Billabong Locked in Talks With Two Suitors -Source

By Gillian Tan

Action sports retailer Billabong International Ltd (BBG.AU) may yet strike a deal with one of two U.S. private equity-backed consortia.

Both Sycamore Partners and Billabong's former Americas head Paul Naude, and VF Corporation (VFC) and Altamont Capital Partners, are still engaged in talks, a person familiar with the matter said Thursday. Sycamore Partners's second period of exclusivity has ended.

Billabong on Thursday requested that trading in its shares be suspended to allow the company to progress discussions with interested parties. Its closing price, before the company was halted from trading on Tuesday, was 45.5 cents a share, a 24.2% discount to the 60 cents a share offered by the Sycamore consortium in April.

Earlier this year, both the Sycamore and Altamont consortia offered A$1.10 a share to gain due diligence.

J.P.Morgan analyst Shaun Cousins said in a note to clients on Thursday that challenges to Billabong's debt position and operations remain "significant". The company's first-half earnings before interest, tax, depreciation and amortization fell 31%, and are forecast to decline between 51% and 64% in the full fiscal 2013 year.

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