Billabong Shares Will Keep Dropping, May Drop Founder
Surfwear retail Billabong Int'l shares are "expected to slump to $1 or even less when they resume trading" after the near-doubling of the company's issued shares via a $225M issue last week, according to Andrew Main of THE AUSTRALIAN. The shares closed at $1.83 on Wednesday and the six-for-seven non-renounceable share issue at $1.02 "left many investors unhappy about having to put more money into the company," even at a 44% discount to the last sale price and a 30% discount to the theoretical ex-rights price of $1.46. The shares were worth $18.81 each in May '07. A market observer said that Billabong had been "hit hard recently by opportunistic shorting in the wake of the latest profit downgrade" (THE AUSTRALIAN, 6/25). In Sydney, Eli Greenblat noted that one of Australia's "leading fund managers" has called for Billabong founder Gordon Merchant "to step down as director." Perennial Value Managing Dir John Murray blames the businessman and entrepreneur for "dismissing a private-equity takeover bid earlier this year, worth more than twice the company's present value." Murray said, "Dismissing any possible bid below $4 reflects poor judgement for someone who should know more about this business than anyone else" (SYDNEY MORNING HERALD, 6/23).