VITALITY LIVES IN OUR FAST AND DYNAMIC CITY
Written on the 20 April 2012
One thing is guaranteed in a fast and dynamic city like the Gold Coast – vitality.
In the special Gold Coast Business News Top Companies annual edition, our biggest companies are showcased. You will find out where they’re headed after a difficult year with many affronted by unprecedented challenges.
Take our No.1 company Billabong for example. In one year it lost more than $1.23 billion from its market capitalisation, was targeted by private equity giant TPG Capital in a takeover bid that valued the company at just $3.30 per share, and was forced to close up to 150 stores and shed hundreds of jobs following a 70 per cent free-fall in half year profit.
The one thing that stood out – apart from the savage attack on its value – was the belief by its founder and largest shareholder Gordon Merchant, who refused to sell, saying the offer undervalued the company.
Merchant has experienced enough waves in the business he stitched together in a garage in 1973 to know when the mickey is being taken out of him.
By sticking to his guns and with Billabong advisors orchestrating an austere capital restructure plan to sell part of its hot performing US watch brand Nixon, Merchant’s company paid down debt of around $264 million. There is little doubt he will sell when the price is right, but in a heavily discounted market that attracts the vultures of private equity, it’s time to go surfing until things settle down.
The Billabong story did have advantages for other companies, and in a fleeting moment the city’s No. 2 company CuDeco perched briefly atop the ladder until Billabong’s share price rallied. The copper miner has increased its value by about $140 million in one year to $640 million.
Retail Food Group also performed strongly and has a market cap of $309 million. It successfully acquired the Pizza Capers fast food franchise for close to $30 million and is planning an expansion roll-out.
While the Gold Coast lost a couple of publicly listed entities in Landmark White and Pacific Environment Limited to Sydney, a newcomer to the list was explorer Platina Resources.
Allied Brands and Intelligent Solar are off the list after going into voluntary administration. Then there’s chatter of a Raptis Group comeback, which polarised opinion among unpaid contractors and business leaders. In a statement to the ASX in January Raptis outlined its determination to return to operational status and give control of the company back to shareholders.
The focus of this edition though is on those companies that have been able to survive and thrive in a tough landscape – from the ASX-listed to the private players all showing what they’re made of despite the challenges.