Billabong International Ltd. has cut its fiscal 2009 guidance for the third time since mid-2008, citing the weak U.S. economy as reason for the reductions. The Australia-based surf company now expects to report full year net profit after tax in the range of A$160 million to A$165 million ($122.5 mm to $123.5 mm) for the 12 months ending June 30, a 9.3% drop from the year-ago forecast of A$176.4 million ($135.1 mm.) Additionally, further impairment testing by the company at year-end may result in non-cash charges.
Billabong said the charges, which are expected to relate to various retail assets, are not anticipated to exceed A$10 million ($7.7mm) pre-tax for the year and include the A$2.3 million ($1.8 mm) charge already announced in the first half results.
The company is also looking to raise A$290 million ($217.6mm) to pay down debt, reportedly with a share sale priced at a 29% discount to its last trade. Billlabong said it intends to use offering proceeds of the offer to reduce the amount of outstanding drawn debt. Shares fell nearly 20% for the week on the news. Under the plan, Billabong is offering a fully underwritten 2-for-11 rights offer to institutions, at A$7.50 a share, valued at A$200 million, and a matching offer to retail shareholders, which would raise up to A$90 million. The offer price of A$7.50 represents a 29% discount to Billabong's closing share price on May 13 of A$10.62.
Billabong also announced that company founder and director Gordon Merchant intends to take up his full share of entitlements.
