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Details on Industry Insight.
Billabong made its big announcement Tuesday in Australia, saying that it has struck a multi-pronged deal with Altamont Capital Partners to help the company out of its financial turmoil.
The deal includes:
* The sale of DaKine to Altamont for A$70 million, and DaKine will be run as a separate company
* Well-regarded former Oakley and Nike executive Scott Olivet will become the new CEO
* A variety of financing measures including A$325 million bridge loan, a minimum of a A$221 million term loan, convertible note of A$44 million, and an asset-based revolving loan of A$177 million
* The proceeds from the sale of DaKine and the bridge loan, which total A$395 million, will be used to pay down A$289 million in debt now owned by US hedge funds and A$106 million will be used for working capital requirements.
* Two Altamont executives will join the board of directors
* If Altamont eventually exercises all of its options and converts all of its shares attached to the deal, it could potentially own 36.2% to 40.49% of Billabong equity.
* Shareholders must approve several aspects of the deal.
The Billabong Board of Directors approved the deal unanimously, including current CEO Launa Inman, who also sits on the board.
I understand that she will be working very closely with Olivet on the transition and believes that his experience is a great fit for Billabong.
The deal contains many components and is complicated. Below is the official press release.
REFINANCING OF SYNDICATED DEBT FACILITIES SALE OF DAKINE, APPOINTMENT OF NEW CHIEF EXECUTIVE OFFICER NEW DIRECTOR APPOINTMENTS
GOLD COAST, 16 July, 2013: On 9 May 2013, Billabong International Limited (“Billabong” or the “Company”) announced that it was in discussions with each of Altamont Capital Partners (“Altamont”) and Sycamore Partners regarding proposals presented to the Company for alternative refinancing and asset sale transactions, the proceeds of which would be used to repay in full the Company’s existing syndicated debt facilities (“Refinancing”). Billabong today provides an update in relation to the proposed Refinancing.
The Company today announces it has entered into agreements with entities advised by Altamont and entities sub-advised by GSO Capital Partners1 (the credit arm of the Blackstone Group, and together with Altamont, the “Altamont Consortium”) which will allow Billabong to immediately repay in full its existing syndicated debt facilities. The Company has also entered into commitment letters with the Altamont Consortium and GE Capital to provide a long term financing package for Billabong.
The immediate refinancing will be by way of a bridge financing by the Altamont Consortium of the Company's existing syndicated debt facilities and the sale of the DaKine brand. The long term financing will be by way of an Altamont Consortium term loan and convertible note, and a revolving credit facility provided by GE Capital. This financing package is intended to provide Billabong with a flexible capital structure to allow it to stabilise the business, address its cost structure, and pursue a strategy to grow the business.
As a condition precedent to this significant investment by the Altamont Consortium, the Board of Billabong today announces that it intends to appoint Mr. Scott Olivet as Chief Executive Officer and Managing Director of Billabong.
In order to further adequately reflect Altamont's significant investment in the Company, Altamont will be permitted to nominate two representatives to the Board of Billabong.
“The Board believes that the Altamont Consortium’s refinancing, and the changes being announced today, provide the Company with a stable platform and the necessary working capital to continue to address the challenges it faces. We had highlighted the Company's debt issues previously and it was imperative to deliver a refinancing that retained an opportunity for shareholders to participate in the future of the Company. The Altamont Consortium presented the best available, certain and executable opportunity in these challenging circumstances,” said Billabong Chairman Ian Pollard. “The transaction reflects the Altamont Consortium’s confidence in the value of Billabong’s brands and our Company’s ability to achieve future profitable growth.”
See Page 2 for more of the refinancing details