The deal gives Altamont a 15 percent stake in the company in exchange for a 325 million Australian dollar, or $300 million, bridge loan facility and the sale of the DaKine brand to Altamont for 70 million Australian dollars, or $65 million.
Altamont could wind up with a 40.49 percent stake under a long-term refinancing package that includes a loan of $254 million, the issue of a convertible note with a face value of $40 million, convertible into redeemable preference shares and a $160 million revolving credit facility.
According to a statement released by Billabong to the Australian Securities Exchange on Tuesday morning, the drawdown under the bridge facility occurred on Friday, repaying in full all principal, accrued interest and outstanding commitment fees under Billabong’s syndicated debt facility of approximately 300 million Australian dollars, or $277 million, that has been held since June primarily by two U.S. hedge funds, Oaktree Capital Management and Centerbridge Partners. The DaKine sale has also gone through, the company said.
On July 16, several hours prior to the announcement of the Altamont deal, 14 Oaktree/Centerbridge representatives arrived in Brisbane from the U.S. to present their own refinancing proposal to Billabong. According to an Oaktree/Centerbridge spokeswoman, Billabong declined to meet with them.
Billabong’s version of events is that numerous requests had previously been made to Oaktree/Centerbridge to submit a refinancing proposal, but none had been forthcoming.
A formal proposal was placed on the table on Thursday — a debt-for-equity swap that would give the funds a 61.2 percent stake in the company and, the funds claimed, save Billabong 150 million Australian dollars, or $138 million, in interest and preserve the existing share value at an indicative price of 25 cents. The funds want Billabong to put the proposal to shareholders before Oct. 31 and let them decide.
In a statement later that day, Billabong rejected the proposal as “not an offer that is capable of acceptance.”
But Oaktree and Centerbridge are not going away quietly.
On Friday, the funds referred the matter to the Australian takeovers regulator, arguing some of the deal terms constitute “lockup devices that are anticompetitive and coercive.” Specifically, a 65 million Australian dollar, or $60 million, termination or “break” fee and a 35 percent interest rate levied on the $40 million convertible loan held by Billabong, which will be charged until shareholders approve an options issue to Altamont.
The funds also argue that there was no disclosure of the terms of the exclusivity arrangements or details of the circumstances in which the break fee may apply.
The panel’s general guidance on break fees is that they should not exceed 1 percent of the equity value of a transaction. Altamont’s 65 million Australian dollar break fee represents 20 percent of the 325 million Australian dollars being put forward as part of the deal.
The panel has yet to make a decision on whether or not to investigate the matter. An announcement could be made by the end of this week, said a panel spokesman.
“We’re urging the panel to say the break fee is unacceptable — it’s considerably outside the guidance” said Ian Curry, chairman of the Australian Shareholders Association.
“I don’t think it’s fanciful what they [Oaktree/Centerbridge] are doing at all,” said Mark McNamara, an M&A adviser and partner with King & Wood Mallesons. “I don’t think it will see the deal ended. I would be very surprised at that. But you just don’t know. It’s going to depend on a lot of factors. Shareholders should ultimately be asked to decide what deal they want. That’s effectively where it’s going to end up.”
Billabong shares closed down 0.5 percent at 41.5 cents on Tuesday.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast