Inman Offers Up Billabong’s Hail Mary Plans

by The Editors on June 21, 2012

Billabong Logo-1Today (in Australia) Billabong’s new CEO Launa Inman outlined the company’s short term plans during a conference call. In the call she reportedly spelled out plans for “raising more capital, downgrading earnings expectations, and undertaking a top to bottom review of all Billabong operations with the goals of reducing expenses, identifying efficiencies and improving the competitive positioning,” according to a story on Jeff Harbaugh’s Market Watch.

They want to raise 225 million Australian dollars (about $229 million U.S. dollars) by selling shares to existing shareholders at $1.02 for each new share, a 44% discount from the 1.83 Australian dollar share price before the trading halt. The offer is fully underwritten by Goldman Sachs and Deutsche Bank, which means that Billabong will get the money.

But not everyone is stoked on this stock offering, according to a story in the Sydney Morning Herald:

City Index analyst Peter Esho said the capital raising was a huge slap in the face to shareholders, particularly after Billabong rejected a generous offer from private equity giant TPG Capital four months ago. . . ‘‘Knocking back private equity’s $3.30-a-share takeover offer and then raising equity at $1.02 will no doubt see a lot of criticism from shareholders and rightly so,’’ he said. . . “You either participate or get massively diluted – a huge slap in the face again for shareholders,” he said.

The money will come in handy, it’s the “deep dive” into all of Billabong’s operations that should have some of the company’s acquired brands feeling cautious. We’re guessing there could be a few “efficiencies realized” that may not be all that popular with some Billabong employees.

[Link: Harbaugh’s Market Watch and Sydney Morning Herald]

{ 1 comment… read it below or add one }

Warren Buffet June 21, 2012 at 1:33 pm

I picture an image of a whale that has beached itself and is fighting off the people who are trying to help it get back to sea, and instead pushes itself further inland in a futile attempt to reach an oasis that is just a mirage.

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