Billabong shares tumble 15%

Shares in struggling surfwear retailer Billabong have dived almost 15 per cent after it downgraded its earnings guidance and said it was considering a fresh $527 million takeover bid.

Former board member Paul Naude has made a $1.10 a share bid for the surfwear company, as part of a consortium which includes New-York based Sycamore Partners and Bank of America Merrill Lynch.

It is Billabong's fifth takeover offer since February.

However the troubled retailer is warning that it now expects its full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $85 million and $92 million for 2012/13.

The new forecast is lower than its previous guidance of $100 million to $110 million, which was given to shareholders at the company's annual general meeting on October 24.

Billabong shares tumbled almost 15 cents, or 15 per cent, to 83 cents at 1122 AEDT, shortly after the announcement was made.

The company attributed its earnings downgrade to weaker-than-expected sales during October and November.

It said statutory EBITDA for the year was expected to be between $53 million and $63 million, due to the costs of the company's transformation and revaluation of one of its businesses.

The company could also incur impairments on the value of its assets during the year.

Options XPress analyst Ben LeBrun said investors had focused on the bad news of the earnings downgrade as well as the many conditions attached to the takeover bid.

"Investors focused on the negatives in the multi-threaded announcement," he said.

Mr LeBrun said the fact that the deal was subject to a confidentiality agreement could put the offer in jeopardy.

Details of the bid had leaked and were published in a newspaper on Monday.

The consortium has also yet to go through a due diligence phase which was when private equity firms, TPG Private Equity and Bain Capital, withdrew their bids, Mr LeBrun said.

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