Billabong Accepts Centerbridge, Oaktree Rescue Bid

SYDNEY--A battle between two U.S.-led consortiums for control of Billabong International Ltd. (BBG.AU) took a new twist Thursday when the Australian surfwear company tore up an existing refinancing deal and overhauled its top management.

Billabong said it has accepted a new funding package from Centerbridge Partners LP and Oaktree Capital Management, backing away from a rival rescue deal after the distressed debt investors sweetened their original bid.

The struggling company, which recently reported a 860 million Australian dollars (US$816 million) annual loss, had agreed to accept a refinancing proposal from private equity firm Altamont Capital Partners and Blackstone Group's (BX) credit arm, GSO Capital Partners.

The new agreement involves Billabong using funding provided by Centerbridge and Oaktree to repay the US$294 million loan it received from the Altamont consortium. It also involves issuing new shares and options to Centerbridge and Oaktree that will result in the pair owning up to 40.8% of Billabong's stock.

As part of the deal, Neil Fiske, a former head of adventure-wear company Eddie Bauer Holdings Inc., will become Billabong's new chief executive. Mr. Bauer displaces the Altamont consortium's choice, former Oakley Inc. boss Scott Olivet.

Centerbridge and Oaktree's bid was "significantly improved" compared to an earlier offer, partly because it involves cheaper funding costs. Existing Billabong shareholders will also be able to buy A$50 million worth of new Billabong shares at 28 cents each.

Centerbridge and Oaktree would have ended up with a greater equity stake in company of up to 44.3% under the previous deal.

Write to Ross Kelly at [e-mail]

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