Surf-wear giant Billabong is to enter into a restructuring agreement with Centerbridge Partners and Oaktree Capital Management – just a month after agreeing to take a A$309 million ($294 million; €215 million) loan from Altamont Capital Partners.
Altamont will only be entitled to an A$6 million break-up fee after the Australian Takeovers Panel forced Altamont to drop a A$65 million break-up fee that was deemed unacceptable.
Altamont confirmed that it is no longer pursuing long-term financing with the company after declining Billabong board’s request to revise the terms of its financing commitment.
The panel had described the “magnitude” of the break-up fee loan as a “lock-up device with the effect of deterring rival proposals”, according to a statement.
In a statement the Australian Shareholders Association said that the break-up fee equated to 20 percent of the debt, adding that break-up fees in Australia don't usually exceed 1 percent of the equity value of a transaction.
Altamont dropped the terms deemed unacceptable by Australian regulators to get its deal over the line but the updated takeover agreement was then susceptible to competition from rival bidders.
The Centerbridge and Oaktree restructuring will repay the loan provided by Altamont 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.
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