what debt sales tell you about billabong, page-4

12:01 am
Jun 26, 2013
Asia

CBA Sells Billabong Debt at a Discount

By Gillian Tan
Australia’s largest lender by market value Commonwealth Bank of Australia CBA.AU +1.35%, has sold its debt holding in troubled retailer Billabong International Ltd. BBG.AU -1.58% worth around 65 million Australian dollars (US$60.1 million), a person familiar with the matter said Wednesday.

CBA ran an auction for its parcel in Billabong’s debt syndicate, which traded at 85 cents to the dollar, or a discount of 15%, the person said. HSBC Holdings PLC HSBA.LN +2.29%left the syndicate in the past week, selling its debt position worth around A$20 million for a 20% discount, the person said.

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Billabong said Tuesday it remained in refinancing and asset-sale talks with U.S. private equity firms Altamont Capital Partners and Sycamore Partners Management.

But holders of Billabong’s debt could crash negotiations if they agitate for control through a debt-for-equity swap. Billabong’s equity is currently worth around A$90.1 million, having tumbled from highs of A$3.8 billion as recently as 2007. Its syndicated debt facility totaled A$280 million at Dec. 31.

In recent years, senior lenders have seized control of distressed businesses including Nine Entertainment Co., which had a debt pile of A$3.3 billion. Oaktree Capital teamed up with TPG Opportunities Partners and other lenders to take control of Alinta Energy, which was weighed down by A$2.6 billion in debt. Separately, lenders to Centro Properties Group swap CEOPF -90.00%ped A$2.9 billion of debt for equity, keeping the group out of receivership.

Earlier this month, lenders to MediaWorks New Zealand began negotiations to swap their debt for equity.

HSBC didn’t return calls for comment. Spokespeople for Billabong and CBA declined to comment.

http://blogs.wsj.com/moneybeat/2013/06/26/cba-sells-billabong-debt-at-a-discount/