Surfwear giant Billabong has ended takeover talks with two potential suitors and flagged a change of direction as it investigates other avenues to salvage the struggling company.
As previously reported on ragtrader.com.au, Billabong has requested several suspensions from trading this year to sort through two private equity bids it received in January from Altamont Capital Partners and Sycamore Partners Management.
However, the retailer has now confirmed that change of control discussions with both the Sycamore Consortium and the Altamont/VF Consortium have now concluded.
Instead, Billabong has revealed that it is in discussions with both parties regarding proposals presented to the company for alternative refinancing and asset sale transactions, the proceeds of which would be used to repay in full the company's existing syndicated debt facilities.
According to chairman Ian Pollard, no period of exclusivity has been granted to either party with regards to the potential refinancing.
He also warned that there is no guarantee that binding documentation acceptable to Billabong will be agreed with either Altamont or Sycamore in relation to the potential refinancing transaction.
However, should the refinancing be successful, Pollard said the funds will be funnelled into a refresh of the company, which has been trading below expectations in the Australasian region.
According to a recent update provided by the company, whilst Australian wholesale is on plan, Billabong's performance in Australian retail is below last year.
On a comparable store basis, year to date sales are 5.4 per cent below year the previous corresponding period and gross profit is 2.3 per cent below the previous corresponding period.
“The refinancing is intended to provide the company with a comprehensive solution and an appropriate capital structure, allowing it to continue its reform agenda,” Pollard said.
“It's our intention to conclude these discussions as soon as practically possible while aggressively reducing costs across all our global operation.”
Billabong has also revelaed it expects its full year earnings, before one-off financial items, to be between $67 million and $74 million, down from its previous guidance of $74 million to $81 million.