As reported in the last issue, two investment companies, Centerbridge Partners and Oaktree Capital, submitted an eleventh-hour proposal on Aug. 23 to rescue Billabong International, after Australia's Takeover Panel objected to some of the terms of a previous offer by Altamont Capital Partners and the Blackstone Group, which had been already been approved by Billabong's board of directors.
The board finally decided to accept an improved offer by the Centerbridge/Oaktree Consortium because of its numerous advantages, including a lower interest rate of 11.9 percent on its loans with a longer duration of six years, and bigger and more favorable rights issues for existing shareholders. The latter's shares will suffer less dilution as the C/O Consortium will have a stake of between 33.9 and 40.8 percent in Billabong.
The new refinancing package consists of a US$360 million term loan, an equity placement of 135 million Australian dollars (€93.1m-$126.8m) for Centerbridge and Oaktree, and an offer to the existing shareholders to acquire additional equity of A$50 million (€34.5m-$46.8m). The consortium will also receive options on 29.6 million shares to be exercised on the basis of 50 cents a share, for a total of A$14.8 million (€20.1m-$13.9m).
The deal was reportedly clinched after the O/C Consortium notified Billabong's board that Neil Fiske, a former chief executive of Eddie Bauer, would be appointed chief executive of the Australian surfwear company if its offer was accepted. Scott Olivet, a former CEO of Oakley, had been designated for that role by the Altamont consortium. Fiske is credited with having led a financial turnaround at Bath & Body Works for The Limited as well as at Eddie Bauer.
The transaction still has to be endorsed by Billabong's shareholders at their annual meeting in November, settling a long battle for Billabong's rescue that began 19 months ago with an offer by Texas Pacific Group. Since then, the company has sold a majority stake in Nixon and all its shares in Dakine. Reports indicate that Billabong may still seek additional refinancing through the sale of its West 49 retail chain in Canada, possibly to Zumiez.
Nixon, which is now joint venture between Billabong and Trilantic Capital, has a new chief executive, Nick Stowe, replacing Andy Laats, one of the company's two founders. The 43-year-old U.K. native worked at Bain & Co. and with a jewelry company, Stella & Dot, where he acted as chief operating officer, before joining Converse and Hurley.
On the other hand Marco Fogliato is leaving as the longtime general manager of Billabong Europe to run the European operations of Columbia Sportswear (see the following story). Jean-Louis Rodriguez former general manager of O'Neill for Southern Europe and manager of Billabong's European retail business since 2008, will take over his responsibilities as acting general manager for Europe, pending a review of the company's leadership structure being conducted by Fiske.
Fiske met Rodriguez and other members of the European team at Billabong Europe's head office in Hossegor, France. He had previously met Billabong's top management in the U.S. at Irvine, California. After these meetings, he released a statement to the effect that he “will be moving with speed, across the business globally, to put in place specific plans to reinvest in and reenergize our brands.”
Meanwhile, Derek O'Neill, former European director and global CEO of Billabong, has been reported to be plotting the launch of a new surf brand together with Paul Naude, former head of Billabong in the Americas and a recent candidate to the takeover of the whole group with the support of another fund, Sycamore Partners.
According to the Australian press report, O'Neill would become the European licensee of the still unnamed brand. He set up and ran Billabong's European operations between 1992 and 2003. He then acted as the group's CEO from 2003 to May of last year.
