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* Coastal Capital seeks board spill
* Altamont pursues debt finance deal
* Billabong says competition won't derail future
By Jane Wardell
SYDNEY, Sept 2 U.S. hedge fund Coastal Capital
joined debt specialists circling Billabong International Ltd
on Monday, seeking a board spill, as rival investors
eye the proceeds from a potential debt restructure rather than
equity from a long-term turnaround.
It's a change from a lonely couple of years for the
Australian surfwear retailer, during which it opened its books
to several private equity investors only to have them walk away.
"Private equity firms are looking at ways they can exploit
the vulnerability without risking too much skin," said City
Index analyst Peter Esho. "It's moved from a survival valuation
to a play for debt."
Billabong's shares jumped 14 percent to A$0.48 ($0.43) after
shareholder Coastal said it wanted to ditch and replace the
majority of the board as well amend the company's constitution
for member approval of future debt and equity financing
The stock has improved from a record low of A$0.12 in June
but remains a far cry from the A$14 reached in the company's
heyday in 2007.
Still, analysts say an equity valuation of around A$0.40 to
A$0.60 is fair for a company that recently wrote down the value
of its namesake brand to zero.
Billabong was crippled by an ill-timed global expansion amid
the global economic downturn and the loss of favour with young
shoppers for its brands, leading to an annual net loss of
A$859.5 million last financial year.
The company last month entered into a $470 million
refinancing arrangement with private equity firms Altamont
Capital Partners and Blackstone Group Inc.
But it later said it would consider a rival offer from U.S.
hedge funds Oaktree Capital Management and
Centerbridge Partners, which offered a number of sweeteners,
including a lower interest rate.
IG market analyst Evan Lucas said there was speculation
Centerbridge and Oaktree were behind some of the recent rally in
"The price is actually quite strong, suggestions are that it
could actually be the two corporate players and they're trying
to pick up equity shares to then use as debt talk as well,"
PROPOSED BOARD SPILL
New York-based Coastal, which picked up a 5 percent stake in
Billabong last month, has a history of gatecrashing
debt-for-equity deals in Australia, attempting to derail a $2
billion deal by TPG Capital for Alinta Energy in 2011.
Coastal wants to remove all Billabong's current directors
except founder and majority shareholder Gordon Merchant and
fellow board veteran Colette Paull.
Billabong said it is reviewing the request from Coastal to
call a shareholder meeting to vote on its proposals. The Gold
Coast-based company added however that Coastal's intervention
would not derail a refinancing deal.
Altamont, which plans to make former Oakley boss Scott
Olivet CEO to replace Launa Inman, said in a statement on
Thursday it was committed to working with the current board "to
reinvigorate Billabong's businesses and brands."
Coastal, Centerbridge and Oaktree could not immediately be
reached for comment.
($1 = 1.1228 Australian dollars)
(Additional reporting by Thuy Ong in Sydney; Editing by Stephen