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Billabong’s Syndicated Loan Facility

Billabong International Ltd.’s core business involves the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods in the board sports sector. As part of our broader coverage of the Australian retail sector, we were closely tracking Billabong’s declining earnings since mid-2011. We regularly shared our analysis with lenders, who appreciated our independent view.  

Objective

By May 2013, Billabong’s financial position had deteriorated markedly. A number of lenders engaged us bilaterally, seeking assistance regarding price discovery in preparation of a potential sale of their positions. 

Transaction Process

The situation was particularly sensitive given the ongoing take-over negotiations at the time between Billabong’s board and two private equity investors. In June 2013, SC Lowy traded USD 150 million of Billabong International’s USD 385 million syndicated loan facility from three original lenders to a US-based hedge fund.

Away from the public eye and with exclusive access to private information, we worked with a select group of distressed-debt investors to create liquidity for Billabong’s lenders. 

Outcome 

Within a month, we traded the first block of loans. By early July, all original lenders had sold their exposure. As an independent market-maker with a strong balance sheet and a solid reputation for absolute trust and confidentiality, SC Lowy proved uniquely placed to create liquidity even under the most sensitive circumstances.