Two US private equity firms buy 40 percent of Billabong

Billabong shareholders have overwhelmingly voted in favour of a 135 million dollars share issue that will transfer more than 40 percent of the business to two US private equity groups. The vote took place days after the Australian Shareholders' Association (ASA) called for a

delay in the decision. US hedge funds Oaktree Capital and Centerbidge Partners are set to take control of 40 percent of Billabong International after at an extraordinary general meeting last week, shareholders approved the issue of 329 million shares at 41 cents apiece to Oaktree and Centerbridge.

About 90 percent of the shares and proxies voted were in favour of the issue, a Billabong spokesman said, reported Australian media over the weekend.

Two US private equity funds acquire 40 percent of Billabong

The two American funds emerged as joint winners of an 18-month auction for the company, with an offer of 386 million dollars debt and equity rescue package.

Billabong chairman Ian Pollard told shareholders the share issue and a subsequent rights issue would give the retailer the financial structure it needed to complete a turnaround "in a manner and speed which will benefit all shareholders."

"We still face a number of hurdles in our reported profitability and expect this year's results to include more significant costs associated with reinvesting in and restructuring the business," warned Pollard, leaving the company´s shareholders with a bitter mouth´s taste.

"There remains much work to be done and few of the elements of the turnaround are as yet impacting on the company's financial performance," Billabong´s CEO added, although he recognised that the "support of today's resolutions is critical in providing our new executive leadership team with the financial flexibility to turn around our business operations."

Shareholders also approved the issue of up to 178 million shares at 28 cents each through a 50 million dollars rights issue and the issue of 29.6 million free options with an exercise price of 50 cents each.

The proceeds of the share placement and rights issue will be used to repay 185 million dollars of the 386 million dollars financing package negotiated with Oaktree and Centerbridge, as specified by the company.

That new debt was used in part to repay a 350 million dollars loan from the Altamont consortium, a failed bidder for Billabong. Meanwhile, the 50 million dollars rights issue - which will commence on February 21, will enable existing shareholders to buy shares at a big discount to the entry price paid by Oaktree and Centerbridge.