FS Investment Corporation (FSIC) and FS Investment Corporation II (FSIC II), together with private equity firm Altamont Capital Partners, have committed to a USD294m proprietary loan financing for Billabong International Limited.
Billabong is an international manufacturer and distributor of surfwear and extreme sports apparel.
The financing commitment provided by FSIC, FSIC II and Altamont consists of a USD294m bridge loan with an interest rate of 12 per cent per year, a maturity date of 31 December 2013, and meaningful call protections. The financing arrangement also includes an option to acquire a 15 per cent equity stake in Billabong.
The proceeds from the bridge loan are expected to be used to refinance an existing loan facility and to provide Billabong with cash for working capital purposes. The final terms of the financing commitment are subject to change.
Billabong is also working with FSIC, FSIC II and Altamont on a long-term financing solution. Billabong has signed a commitment letter with FSIC, FSIC II and Altamont for a five-year term loan for up to USD254m, the proceeds of which are expected to be used to repay the bridge loan. Under the terms of the commitment letter, the term loan will pay an interest rate of 12 per cent per year, of which seven per cent must be in cash and up to five per cent may be paid-in-kind. FSIC, FSIC II and Altamont have also committed to provide Billabong with USD40m in convertible notes, which if converted into shares would equate to approximately 25 per cent of Billabong’s equity.
"We are pleased with the structure, downside protection and return potential of our latest proprietary transaction," says Michael C Forman, chairman and chief executive officer of FSIC and FSIC II. "This transaction is possible because of the scale of our platform, our ability to co-invest across our funds and our access to the deal flow sourced by our partners at GSO/Blackstone. We are also pleased to provide this interim financing solution for Billabong and look forward to working with Billabong’s new management to provide a long-term financing solution for the company."
