Billabong sells its Canadian chain West 49 to YM Inc

Ailing Australian surfwear group Billabong has announced its plans to sell its Canadian retail chain West 49 to fashion retailer YM Inc. The deal will reportedly include Billabong’s up to now owned 92 stores across Canada for a sum between 9 and 11 million

Canadian dollars.

"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,” as Neil Fiske, Billabong Chief Executive Officer, explained in a statement to the Australian Securities Exchange.

YM Inc - which also owns other apparel stores such as Stitches, Sirens, Urban Planet and Bluenotes - will purchase 92 West 49 retail stores across Canada for a sum between 9 and 11 million Canadian dollars in a deal that also comprises a 34 million Canadian dollars non-exclusive wholesale agreement with YM. The supply agreement will roll out over the next two years.

Under the deal, Billabong will keep its six Billabong and two Element stores in Canada, reported local media over the weekend as “The supply agreement we’ve entered into ensures our products will continue to have a strong presence for consumers in that market,” further outlined Fiske.

West 49 sale as part of Billabong’s financial restructuring efforts

Billabong acquired West 49 in early 2010, in a transaction valued at 1.30 Canadian dollars per share. Three years later, the Australian surfwear group had to wave goodbye to its foray into Canadial apparel market as part of its plan to reverse its financial struggles. It’s worth of remembering that the company agreed to a refinancing proposal from hedge funds Oaktree Capital Management and Centerbridge Partners in September.

As the company explained in a statement issued earlier this week, Billabong will continue to work with GE Capital to provide an asset-based multi-currency revolving credit facility of up to 100 million dollars. Billabong’s management highlighted that this amount has been cut from the previous 140 million dollars thanks to the sale of West 49.

Additionally, Billabong said a 300 million dollars tranche of the 6 year senior secured term loan of 360 million dollars provided by entities affiliated with Centerbridge Partners, L.P. and Oaktree Capital Management, L.P. funded on November 1. 'The Australian' added that the group's intention is to use the tranche to fully repay its bridge loan facility from the Altamont Capital Partners consortium, entered into on July 16 this year, including accrued interest and fees.

In summer, Billabong brand became “worthless” after the company tripled its annual loss to 859.5 million dollars loss, compared to the previous year’s 282.7 million dollars.