Billabong has around $400M in cash. That would have made BBG very tempting for TPG and Bain to purchase. However in the next 2 years Billabong will be paying out $45M for capex, $130M for deferred payments for acquisitions made, $40M for restructuring costs.
So all up Billabong will have cash outflow of ~$215M in the next 2 years, if we conservatively estimate that their net cash flow from operations is around $70M per annum then they have more than enough cash to fund the business through these hard times.
But they still need to sell surf and skatewear at a decent margin...I think TPG and Bain walked away when they realised just how much of the $400M cash pile needs to be spent in the next couple of years.
Anyway I'm in at 75c, looks good value.
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