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SBD Global/June 26, 2012/Finance

Billabong Shares Plunge To Record Low

Shares of Australian sportswear brand Billabong have fallen 50% to a record low Monday, wiping out more than $200M in shareholder value, according to Blair Speedy of THE AUSTRALIAN. Billabong shares opened at $1 Monday, down from its previous close of $1.83. The downward trend continued, and shares sank as low as $0.93 during the session. That was "their lowest level since the company listed on the stock exchange" in '00, before closing down $0.87 for the day at $0.96. The rout was driven by the capital raising, which, as a non-renounceable offer, required shareholders to put up money for new shares or have their existing stake diluted. Additionally, the company's decision to "cut earnings forecasts last week and warn it would not pay any dividend, in respect of the next two financial halves," did not help either (THE AUSTRALIAN, 6/26). Billibong's fall comes as at least two industry players and private equity operators are believed to be "considering taking a strategic holding or making a full takeover bid." Sources close to the company said that founder Gordon Merchant "has gone away to his beach home for three weeks to digest the realisation that a deal is inevitable." One source said that "Gordon's wealth was tied up in Billabong and despite the decimation of his wealth he was reluctant to sell out." It is believed that "if a private equity operator or trade buyer offered him a role and a stake in any takeover, he would back it" (SYDNEY MORNING HERALD, 6/25).
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