Billabong says it notes a media report that the troubled surfwear retailer’s equity value could be worthless if its pre-tax earnings guidance falls to around $50 million in the 2015 financial year.
It also says it is not aware of the reasons for the increased level of trading in its shares, after it came out of a trading halt late on Thursday.
Billabong shares were earlier parked in a trading halt after a surprise sharp sell-off pushed the stock to record lows.
Billabong requested a trading halt after its shares suddenly plunged by more than 20 per cent in late morning trade on Thursday.
The trading halt came ahead of next week’s deadline for two potential private equity suitors to make up their minds about whether to finalise takeover bids for the company.
“Billabong … notes an article in today’s The Australian Financial Review referring to a bid process for the Company and to a Credit Suisse research analyst report in relation to the Company,” it said in a statement to the Australian Securities Exchange.
The newspaper article, quoting Credit Suisse, said that if earnings before interest tax, depreciation and amortisation dropped from the current guidance of $74 million for the 2013 financial year to $50 million by 2015, due to a reduction in wholesale earnings resulting from brand rationalisation, then Billabong’s equity value would be zero.
The stock fell as much as 22 per cent to a record low of 63 cents in late morning trade.
It was down 11.5 cents, or 14.2 per cent, at 69.5 cents when the trading halt was announced at lunchtime.
Two private equity consortiums, Sycamore and Altamont/VF, have made separate offers of $1.10 a share for Billabong.
Both have been running their slide rules over Billabong’s books in recent weeks.
The due diligence process is due to end next week.
Billabong also said in the stock exchange statement that it “confirms that the process for the change of control proposals previously announced is ongoing and that both the consortia who have submitted indicative proposals remain in the process”.
Billabong plunged into the red with a massive $536.6 million first half net loss.
