The Australian surf wear producer Billabong is forced to sell its Canadian chain West 49 in an ultimate attempt to stay afloat, now the final talks with a potential candidate for a takeover have fallen through. In the meantime management has issued another profit warning.
West 49 on display
After negotiations with potential investor Sycamore Partners turned out to nothing early May, the talks of the last chance – with Altamont – have also shut down entirely. There is now nothing left to do for Billabong but to go and talk with Altamont and Sycamore about refinancing the company and the sale of parts of it. In February Billabong had given 80% of its properties and 85% of its profits as collateral to its creditors, when it could not meet the demands of its loans.
According to the Wall Street Journal business bank Financo has been appointed to find a buyer for West 49. Billabong had bought that Canadian fashion chain for young people in June 2010 for 75 million euro, but since then the number of shops has halved from 138 shops to just over 70.
Share price plummets
Because of the bad news the price of the Billabong share has crashed at the exchange of Sydney: the share lost almost half its value. Today the group is worth only 110.2 million Australian dollar (about 80 million euro). At its peak, in May 2007, Billabong was valued at no less than 3.84 billion Australian dollar (about 2.8 billion euro).
And because bad news never travels alone, Billabong has also lowered its profit forecast for this financial year (ending on 30 June). Management is now counting on a company result of 67 to 74 million Australian dollar (50 to 55 million euro). Earlier Billabong had predicted somewhere between 74 to 81 million Australian dollar.