Billabong announced today in Australia that is selling West 49 for CAD $9 million to $11 million.
When Billabong bought West 49 in 2010, the enterprise value of the deal was CAD $99 million, which included the assumption of $8.8 million in debt.
The new buyer is YM Inc., a low-price, fast fashion Canadian retailer that owns a variety of retail chains including Stitches, Urban Planet, Siren and Siblings.
YM is buying 92 West 49 stores, while Billabong is keeping six Billabong stores and two Element stores in Canada.
When Billabong bought West 49, the Canadian chain operated 138 stores.
The two parties have also signed a two-year wholesale supply agreement valued at CAD $34 million.
Unrealized goals
Billabong outlined the reaons why it believed acquiring West 49 was the right move when it announced the deal in 2010, many of which did not come to fruition at the historically skate-focused West 49 chain. The Canadian market also grew more challenging during the years Billabong owned the chain.
In 2010, Billabong listed the following reasons for the acquisition:
-  Increases the availability of Billabong’s brands in the key action sports market of Canada
-  Provides the ability to increase wholesale throughput of Billabong’s existing brands via an expanded retail network – currently across West 49’s portfolio Billabong has a brand share of approximately 15%
-  Increases Billabong’s participation in an important distribution channel including providing greater influence over the store environment and brand image presented to consumers
-  Provides the opportunity to expand on West 49’s current platform to enhance premium action sports retailing in the Canadian market
-  Provides North American retail expertise and efficiencies for Billabong’s expanded retail network
- Â Enhances retail presence providing Billabong with faster feedback on consumer trends and the ability to test product
- Â Provides increased branding opportunities, which in turn will drive demand
-  Broadens Billabong’s retail portfolio to better target key Canadian demographics via West 49’s banners.
Other Billabong developments
Billabong also said today that US $300 million of the $360 million term loan from Oaktree and Centerbridge funded on Nov. 1. That money was used to repay US $294 million to Altamont.
Billabong is still working with GE Capital to finalize a revolving credit line of US $100 million.
New investors Oaktree and Centerbridge are also bringing new board members to the table, and some other board changes are in the works. Going forward the board will include Sally Pitkin, Ian Pollard, Howard Mowlem, Gordon Merchant, Jason Mozingo (Centerbridge), Matt Wilson (Oaktree), and Billabong CEO Neil Fiske.
Billabong also said today that its Annual General Meeting will be held on Dec. 10, and that proposals related to the Centerbridge/Oaktree consortium will be addressed at a later meeting in January.
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