Call to oust Billabong director
Gordon Merchant. Photo: Robert Rough
ONE of the country's leading fund managers has called for the founder of surfwear group Billabong, Gordon Merchant, to step down as a director, blaming the businessman and entrepreneur for dismissing a private-equity takeover bid earlier this year worth more than twice the company's present value.
John Murray, managing director of Perennial Value, said Mr Merchant needed to remove himself from the board.
''Dismissing any possible bid below $4 reflects poor judgment for someone who should know more about this business than anyone else.
''The conflict of interest which Gordon Merchant had in rebuffing recent bidding interest has cost all shareholders dearly, not least himself!''
Earlier this year, Billabong fended off a private-equity bid from TPG Capital, with Mr Merchant saying he would not sell for under $4 a share.
Following a string of profit downgrades, including one this week, Billabong shares were last traded at $1.83 but are expected to dive sharply on Monday after a trading halt is removed and the market reacts to a fresh $225 million capital raising priced at only $1.02 a share.
Mr Merchant, Billabong's founder and a 15 per cent shareholder, will invest $30 million in the capital raising but this represents only 85 per cent of his entitlement.
''Departing the board removes any conflict of interest issues for the board and would give us confidence that the board could entertain any potential bids through due and proper process,'' Mr Murray said.
''We are invested in Billabong as we believe in the long-term value of the key brands. However, the extent of the turnaround from the current position is such that it may be better suited for this to occur out of the public spotlight in private hands."
Mr Murray also welcomed the announcement yesterday that Billabong chairman Ted Kunkel would leave the board next year.