Billabong’s shares dropped 47% in heavy trading Monday in Australia, after the company cut its earnings forecast again last week and announced it was raising additional capital.
The stock closed Monday at 96 cents, a new low. Billabong’s stock price has ranged from AUS $1.70 to AUS $6.42 the past 52 weeks.
At Monday’s closing price, Billabong’s market cap is now approximately AUS $245 million.
The company provided details Monday how its capital raising efforts fared for the shares it priced at AUS $1.02.
In a press release, Billabong said institutional shareholders bought 79% of the shares available to them in the offering. The balance of the institutional offering went to existing shareholders and new shareholders.
“It is pleasing to see such strong institutional support for the offer,” Billabong CEO Launa Inman said in a press release.
The institutional component of the offering raised approximately AUS $155 million.
Billabong is also offering new shares to the trading public.
All together, the goal is to raise approximately AUS $225 million.
While Billabong portrayed the capital raising as a success, the notoriously feisty press in Australia painted a different picture.
Reuters said institutional investors took up “only” 79% of shares entitled to them, and quoted an analyst as saying the stock market sell off of Billabong shares on Monday was likely from institutional investors that didn’t buy additional shares likely dumping the shares they already owned.
It also said Billabong is likely a prime takeover target again, especially in light of its rejection earlier this year of a bid from private equity firm TPG Capital, that had offered to buy the company for $3.30 per share, more than triple what Billabong offered its new shares for.
Billabong rejected the offer saying the price did not reflect the underlying value of the company.
One thing is certain: change is likely on the way for Billabong with a new CEO who is launching a “transformation agenda” and one board member retiring in October and the chairman of the board retiring sometime between October and February of next year.
