SYDNEY — Billabong’s rescue deal has hit a snag.

This story first appeared in the July 24, 2013 issue of WWD. Subscribe Today.

A 395 million Australian dollars, or $364 million at current exchange, refinancing package from a consortium led by Altamont Capital Partners, which was released July 16 and has now been completed, is currently before the Australian Takeovers Panel.

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.

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