)
BILLABONG shares crashed in value by almost half this morning as investors reacted to the company’s $225 million capital raising venture and profit downgrade.
Shares, which were worth more than $18 five years ago, slumped to $0.97 this afternoon, down from $1.83 when a trading halt was called on Thursday.
In a statement to the ASX, Billabong announced the institutional component of the share offer had been completed with $155 million raised.
Eligible shareholders exercised 79 per cent of their options under the six-for-seven offer at $1.02 a share.
A fully underwritten retail offering on the same terms will be submitted on Friday.
Billabong CEO Launa Inman says institutions strongly supported the offer.
“Billabong has had its challenges in recent times, but milestones such as today ensure we have the opportunity to reinvigorate the business and, over time, create further value for our shareholders through our transformation agenda,” says Inman.
Today’s drop is another kick in the guts for long-term Billabong shareholders, with shares worth $18.81 each in May 2007.
Company founder, board member and major shareholder Gordon Merchant, who has a 15.6 per cent holding in the company, lost more than $30 million on the paper-value of his holding as the price tumbled today. Merchant’s stake is a tenth of what it was two years ago.
Merchant paid $30 million to take 80 per cent of his allocation under the capital raising offer.
Billabong issued a profit downgrade on Thursday, with the company expecting a drop in underlying earnings, excluding one-off costs from the restructure, to be $130 million to $135 million for the year to June 30.
Previous forecasts by the company indicated that number would be slightly above $157 million.
Billabong launched the capital raising effort to reduce $325 million in debt.
Inman is undertaking a thorough review of the company. She will announce the results of that review on August 24 and her plan for the company’s future.
)
