Billabong accepts refinancing deal from Centerbridge, Oaktree Capital

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surfing2_sqAustralian surfwear company Billabong has agreed to a refinancing deal from two private equity firms and appointed a new chief executive.

The company has entered into binding agreements with Centerbridge Partners and Oaktree Capital Management, which will provide long-term funding to recapitalise the business.

Billabong will receive a $360m loan, which will enable it to repay in full its existing debts of $294m. It added that it will retain a $140m credit facility from GE Capital it secured in July this year.

The company also announced that it has appointed Neil Fiske as its new CEO.

Earlier this year private equity firm Altamont Capital was involved in a bidding war for Billabong with a rival consortium backed by private equity firm Sycamore Partners, but takeover talks ended in July and the company said it was negotiating refinancing deals with the firms.

Oaktree and Centerbridge asked Australian regulators to look into the deal, which they said contained lock-up devices that are anti-competitive and coercive.

The company reported net loss after tax of A$859.5m in its most recent results.

Billabong chairman Ian Pollard said, “In fully evaluating the competing refinancing proposals, on a range of factors, the board determined that the C/O Consortium proposal was in the best interests of the company, its shareholders, its employees and other key Billabong stakeholders, on both economic terms and in providing near term certainty.

“The proposal was significantly improved compared to the C/O Consortium’s previously announced proposal and offered lower financial leverage and cheaper cost of funds with lower equity dilution than the Altamont proposal plus the ability for existing shareholders to participate alongside the C/O Consortium via the rights offering.

“As Billabong continues to restructure its operations globally, the need for immediate long-term funding certainty and a strong financial base from which to reinvigorate an iconic group of brands is best met by entering into this agreement now.”

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