Billabong vows to overcome financial woes

Troubled retailer Billabong says it needs to decide on a funding lifeline as soon as possible after falling to a $860 million full year loss.


A huge writedown on the value of its brands and weaker sales contributed to the surfwear brand’s loss in 2012/13, which was down sharply from the previous year’s $275.6 million loss.

Several failed takeover bids from private equity firms, and the current battle between two consortiums to refinance the company, have also been a distraction for Billabong and its staff.

“2013 has clearly been a tumultuous year with all that has gone on,” acting chief executive Peter Myers told investors.

Chairman Ian Pollard said Billabong wanted to secure a deal to reduce its $320 million in debt and fund its restructure “ASAP”.

“Since 1973, Billabong’s faced some tough times and has come through them stronger and will do so again on this occasion,” he said.

A $US470 million deal has been reached with US-based Altamont Capital Partners, but the Billabong board is currently considering a rival offer from US hedge funds Oaktree and Centerbridge.

The man who is supposed to be running Billabong, former Oakley boss Scott Olivet, will remain as a consultant until the board makes a decision.

“In those circumstances, neither we nor Scott think it’s appropriate for him to be appointed as CEO at this point, until this matter has been resolved,” Dr Pollard said.

Morningstar analyst Tim Montague-Jones said the Billabong board appeared more likely to accept Altamont’s offer, which will give the private equity firm a major stake in Billabong.

“It sounds as if possibly Oaktree and Centerbridge haven’t put forward a comparable or compelling proposition to the board, and also maybe haven’t presented a potential CEO to lead that as well,” he told AAP.

An Altamont deal would prevent Billabong from going into liquidation, but investors are still staying away from the company, Mr Montague-Jones said.

“It’s a bit of a mess to be honest, the whole scenario, and it’s impossible to predict how it’s all going to get resolved,” he said.

Billabong’s 2012/13 loss included a $604 million writedown in goodwill and the value of its brands, plus a $129 million write-off from the sale of its US watch brand Nixon.

Revenue fell by 12.6 per cent, when the impact of currency movements are excluded, to $1.35 billion.

Billabong said it was making progress on the sale of its Canadian retail chain West 49, and it has also closed 158 under-performing stores.

Billabong shares dropped three cents, or 5.3 per cent, to 53.5 cents.

The company’s market value is currently $271 million, down from $907 million less than two years ago.