Billabong International acquired the Canadian West 49 chain of 138 surf and skate shops three years ago for about 86 million Canadian dollars (€61.0m-$82.2m). After at least six months of speculation that it was seeking to divest it, it has now agreed to sell it for an amount between C$9 million (€6.41m-$8.59m) and C$11 million (€7.83m-$10.50m) to YM Inc., a leading Canadian fashion retailer operating under such banners as Stitches, Urban Planet, Sirens, Siblings, Suzy Shear and Bluenotes.
As part of the deal, the Australian company will keep ownership of six Billabong and two Element mono-brand stores in Canada, and the buyers of West 49 will commit themselves to the purchase of about C$34 million (€24.20m-$32.45m) worth of merchandise from Billabong on a non-exclusive basis for two years.
While reporting on this new asset sale, Billabong announced that it has used $300 million from its new $360 million term loan from Centerbridge Partners and Oaktree Capital, the new investors in the company, to repay in full the US$294 million bridge loan that it had contracted in July with an alternative group of investors led by Altamont Capital.
Billabong will hold a shareholders' meeting on Dec. 10 to vote on a resolution granting nearly 29.6 million share options to the Centerbridge/Oaktree consortium and on other resolutions proposed by Coastal Capital, a minority shareholder that has been criticizing some of the company's recent moves. The final shareholders' vote on the transactions related to the acquisition of a substantial minority share by Centerbridge/Oaktree should follow in January.
The Dec. 10 meeting will also vote on a major reshuffle of Billabong's board of directors. The two directors who represented Altamont have already resigned. Tony Froggatt and Colette Paull will no longer be on the seven-member board either. Paull has been an employee or an executive of Billabong since 1973 and a non-executive director since 2000. Two new directors have been nominated by Centerbridge and Oaktree to the board. Three independent directors will remain on the board along with Gordon Merchant, a founder and substantial shareholder in Billabong, and Neil Fiske, the new chief executive.
