into perspective with previous year's trading prices - if they hadn't done the share consolidation they'd be sitting at 40c.
Any obvious reason for the share slide? I mean if they can't make a buck at this time of the year then can they ever.....
Wow, it's dropped since this morning's small gain. Down to $1.96.
And private equity has got a big stake in BBG now and they'll be wanting a quick return I imagine! But look at the Dick Smith debacle!
Merchant has been buying plenty of BBong of late .
The whole market is taking a hit - of similar proportions. Hang in there.
24% in 6 weeks? ($2.58 late Nov to $1.96 now).
Yep, the stocks are doing it tough. BHP dropped from $25 to $16 in three months. Unless you need to sell, try to hang in there. It's probably unlikely that anyone bought at lower prices. Frankly, it may be soon be time to buy - but I can't say which area.
Down another 16c to $1.80. Wonder what's triggering this?
Overall market sentiment is heading that way, so it's really not that surprising.
blame china. it's always easiest to blame china.
Down another 20c to $1.60. That's 32c in the old metric (pre-share consolidation).
Down another 10c to $1.50.
BBG have been pretty quiet over the last 8 months, with share price averaging $1.50 since January. However the 15/16 FY results came out today, and they are reporting a full-year net loss of $23.7 million.
BBG price dropped from $1.59 to $1.27, but has since leveled out at $1.37 (down 13% for the day).
When will the next big cost saving cull happen? How much value to the company do surf contests like the Billabong Pro Tahiti add and how much value do surfers like Parko, Taj, Freestone really add to the business? Not saying I don't like watching these blokes surf but it doesn't entice me to purchase billabong clothes.
As for their Wetsuits does anyone even buy billabong suits? Theres so many better wetsuits on the market for the price I cannot see the company being able to turn it around in its current format.
I doubt back in '73 young Gordon would never have invisioned making a few pairs of comfy new boardshorts out the back of Burleigh, selling them round the traps,would have turned into this..I have great memories of violating as a young grommet so it's sad to see what's happened to a once proud Queensland icon..The local menswear store used to stock a few pairs hidden away in the corner in the shadows of all the business slacks and suits..They were the bees knees back in the very early 80's..I remember every week I'd go into town with the old girl to do the grocery run,I'd say mum I'm just going to check out the boardies ok..doubt she had any idea what I was talking about but there they were,nothing but black with the dual colours on top and bottom either side..sleek and cool..expensive as hell at $20 a pair but I kept telling myself there was always next Xmas..
Times change Taco once young Gordan would still be going ok I reckon.
Hasn't been much in the way of biz news from Billabong in the last year or so, however the share price dipped to 64c in early July, equalling their all time low.
At first glance it wasn't noticeable, however this is because BBG did a share consolidation in Dec 2015 where 5 shares were replaced with 1 share. So 64c is the equivalent of 12.8c (pre-Dec 2015).
And, in relative currency this means this 64c low needs to be compared to an adjusted 2007 share price high - which is $90 (actual share price high was $18, pre-consolidation).
Previously BBG's all time share price low was 21st June 2013, which was somewhere around 13c. But at the time there was a reason for the drop - failed PE takeover and the like - but this time around there hadn't been any news from BBG in many months. Certainly nothing to warrant an all time low share price.
Anyway, that was a few weeks ago. But yesterday brought about a new announcement: "the company has terminated its agreement with Omni-Channel solution provider referenced in company's H117 results. As a result of termination of agreement, an impairment charge of approximately A$11.7m will be booked in FY17 results."
The omni-channel solution provider was Netsuite, whom Bong entered into a contract with in 2015, following their divestment of SurfStitch. It was one of Neil Fiske’s “largest investments of the turnaround plan” announced in 2015, detailed in the SMH in May of that year:
“Billabong customers will soon be able to shop seamlessly across the retailer's bricks-and-mortar and online stores after it signed a deal with cloud-based software supplier NetSuite to implement a new global omnichannel retail platform"
The omni-channel rollout was expected to be complete in mid-2016, but in Feb 2017 (during the announcement of its half-year results), Bong said the rollout had been delayed because of unspecified "technical issues".
Not sure where they'll go to from here, but I assume it'll be announced in the full year results in the next month or so.