SYDNEY Billabong International Ltd has reported a first-half record loss that is bigger than its market cap.

The Gold Coast-based surfwear manufacturer said Friday it posted a net loss of 537 million Australian dollars, or $550.19 million, for the six months ending Dec. 31. That compares with a 16.1 million Australian dollar, or $16.5 million, profit from the same period a year ago.

Billabong’s market cap is currently 421.5 million Australian dollars, or $432 million.

Billabong said 567 million Australian dollars, or $581 million, worth of impairment charges and other write downs contributed to the loss. The company was forced to disclose 270 million Australian dollars, or $277 million, worth of borrowings from banks as current liabilities on its balance sheet, the result of breaching its debt covenants.


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Billabong stock slumped as much as 7.1 percent on the news to 84.5 Australian cents, before recovering to 88 Australian cents by early afternoon.

That share price presents a 24 percent discount to the matching 1.10 Australian dollar (or $1.16 at December exchange) bids made by the Naudé-Sycamore and Altamont/VF consortia in December, valuing the company at 527 million Australian dollars (or $554million at December exchange). 
Billabong also downgraded its full year EBITDA guidance to 74 to 85 million Australian dollars, or $76-87 million, down from its previous target of 85-92 million Australian dollar or $87-94.3 million.

Friday’s news confirmed suspicions over the hitherto undisclosed “issues” that prompted TPG Capital and Bain Capital to withdraw from their earlier higher takeover bids for the company in 2012, shortly after the commencement of due diligence.
Billabong reported that discussions are continuing with Sycamore-Naudé and Altamont/VF, with due diligence anticipated to conclude at the end of March.

“Today revealed exactly what investors were thinking — they’re not in good shape at all” said IG Markets analyst Stan Shamu. “They [Naudé-Sycamore and Altamont/VF] might revise their bids or pull out altogether. I think skepticism continues to haunt the stock”.