August 24th, 2013

Paul Naude Billabong’s Former CEO Starting His Own Surfing Brand

Update August 25: We have received confirmation that Terry Strumpf and Rob McCarty will be joining Paul Naude and his new adventure.

Things just got a little more interesting in the surf world as Paul Naude will be starting his own new surfing brand. Surprising to hear Terry Strumpf, Billabong’s VP of merchandising and design and president of the Xcel brand, turned in his resignation Friday as well as Rob McCarty, Billabong’s senior design director. (to join Paul?)

Paul Naude giving the winning hug to Billabong team rider Taj Burrow

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August 23rd, 2013

Only Billabong Knows The Feeling

Do we know what this all means, no! But if your into reading this kind of stuff have fun.

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Centerbridge/Oaktree Consortium Provide Billabong Board Superior Terms for Company, Shareholders and its Other Stakeholders

Centerbridge and Oaktree offer superior terms compared to Altamont and GSO proposal:

– Lower interest rate on Billabong’s debt will result in interest savings of up to A$119- 143m over 5 years

– C/O Consortium offering to pay ~81% premium (~36c vs. ~20c per share) to the Altamont Consortium for an approximately equivalent equity stake

– Under the Altamont Proposal, Billabong could be left with a much higher level of debt (A$276m) vs. the C/O Consortium Proposal (A$158m)

The Centerbridge and Oaktree Consortium (“C/O Consortium”) today released details of a revised recapitalisation proposal (the “C/O Consortium Proposal”) that it has delivered to the board of directors (the “Board”) of Billabong International Limited (the “Company”). The C/O Consortium’s proposal provides the Board with greater flexibility for addressing the Company’s near- and longer-term capital and operational needs when compared to the revised Altamont and GSO proposal (the “Altamont Consortium” and the “Altamont Proposal”).

The C/O Consortium believes the Company has a well-recognized portfolio of brands with great future potential. For the Company to overcome the numerous strategic and balance sheet issues it is facing, it needs the right strategy, capital structure and strategic partners with demonstrable track records in investing and building value in the retail and consumer industries.

The C/O Consortium has also provided to the Board, at their request, significant detail around the C/O Consortium’s intended strategy and vision for the business, which is aimed at putting the Company on a path to stability, growth and success, as well prior examples of the C/O Consortium’s proven track record in supporting companies to enhance shareholder value through a minority equity interest.

The C/O Consortium has also informed the Board that it has engaged with qualified CEO candidates that it will introduce to the Board in the event that Scott Olivet is unavailable to serve as CEO under a transaction with the C/O Consortium. These potential candidates are all highly experienced in the retail sector and have proven turnaround skills.

Given the announced timing on entering binding long form documentation on the Altamont Proposal, the C/O Consortium believes it is appropriate that shareholders and other stakeholders are made aware of the C/O Consortium Proposal terms before the Altamont Proposal is implemented.

The C/O Consortium Proposal is structured as follows:

– if required, an interim bridge loan to refinance the current A$325 million bridge loan in full, at a 12% interest rate and maturity of 31 March 2014;

– a senior secured term loan of A$325 million (“New Term Debt”); and

– a A$135 million equity placement to the C/O Consortium and an A$32.5 million rights issue (“Equity Raising”) available to all existing shareholders, of which the proceeds will be used to immediately pay down the New Term Debt (with no prepayment premium) to a balance of A$157.5 million. The New Term Debt would have the following key terms:

– 5 year A$325 million facility;

– fixed interest rate of 13.5% per annum (6.50% payable in cash and up to 7% payable in kind at the Company’s option);

– if the Company’s debt balance is reduced through the Equity Raising, a 10% rate will apply on the remaining New Term Debt (instead of 13.5%);

– the remaining New Term Debt is subject to an optional and mandatory prepayment mechanism that is more favorable to the Company than the Altamont Consortium Proposal, providing more flexibility for the Company to refinance on a more cost effective basis if it so chooses;

– on execution of the New Term Debt facility agreements, the C/O Consortium will be issued 29,581,854 options with a 7-year term and a strike price of A$0.50 per share; and

– the C/O Consortium would be prepared to assist the Company in ensuring that the GE Capital revolving credit facility would continue to be progressed ahead of, or concurrently with, entering into the New Term Debt. The terms of the Equity Raising would be as follows:

– placement to the C/O Consortium of A$135million at A$0.35 per share (“Placement”), subject to shareholder approval;

– rights offer to existing shareholders of A$32.5 million at A$0.30 per share (“Rights Issue”) upon completion of the Placement; and

– upon completion of the Equity Raising and assuming full shareholder participation in the Rights Issue, the C/O Consortium would acquire through the Placement and Options issued 39.7% of the fully diluted equity interest in the Company.

The C/O Consortium Proposal: Superior terms to the Altamont Proposal:

– the C/O Consortium Proposal delivers cheaper cost of debt (10.0% vs. 14.3% assuming the upsize commitment is drawn) with ~A$119m-A$143m of interest savings over 5 years, assuming the equity component of both proposals were approved by shareholders;

– the C/O Consortium acquires an equivalent interest in Billabong (39.7% vs 39.2% under the Altamont Proposal) for 2.2x the amount of cash invested into the business for that equity consideration (~A$150m under the C/O Proposal compared to ~A$67m under the Altamont Proposal), with the aggregate C/O Consortium equity priced at an 81% premium (A$0.361 per share compared to A$0.199 per share under the Altamont Proposal);

– the C/O Proposal provides the ability for existing shareholders to participate (at a discount) alongside the C/O Consortium through the rights issue ensuring full alignment of interest; and

– similarly when looking at the potential longer term returns under the various proposals the C/O Consortium believes the C/O Consortium Proposal delivers superior returns to existing shareholders with a deleveraged, more appropriate capital structure (which increases the probability that the business will successfully execute its turnaround). The C/O Consortium Proposal that was delivered to the Board is capable of execution on a timeframe similar to the Altamont Proposal and only subject to the Altamont Proposal not being implemented, long form documentation being executed for the C/O Consortium Proposal and Foreign Investment Review Board approval, if required.

Background

Centerbridge and Oaktree are two of the world’s preeminent investment managers, each having substantial experience investing in the retail and consumer industries.

Centerbridge Partners, L.P. is a private investment firm headquartered in New York City with approximately $20 billion in capital under management as of May 2013. The firm focuses on private equity and credit investments. The firm is dedicated to partnering with world-class management teams across targeted industry sectors to help companies achieve their operating and financial objectives.

Oaktree is a leader among global investment managers specializing in alternative investments, with $76.4 billion in assets under management as of June 2013. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in corporate debt, private equity, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 750 employees and offices in 13 cities worldwide.

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August 23rd, 2013

Matt Damon Talks Surfing With David Letterman

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August 23rd, 2013

The Surfer’s Guide To Marketing

The Surfer’s Guide To Marketing is an entertaining, motivational, and educational guide to developing marketing efforts in today’s fluid landscape. Utilizing surfing and ocean references while interjecting real-world examples that provide both traditional and unorthodox brand communication tactics in the competitive marketplace, The Surfer’s Guide To Marketing challenges marketing minds to push the envelope. Featuring cases and insight from such brands as ZICO, Body Glove, and Wahoo’s and interviews with famous innovators like FOX’s David Hill and Super Agent Leigh Steinberg, the book is a hands-on, humorous discussion of marketing strategy and tactics. By creating an atmosphere for marketing and business professionals to think outside-the-box, we paddle out into a lineup consisting of large brands, small start-ups, and everyone else in the market vying for the wave of consumer attention. The Surfer’s Guide To Marketing crushes boring, industry text book rhetoric like a barrel at North Shore and drops in plenty of humor and a unique marketing perspective to encourage fresh thought and a new attitude for brands.

Randy, seems you could have used a good graphic artist to mock up your cover, we’re just saying…

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I appreciate when someone can put a new spin on traditional views. That is how I have approached my life and experienced great rewards as a result. The other thing that is imperative to remember is to trust yourself even when it can be scary pushing uncharted waters. Randy uses surfing as a great teacher and provides interesting analogies to communicate his marketing philosophies in his book. – Laird Hamilton

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August 23rd, 2013

Want To Look Like Pro Surfer Cory Lopez

Then head over to Cory Lopez’s facebook page where you have a chance to WIN Cory’s signature gear!

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August 22nd, 2013

Our Daily Fix

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August 22nd, 2013

Lost Wetsuits and Surfboards At Cardiff Reef

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August 22nd, 2013

Compassing – A Surf Movie By Cyrus Sutton

Compass_ing // Cyrus Sutton x Reef

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No one knows Just Passing Through like Cyrus Sutton. And in the latest chapter of Cy’s adventures, he’s customized his van for experiencing life on the road. Through cutting, sanding, welding, and staining, he’s transformed his old van into a unique camper that’s been helping him traverse the Western side of North America to seek out good waves and good people. Reef is proud to partner with Cy on his new project, “Compassing,” a film chronicling his recent van travels.

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August 21st, 2013

Alana Blanchard In Sony TMobile Commercial

TMobile we get using Alana, but god you could have spent some money and hired some decent actors. What a flop of a commercial!

“Hang ten Alana, hang ten”

Pro-surfer and model Alana Blanchard undertakes her most dangerous mission yet. However, with the Sony Xperia Z from T-Mobile, she’ll be set to save the world!

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August 20th, 2013

Quote Of The Day

“That was weird” – Andy Irons (moments after leaving Surf Ride surf shop where he had to pay full price for his own Dakine leash as he needed one for a Billabong shoot he was doing in Oceanside)

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