Billabong ditches Altamont tie-up

The surf-wear giant said it would enter into a restructuring agreement with Centerbridge Partners and Oaktree Capital Management - just a month after agreeing to take a A$309 million loan from Altamont Capital Partners.

Australian surfwear company Billabong has entered into a restructuring agreement with Centerbridge Partners and Oaktree Capital Management, despite rebuffing an earlier bid from the pair.

Centerbridge declined to comment on the transaction and Oaktree was unavailable to respond to a request for comment by press time.

The restructuring will repay the A$309 million ($294 million; €215 million) loan provided by Altamont Capital Partners and instead put in place a $360 million loan. Billabong will repay the Altamont in full from the first drawing of the new debt, according to a Billabong statement.

The interest rate payable by Billabong will fall from 13.5 per cent to 11.9 per cent per annum, but the term of the debt will be increased from five to six years. Billabong will also undertake a $135 million equity placement to Centerbridge and Oaktree, while other shareholders will be able to participate in a $50 million rights issue.

After 18 months of back-and-forth with various private equity players, Billabong finally agreed to refinance its debt with GSO Capital Partners and a consortium led by Altamont.

But the deal hit a snag when the Australian Takeovers Panel deemed the A$65 million break-up fee included in the agreement, among other clauses, as unacceptable. The panel had described the “magnitude” of the 20 percent fee as a “lock-up device, with the effect of deterring rival proposals”, according to a statement.

But having dropped the terms deemed unacceptable by Australian regulators, Altamont’s takeover agreement was then susceptible to competition from rival bidders.