BILLABONG International's (ASX:BBG) road to recovery, buoyed by its first annual profit in five years, is being tested again with the resignation today of one of the key backers of its recovery.
Matt Wilson, the managing director of Oaktree Capital Management, announced his departure was the result of a potential conflict with Oaktree's investment portfolio.
While there is little detail surrounding the brief explanation, the move has been widely reported to involve a conflict with one of Billabong's major shareholders.
Wilson joined the Billabong board in 2013 as part of a $380 million debt and equity refinancing deal in which Oaktree partnered with fellow hedge fund Centerbridge Partners to rescue the former retail powerhouse.
Between them, Centerbridge and Oaktree own more than 40 per cent of Billabong.
The departure of Wilson, who heads Oaktree's retail and consumer investment division, has been punctuated further by the resignation of Thomas Casarella, an alternate director for Wilson. This leaves Oaktree with no direct representation on Billabong's board.
The move comes in the wake of an announcement last week that 329 million Billabong shares issued as part of the 2013 equity funding deal will be released from voluntary escrow on September 15.
Billabong today put on a brave face despite the shock development.
"On behalf of my fellow directors I would like to acknowledge and thank Matthew Wilson for his contribution," says Billabong chairman Dr Ian Pollard in a statement to the ASX.
"Having joined the board in November of 2013, Mr Wilson steps down with Billabong having just reported its first full-year profit in five years.
"Mr Wilson and Oaktree are strong supporters of Billabong's turnaround strategy, which the board and the group remain focused on implementing."
A Billabong spokesman says he cannot comment further, and particularly on behalf of Oaktree.
Oaktree is an investment management firm whose core investment strategies include distressed debt, corporate debt, real estate and listed equities.
Earlier this year, the company sold half of its stake in Nine Entertainment (ASX:NEC) for $160m, reducing its stake in the television group to about 7 per cent.
It is unclear whether the latest development will have implications for Oaktree's continued holding in Billabong.
Last month, Billabong posted a $4.1 million bottom-line profit for FY15, its first positive financial result in five years.
The bottom-line figure was buoyed by a favourable exchange rate and, while constant-currency earnings from continuing operations were down in most regions, the company reported business growth in Europe.
Billabong's share fell as much as 5 per cent on the news today before regaining some ground by the afternoon.
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