BILLABONG: 90 PER CENT GONE IN 13 MONTHS

Written on the 2 July 2013

BILLABONG: 90 PER CENT GONE IN 13 MONTHS

THIRTEEN months after taking the helm at Billabong, CEO Launa Inman has overseen a massive 90 per cent wipeout in the market value of one of the world’s biggest surf brands.

The shares slumped a massive 30 per cent this week alone after sliding to a new all-time low of 12.2c a share today.

Investors have been bailing out of the company for more than two weeks after they emerged from a month-long suspension that failed to deliver a long-awaited takeover offer from one of two suitors.

But today, more than 6.5 per cent of the company’s issued shares changed hands as Billabong’s stock continued to struggle to find a bottom.

The shares slumped as much as 13 per cent to 12.2c before finishing at 13c as 32.5 million shares were traded.

Billabong’s market value now stands at $62 million, which compares with $600 million when Inman took control of the company’s global business from long-time CEO Derek O’Neil in May last year.

Inman, the former head of Target Australia, has struggled to gain traction with her turnaround strategy for Billabong which she announced almost a year ago.

The CEO is understood to be overseas at present and could not comment on Billabong’s latest share slump.

But a Billabong spokesman tells Gold Coast Business News that refinancing talks with the Paul Naude-led bid backed by Sycamore Partners and the consortium comprising VF Corporation and Altamont Capital Partners are continuing.

“We’re focused on completing that process as quickly as possible,” says the spokesman, Chris Fogarty.“It’s certainly not in our interests to prolong this and nor do we want to.”

Fogarty rejects suggestions that the refinancing process will take as long as the bid process, which had been under way for six months before collapsing.

He stresses that the negotiations are confidential in nature.“This is not a position the company wants to be in and people are working very hard to address long-term problems.
“We have the responsibility for thousands of people and their jobs and we are communicating with them regularly.”

Any refinancing proposal is seen as crucial to Billabong as its share value is now less than a third of its current debt of about $280 million.

In the wake of the failed takeover bid, Billabong announced a new round of “aggressive” cost cutting which has led to a handful of job losses at its Burleigh head office.

The cost-cutting bid has come amid claims that Billabong has spent about $20 million on consultants to review the business over the past year.

This week’s share price fall also comes on the heels of rumours that Billabong’s relationship with Sycamore Partners has become strained due to the potential suitor’s frustrations with the board over the bid process.

The Sycamore team is headed by Billabong’s US boss Paul Naude who would have been the most likely candidate to step into Inman’s shoes should a takeover have been successful.

The indicative bid by Sycamore had been pitched at 60c a share, which now stands at a significant premium to Billabong’s current share price and values the company at $280 million.


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