Surfwear manufacturers Billabong have been reported to be slashing 80 jobs in Australia as a part of the global restructuring they are currently undergoing.
The debt-laden retail giant will close up to 100 and 150 stores worldwide as it responds to threats from US private equity raiders.
Billabong will also sell half of its share in its Nixon brand to Trilantic Capital Partners to establish a joint venture, as first-half profit was down 72 per cent to $16 million.
Its shares were 77 cents higher at $2.56 at 10.31am AEDT, and they have surged more than 60 per cent in early trade after the stock came out of a trading halt, but fell back a short time later.
The strategic resturcture was announced in December of 2011 and under the joint venture with TCP, Billabong will retain 48.5 per cent of Nixon. TCP plans to purchase 48.5 per cent and Nixon’s mangement will puchase 3.0 per cent.
The partial sale represents a value of about $US464 million ($432.71 million) for Nixon and results in net proceeds to Billabong of approximately $US285 ($265.78) million.
“One hundred per cent of net proceeds will be used to pay down debt,” Billabong said in a statement today.
The group wants to reduce rent expenses by $20 million to $30 million, saying it will close between 100 and 150 loss-making and underperforming stores worldwide, and annual costs by $30 million.
“The company will seek to minimise forced job losses by redeploying staff from closed stores to other Billabong retail stores wherever possible and through natural staff attrition,” Billabong said.
The fluctuating nature of seasonal retail and the timing of store closures would impact on the ultimate number of casual job losses, Billabong said.
Billabong will also reduce its dividend.
Yesterday, Billabong shares were placed in a trading halt amid reports it received a $776 million takeover bid from US private equity giant TPG.
Billabong said the takeover offer from TPG was never certain to go ahead as it was subject to due diligence, finance and it not selling down its ownership in any of its brands.
“In the absence of certainty, Billabong has proceeded with the partial sale of Nixon in order to stabilise its balance sheet,'” the company said.
Billabong said it needed to undertake the revamp of its business to avoid any potential breach of its bank covenants.
It said that, given the uncertain trading conditions, it would reduce its dividend payout ratio for its 2012 financial year to about 25 per cent.
It also plans to reimplement its dividend reinvestment plan, which will be fully underwritten.