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SYDNEY—Billabong International Ltd.'s BBG.AU +34.00% lenders made an unsolicited proposal Wednesday to refinance the Australian surfwear retailer, people familiar with the matter said, just a day after Billabong accepted a rescue package from a consortium. U.S. distressed-debt investors Centerbridge Partners and Oaktree Capital Management offered more attractive terms than those agreed with a consortium comprising Californian private-equity firm Altamont Capital Partners and theBlackstone Group LP's BX +0.59% credit arm, GSO Capital Partners, the people said. Centerbridge and Oaktree, which own the majority of the struggling retailer's 289 million Australian dollar (US$267 million) debt facility, hired Moelis & Co. as an adviser earlier this month, while Goldman Sachs Inc. GS +0.61% is advising Billabong. One of the people said the proposed refinancing involves Centerbridge and Oaktree taking a 60% stake in Billabong through a debt-for-equity swap. They would then raise A$100 million (US$92.5 million) of debt carrying an interest rate of 8% a year. That compares to the US$294 million of debt that Billabong will take on at an average repayment rate of 12% annually under the deal with the Altamont-led consortium. If shareholders vote against some key terms including approving the issue of options and a A$40 million convertible note, which provide the Altamont-led consortium with an up to 40% equity stake, the interest rate on the note could rise to 35%. The person said around A$40 million in interest payments over five years will be due under the unsolicited offer, compared with around A$190 million under the Altamont deal. However, the offer by Centerbridge and Oaktree, which gives shareholders a smaller overall stake in a company with a healthier financial position, is conditional on them carrying out due diligence that could take months, a person familiar with the matter said. Billabong has agreed to pay the Altamont-led consortium a break fee of A$65 million, or 40% of the retailer's market value as of Wednesday's close, if it abandons the deal. Billabong's period of exclusivity with the consortium ends Dec. 31. The Centerbridge and Oaktree proposal also suggests that Billabong retain DaKine, which it agreed to sell to Altamont for A$70 million. Billabong bought the action-sports and outdoor-accessories brand in 2008 for A$174 million, including deferred costs and transaction fees. In an interview with The Wall Street Journal Tuesday, Billabong Chairman Ian Pollard said the Altamont offer was attractive, and directors had agreed to a deal because it made the group's financial position less uncertain. Shares in Billabong rose 34% to close at A$0.335 on Wednesday in response to the Altamont lifeline, which included replacing the company's chief executive by the end of the month. http://online.wsj.com/article/SB10001424127887324448104578611281628295120.html
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