Billabong shares catch a wave after profit wipe-out

Feb 17, 2012, 1:40 GMT

Sydney - Australian surfwear company Billabong International Ltd will slash 400 jobs and close up to 150 of its 677 shops worldwide after reporting on Friday a 71-per-cent slide in first-half profits to 16 million Australian dollars (17 million US dollars) from 41 million Australian dollars in the previous corresponding reporting period.

Revenues at the debt-laden company were up 1.5 per cent to 849 million Australian dollars from 837 million Australian dollars.

The plan to slim down Australia's biggest surfwear brand, which is being circled by US private equity companies, prompted an almost doubling of its share price to 2.68 Australian dollars in early trading.

Chief executive Derek O'Neill said Billabong would sell around half of its Nixon Inc subsidiary to US venture capital company Trilantic Capital Partners to pay down debt.

O'Neill said in a statement to the stock exchange that his company 'needed a certain transaction to address Billabong's balance sheet issues, in particular to avoid any potential breach of its bank covenants.'

Billabong shares were trading at 1.79 Australian dollars when they were placed in a trading halt on Thursday, one-fifth of their value a year ago.

O'Neill confirmed that Billabong had received a 776-million-Australian-dollar takeover offer from another US corporate raider, TPG Capital, which it appears to have rejected though the partial sale of Nixon Inc.

O'Neill said 250 of the shops to be closed were in the Americas and 125 in Europe.

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