Billabong plan ‘galling’

SHAREHOLDERS who have stayed along for the turbulent ride endured by Billabong International have every reason to feel let down if a mooted and very opportunistic takeover bid goes ahead, says a long-time Gold Coast sharebroker.

Max Mengler, Bundallbased Patersons Securities director, yesterday said that the suggested $1 a share offer was, as a result of share consolidation, really only 20c a share.

“How would an investor feel if shares they bought in the Billabong float back in 2000, and which at one point topped $16, were worth only 20c?

“Here we have a company that at its market peak was worth more than $3 billion potentially being sold for only $200 million.”

Mr Mengler said it was staggering that what was once the Gold Coast’s biggest-listed company had

“near corpse”.

“What I find most galling is that it once had one of the most high-profile boards in Australia but still slid into hot water financially.”

Billabong floated on the ASX in August 2000 after issuing shares at $2.30.

Its directors up until its earnings began to dive in 2011 included ex-Fosters Group CEO Ted Kunkel and former Qantas chairman Margaret turned into a Jackson. The company, whose borrowings had climbed above $500 million, was rescued in 2013 when US private equity groups Oaktree and Centerbridge provided a $386 million debt-for-equity rescue deal that saw the number of shares go from nearly 200 million to one billion.

A one-for-five share consolidation in 2015 saw the number revert to the original.

Last week rival surf industry firm Boardriders Inc (Quiksilver), 90 per cent owned by Oaktree, revealed non-binding plans to offer $1 a share for Billabong.

Oaktree is one of Billabong’s senior lenders and owns 19 per cent of it.

Mr Mengler said that if the bid was endorsed by the Billabong board, shareholders would be under pressure to take the money.

“They only can hope that founder Gordon Merchant, with around 12 per cent of the capital, and two Sydney fund managers, who between them own 15 per cent, resist Boardriders.

“Billabong’s a great international label and long-suffering shareholders may well do a lot better if a long-mooted turnaround in the company gathers steam.

“They won’t want to be sitting on the beach with their 20c a share watching the Americans enjoying the rewards of that turnaround.”