QUEENSLAND: Billabong chairman Ted Kunkel has today written to the group's retail shareholders inviting them to purchase new shares in an attempt to put an additional $60 million in the company's coffers.
The Retail Entitlement Offer, which will see the company offer two shares for every 11 held at a discounted price of $7.50 per share, is part of a broader capital raising venture aimed at cutting debt to around $450 million.
The offer closes June 11.
The news comes after as a result of the company announcing it expects net profits to fall as much as nine per cent this year because of slowing US sales.
In a conference call with analysts late last week, chief executive Derek O'Neill described US trading conditions "as difficult as any we have seen".
A reduction in forward orders and the strong Australian dollar have made it even tougher, with an expectation that sales would remain sluggish for the rest of the financial year, he said.
In a statement to the Australian Stock Exchange the company said the focus of management would remain on "tight overhead, cost and working capital controls" to reduce the size of its cost base while maintaining brand strength and equity.
"In addition to sales being pushed into the 2009/10 financial year as retail customers delay purchases, the company expects the general trend towards lower inventory and a lower forward looking orders in the US market will lead to product shortages in the 2009/10 financial year. This will have a positive impact on wholesale demand in a tight inventory environment," the statement noted.
Billabong brands include Element, Nixon, Tigerlily, DaKine, Xcel, Sector 9, Von Zipper, Honolua and Custom.