The Australian brand reported a share price increase of 46% today, after the company said it is in advance refinancing and asset sale talks with two US hedge funds – Altamont Capital Partners and Sycamore Partners.
Shares of Billabong decreased earlier this month by half of its value after the company voiced concerns of troubling finances as the company piled on debt and needed loans to cover it.
Amid Tuesday’s news of refinancing talks, Billabong reduced earnings estimates for the third time in six months, blaming weaker trading in Australia and losses on a new European venture. Altamont and Sycamore also said they would not make an offer for the company.
Analysts said the denial of making an offer from the suitors of the company reflected Billabong’s weak balance sheet, lack of tangible assets and low confidence in the outlook for earnings. On top of all this the company accrued gross debt of A$300 million, and also has A$400 million of balance sheet lease commitments.
Today media reports in Australia claimed HSBC had sold A$20 million of Billabong debt to SC Lowy Financial, a China-based investment group, at a discount of around 20%.
The company has taken actions to prevent business from tumbling. The company has sold assets and has closed unprofitable stores. However, share price continued to slide. Billabong is loosing popularity among the younger customers which is in the core of companys recent troubles. There also have been some badly timed acquisitions adding on the decline.
As of right now Billabong raised to A$ 0.19 per share.
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