Merchant buys 1 million Billabong shares Jenny Rogers | 07:37am October 24, 2012
BILLABONG founder Gordon Merchant may be under siege from shareholders but his purchase of about a million shares shows he still believes the embattled retailer's fortunes can be turned around.
Mr Merchant has just spent $753,895.21 to buy more than 900,000 Billabong shares at an average of about 84.
The purchase, before Billabong's annual meeting in Broadbeach today, also appears to be a vote of confidence in new chief executive Launa Inman and her four-year turnaround strategy for the struggling Gold Coast-based surfwear giant.
Ms Inman has also backed her plans to save the company, becoming a shareholder for the first time at the same average price.
She acquired 59,000 Billabong shares on October 19 valued at $49,610.
The acquisition represents about half the $100,000 sign-on incentive package awarded to her when she was appointed chief executive in May, replacing Derek O'Neill.
Her remuneration package also includes a long-term incentive with a face value of $614,000 this financial year.
Her total fixed remuneration is $1.3 million a year.
Newly appointed Billabong director Sally Pitkin also acquired 70,000 shares, with a value of $57,300.
Their decisions to take up shares come as the Billabong board is set to front shareholders at the company's annual meeting today, the first since Ms Inman took on the top job and outlined her plan to reverse a slide that has seen shares slump to a record low of 74. The confidence of Billabong's largest shareholders and its CEO is not echoed by the Australian Shareholders Association, which is refusing to back away from efforts to oust Mr Merchant from the board over his role in the company's rejection of a $3.30-a-share takeover offer from private equity group TPG in February.
The association is recommending that Mr Merchant and fellow director Colette Paull be voted off the board, despite being forced to retract statements it made in its initial recommendation to shareholders to dump the pair.
Lawyers for Mr Merchant and Ms Paull, who supported his February decision to reject the bid, wrote to the association demanding it retract claims Mr Merchant had prevented the board accepting an offer of $3.30 from TPG.
"It was not correct for the ASA to state that Mr Merchant effectively prevented the board from accepting an offer of $3.30," the ASA said.
"The ASA acknowledges confirmation from (lawyers) that the board of BBG made a unanimous decision to cease discussion with TPG and not allow due diligence to commence based on an indicative price of $3.30."
The association also conceded it had been incorrect to suggest Mr Merchant should have known of any perilous financial position before his personal decision to reject TPG's offer.
However, it said it would still recommend shareholders vote against the re-election of Mr Merchant and Ms Paull. At today's AGM, chairman Ted Kunkel will be replaced by Ian Pollard.
Billabong shares closed yesterday at 85.
BBG Price at posting:
70.2¢ Sentiment: None Disclosure: Held
