Billabong International Ltd. has entered into a recapitalization agreement with Centerbridge Partners LP and Oaktree Capital Management LP, which would give the private equity firms at least 34 percent of the surf wear retailer.

The deal will allow Billabong to repay a $294 million bridge loan facility from Altamont Capital Partners and GSO Capital Partners, which the company agreed to in July. The loan would also replace a recapitalization facility proposed by Altamont and GSO. As a result, Billabong will pay Palo Alto, Calif.-based Altamont will receive a breakup fee of $5.62 million.

The new recapitalization agreement includes a six-year senior secured $360 million term loan, a $126.5 million equity placement to the Centerbridge Oaktree consortium, and a $46.8 million rights issue for shareholders other than the consortium, which will be used to repay up to $172 million of the term loan. The consortium would also be issued29.6 million options at about $0.47 per share. The increased size of the term loan should help Billabong’s balance sheet flexibility, the company says in a statement.

Billabong will still receive a $140 million asset-based revolving credit facility from GE Capital. That loan was initially proposed as a part of the Altamont and GSO recapitalization.

Billabong rejected the Centerbridge Oaktree consortium’s initial offer in July, saying it lacked the certainty of Altamont’s refinancing offer.

There are several differences between the Centerbridge Oaktree consortium’s initial proposal and revised recapitalization offer: The interest rate on the new term loan was reduced to 11.9 percent from 13.5 percent; the amount of the loan increased to $360 million from $303 million; the maturity date increased to six years from five years; existing shareholders are allowed greater participation because the rights issue was increased to $46.8 million from $30.4 million; the buy-in price under the rights issue was reduced to $0.26 from $0.28; the placement buy-in price for the consortium increased to $0.38 from about $0.33; and the consortium will now own between 33.9 percent and 40.8 percent of Billabong, down from 39.7 percent to 44.3 percent, which means less dilution for existing shareholders.

The company said the proposal was significantly improved since the Centerbridge Oaktree consortium’s previous proposal. Billabong also said that deal offered lower financial leverage, was cheaper, and provided less equity dilution than the Altamont proposal.

Billabong reached a deal with Altamont and GSO, the credit arm of New York private equity firm the Blackstone Group (NYSE: BX), in July. The deal included a $294 million bridge loan to repay the company’s previous debt, which matures on Dec. 31 and matures interest at 12 percent. That loan was issued in July.

Billabong also entered into a commitment letter with Altamont, GSO and GE Capital for a long-term financing package. The parties would have provided a term loan, convertible note, and GE Capital would have provided the credit facility. 

Scott Olivet, who previously headed sportswear brand Oakley and would have taken the helm as CEO of Billabong under the Altamont proposal, has decided he will not proceed as CEO.

In February, Billabong announced a half-year loss of $556.7 million, which it said resulted from difficult trading conditions in Europe. The company also blamed the loss on the disappointing performance of the Nixon watch line, which it bought in 2006. Billabong sold the majority of Nixon in 2012, but kept a 48.5 percent stake.

The Queensland, Australia-based retailer rejected a $903.5 bid from private equity firm TPG Capital Management in February 2012. Billabong was also in discussions with private equity firm Sycamore Partners Management, which made a $300 million takeover offer in April. Altamont and retail brand owner VF Corp. (NYSE: VFC) submitted a $556 million offer for the brand in January.

Centerbridge, which has offices in New York and London, focuses on private equity and credit investments. Los Angeles-based Oaktree invests in corporate and distressed debt, convertible securities, private equity and real estate.

For more on Billabong, see “Billabong Negotiates Stabilizing Loans” and “Retail Reckoning.” 

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