Beleaguered surf giant Billabong has offloaded its Canadian retail chain amid a string of other changes, as it moves to wriggle its way out of debt.
The company, which entered into a funding agreement with Centerbridge-Oaktree consortium (C/O Consortium) in September, has revealed it has now received a US$300 million tranche of its six-year secured term loan of $US360m from the consortium.
According to Billabong, the proceeds of the funding have been funnelled into the repaying in full the US$294 million bridge loan facility from the Altamont Consortium which was entered into on July 16 2013, together with accrued interest and fees.
Billabong also revealed that it has entered an agreement to sell its Canadian retail chain, West 49, to fashion retailer YM Inc., as it struggles to free itself of debt, streamline and bring the business back to profitability.
The sale will see YM take ownership of the 92 West 49 retail stores across Canada for approximately CAD$9 to 11 million. Along with retaining six Billabong stores and two Element stories in Canada, Billabong has also entered into an approximately CAD$34 million non-exclusive wholesale agreement with YM over the next two years.
Commenting on the deal, Billabong CEO Neil Fiske said the sale is part of a larger strategy for the Billabong business.
“The sale of West 49 is part of our broader strategy of simplifying our business and focusing on the core of what we do best, which is building strong global brands. The supply agreement we’ve entered into ensures our products will continue to have a strong presence for consumers in that market.”
The funding of the New Term Debt with the C/O Consortium, and repayment of the Altamont Consortium debt, has also initiated a restructure of the Billabong board.
Jason Mozingo (nominated by Centerbridge) and Matt Wilson (nominated by Oaktree) have been appointed to the board, while Altamont Consortium representatives Jesse Rogers and Keoni Schwartz have retired from the Billabong board.
Sally Pitkin will also retire from the board following the funding of the New Term Debt, in order to accommodate the rebalancing of the Billabong board and achieve its objective of a seven-member board. Pitkin, however, will continue as one of three independent directors along with Ian Pollard and Howard Mowlem.
In addition, Billabong has confirmed that long-serving executives Tony Froggatt and Colette Paull have also decided to retire from the board, following the funding of the New Term Debt. Froggatt has been a director at the company since 2007, while Paull has been a non-executive director of Billabong since 2000.
Commenting on the management changes, Pollard paid tribute to both Froggatt and Paull for their commitment to the business.
“On behalf of the board I would like to thank both Colette and Tony for their contributions to the company’s direction throughout their appointments and especially during the challenging events of the past 12 to 18 months and the ultimate resolution through the funding just concluded.”
Billabong confirmed it has also received in-principle approval from the Australian Securities & Investments Commission to hold its annual meeting later this year, with the tentative date expected to be December 10, 2013.