BILLABONG CHAIR GOES AS NEW CEO BACKFLIPS ON CAPITAL RAISING
25 June 2012, Written by James Perkins
BILLABONG chairman Ted Kunkel resigned this afternoon to end a tumultuous day for the Gold Coast-based surf apparel retailer in which new CEO Launa Inman (pictured) announced a $225 million capital-raising venture.
Inman’s announcement was an about-face just weeks after Kunkel publicly ruled out going to the market for funds.
Just hours later, Kunkel announced he would leave the company some time between its Annual General Meeting in October and half yearly guidance in February. The chair of the board audit committee, Allan MacDonald, will also leave.
Inman says capital raising was necessary for Billabong after a significant deterioration of market conditions in May and June.
The struggling retailer has already announced an earnings downgrade for the year to June 30, with underlying earnings expected to be about $130 million.
Inman says the cash infusion will be used to pay down some of Billabong’s $350 million debt, while some will be held back as a buffer in case market conditions deteriorate further.
Inman has promised a four-pillar “deep dive” review of the company. She says the results of the review will be announced on August 23.
Inman, who took over from long-serving CEO Derek O’Neill, says Billabong still has huge potential.
“I have only been in the job for six weeks and haven’t seen all the figures, but what I have seen is there is great opportunity and I am comfortable about that,” she says.
“We will come back to the market in August with a proper and professional presentation. I am comfortable what we are raising now will be sufficient.”
The four pillars of the review will be to focus on strengthening the Billabong brand, improving the experience in its retail stores, its online offering and improving supply chains, Inman says.
Inman revealed major shareholder and Billabong founder Gordon Merchant would inject $30 million into the company.
Merchant was a key player in the decision by Billabong to reject a $765 million takeover offer from TPG Capital earlier this year, which valued the company at $3 per share. Today Billabong shares were valued at $1.83.
The company instead sold half of its lucrative Nixon brand to Trilantic Capital Partners (TCP) for $285 million, which it used to pay off debt.
Billabong has also implemented a restructure of its businesses, expected to result in the loss of 400 jobs.
Net profit after tax was down 70.8 per cent to $16.1 million in the six months to December, compared to the previous period.