Embattled surfwear giant Billabong has revealed that its US head will temporarily step down from his responsibilities at the helm to focus on salvaging the company.
The company, which recently received a few takeover bids before both suitors backed out, has now confirmed that it has received notice from the Billabong director and president of the Americas Paul Naude that he intends to stand aside temporarily from his current roles.
The step back will see Naude investigate the possibility of putting forward a proposal for a leveraged buyout of the company.
Naude advised that he is seeking to hold discussions with potential financiers, both debt and equity, to gain their support for a potential change of control transaction of Billabong.
Commenting on the decision, the company said Naude's decision was not solicited by the board of Billabong and Naude confirmed he is acting independently, and that there is no agreement, arrangement or understanding with any member of the board or Billabong's senior management team in regard to his proposal.
Going forward, the board of Billabong said it has agreed to Naude taking these steps, but strictly on the basis of certain protocols which ensure that the interests of the company and shareholders are protected.
These key protocols include:
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Granting a period of up to six weeks (or such longer period as the board may subsequently determine) for Naude to stand aside from his current roles at Billabong;
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For the purposes of Naude’s discussions with potential financiers, no confidential information regarding Billabong will be provided to them;
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If discussions between Naude and potential financiers advance to the development of a proposal capable of consideration by the board, confidential information will only be provided through a formal due diligence process approved by the board, with customary confidentiality agreements in place;
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Any proposal received from Naude must meet the same sufficiency of information as previously required by the board from other interested parties. In particular any proposal would need to include an indicative price per share and sufficient evidence for the Board to have a reasonable basis to determine that financing would be available for such price;
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Naude is not to engage in discussions with any party involved in the formal change of control process recently undertaken by the company, without the express consent of the chairman of Billabong; and
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During Naude’s absence, he will not contact directors (other than the chairman or CEO), any top 20 shareholder or anyone Naude knows to be a shareholder, employees, customers, suppliers or the media in relation to any proposal or the business of Billabong. If Naude is required for business reasons of the company to talk to anyone of the above parties this will only be done with the approval of the chairman or CEO.
During his absence, Naude's executive responsibilities will be addressed by Peter Bryant (CFO for the Americas) for general business and wholesale, and Colin Haggerty (group executive – retail) for retail, both supported by CEO Launa Inman.
However, despite Naude’s announcement the company has reiterated that its priority and focus, for both board and management, is the continued implementation of the 'Transformation Strategy'.
The board of Billabong also warned that there is no guarantee that, following discussions held by Naude, a proposal which is able to be considered by the board will be “forthcoming nor, even if such a proposal is forthcoming, that it will be deemed by the board to justify the granting of due diligence”.
In addition, it has been made clear that, if at the end of the six week period the company has not received a proposal from Naude, the board will discuss with Naude the “appropriate undertakings” required for him to resume his roles.