AUSTRALIA: Shareholders urged to reconsider Billabong deal
The ASA is calling for a delay to the shareholder vote
The Australian Shareholders’ Association (ASA) is calling for a delay to the shareholder vote transferring more than 40% of fashion retail business Billabong to two US private equity groups.
The ASA said it was declining to recommend in favour of the deal out of concern that control of Billabong was changing hands too cheaply and without shareholders being given up-to-date financial information.
Billabong is holding an EGM on Thursday (30 January), at which the board is recommending that shareholders back a deal giving private equity firms Centerbridge and Oaktree more than 40% of the business in return for a AUD360m (US$317m) loan.
ASA policy and engagement coordinator Stephen Mayne contrasted the “heavily discounted” share placement with the typical premium received by shareholders when surrendering control of a company.
“Billabong shares closed at 65c on Friday, yet shareholders are being asked to issue AUD135m worth of new shares – equivalent to more than 40% of the company – at just 41c a share,” he said.
“Before seemingly selling the company on the cheap, investors deserve to be told the December half results, which the insiders proposing this deal are presumably well across.”
The ASA, whose current recommendation is “to be decided”, added that shareholders might be be better off rejecting the proposal so that a “more acceptable arrangement” could be negotiated with the consortium.
If recent trading information cannot be produced before Thursday’s meeting, the ASA said, then an adjournment of the EGM should be considered.
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