refinancing of syndicated debt facilities rev

Revised terms
See Annexure A for a summary of the key revised financial terms. The revisions in the Revised
Transaction Documents include the following:
(a) break fee: Previously, if Billabong did not use commercially reasonable efforts to pursue the
long term financing and completed an alternate financing, or was subject to a change of
control, in each case on or prior to 15 January 2014, any prepayment or repayment of the
Bridge Facility utilising such alternate financing or on such change of control was subject to
a premium equal to 20% of the principal amount of the Bridge Facility. The revised
commitment letter no longer contains the 20% premium and instead includes a break fee in
the amount of A$6 million. The circumstances in which the break fee is payable are
summarised in Annexure B.
(b) convertible tranche/35% per annum rate: It was previously proposed that Billabong would
issue a US$40m (A$44m) convertible note to the Altamont Consortium (“Convertible Note”)
as part of the proposed long term financing. Subject to shareholder approval, the
Convertible Note would convert into Redeemable Preference Shares ("RPS"). The interest
rate applicable to the Convertible Note was to be 12% per annum, however initially and until
obtaining shareholder approval for the issue of the RPS, the interest rate was to be 35% per
annum. Under the revised commitment letter, the previously proposed Convertible Note has
been removed.
(c) term loan: The size of the term loan base commitment has been increased from US$200m
(A$221m) to US$275m (A$304m) with an upsize commitment of US$35m (A$39m). The
interest payable on the base commitment will be 15% per annum, payable quarterly, of
which not less than 7% must be payable in cash and up to 8% may be paid in kind. The
interest payable on the upsize commitment will be 10% per annum payable quarterly in
cash.
(d) RPS: The Altamont Consortium has agreed to take up US$60m (A$66m) of RPS2
with a 0%
coupon, subject to shareholder approval. The RPS in the original commitment letter had a
12% per annum dividend entitlement. The proceeds of the subscription by the Altamont
Consortium for the RPS must be applied towards the prepayment of the term loan, with no
make whole premium.
(e) make whole: Previously, mandatory prepayments included a make whole premium upon a
change of control. This has been removed and instead, upon a change of control, Billabong
is required to offer to prepay the term loan at a 1% premium. The applicable make-whole
payments are included in Annexure A.
(f) option strike price: Billabong agreed to issue options to the Altamont Consortium amounting
to 15% of the fully diluted share capital of the Company (including the options). The options
were to be granted in multiple tranches, with the first tranche of options issued on 16 July
2013 with a strike price of A$0.50 per share. The balance of the options to be issued to the
Altamont Consortium on completion of the long term financing also had a strike price of
$0.50. The strike price on the balance of the options has now been changed to $0.01.
As noted above, the Revised Transaction Documents include revised break fee and exclusivity
obligations. These are summarised in Annexure B.