Billabong Chair Ian Pollard has indicated that the surfwear group is unlikely to accept a last-minute recapitalization deal from U.S. private equity funds Centerbridge and Oaktree "after the company revealed an annual loss of more than three times its own market valuation," according to Blair Speedy of THE AUSTRALIAN. Pollard said that "the board was still evaluating the proposal," but signaled it was hesitant to forgo the certainty of a deal already agreed with rival U.S. buyout funds Altamont and Blackstone. Pollard: "Today's result demonstrates that prolonging any process that we're in now and the destruction it costs and the deferral of strategy associated with that is in no one's interests and nor is there any reason for it to be prolonged" (THE AUSTRALIAN, 8/28). In N.Y., Ross Kelly wrote Billabong "reported a record annual loss." The surfwear retailer booked a net loss for the year through June of A$859.5M ($775.2M), "more than three times its market value" and much deeper than the A$275.6M loss incurred in the previous year. Billabong's net loss included A$867.2M in write-downs, "largely on the value of the company's brands and earlier acquisitions." Excluding the write-downs, "underlying profit fell" to A$7.7M from A$33.5M a year earlier (WALL STREET JOURNAL, 8/27).
SALES SLIDE IN AMERICAS: REUTERS' Maggie Lu Yueyang wrote the company said that "sales continued to slide in the Americas, Billabong's biggest market, following the closure of a number of underperforming stores." Store closures and weak consumer sentiment hit sales in Australia, "while heavy discounting impacted revenue in Europe" (REUTERS, 8/26). In London, Paul J. Davies wrote Billabong, Element, Palmers, Beachculture and New Zealand surf retailer Amazon "have all had their brand value written down to zero, while the carrying values of goodwill for the company's retail operations in Australia, North America and Europe have also been cut to zero" (FINANCIAL TIMES, 8/27).
LOSING ITS COOL: BLOOMBERG's David Fickling wrote founded by Gordon Merchant in '73, "Billabong helped sell Australian surfing culture worldwide" and rose to a market value of A$3.84B at its peak in '07. Moelis & Co. analyst Todd Guyot said, "It probably isn't cool anymore for the youth of today to wear Billabong. You can see how much the core business has deteriorated over the last few years. There's still a massive challenge to get the business going right" (BLOOMBERG, 8/27). In Sydney, Elizabeth Knight wrote the attempts to revive Billabong's financial fortunes "have been lucrative for a number of advisers and consultants" who in the '13 financial year harvested A$23.3M in fees from the cash-strapped surfwear company. In delivering its shocking bottom-line loss of A$859.6M, Billabong revealed that "it had spent this money on advice for restructuring regional finances, supply chains and corporate advice" -- money that Pollard freely admitted he would rather have spent elsewhere. But it is a company "at the mercy of an army of external experts." It paid former CEO Launa Inman up to A$4M for 14 months' work, which covered Monday's result (SYDNEY MORNING HERALD, 8/27).
