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.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty