Why the Billabong share price is up 20% this week

The Billabong International Limited (ASX: BBG) share price has surged over 20% higher this week, including another 7.9% today.

Firstly, it was news on Wednesday that the apparel retailer had finally settled a shareholder class action claim for $45 million – as we noted here.

In short, shareholders had claimed the company had not met its continuous disclosure obligations in 2011 over a series of profit downgrades. As part of the settlement, Billabong admitted no liability on its part.

Then on Wednesday, Billabong announced that entered into a new US$100 million asset-based credit facility with Bank of America Merrill Lynch. That replaced a GE Capital facility from 2013, which was charging above market rates. The new debt facility should see Billabong pay low interest rates – and could prove to be a boost to earnings.

Late last month, Billabong also announced that it had sold its skate hardware brand Sector 9 for around US$12 million – allowing the company to focus on its key brands of Billabong, RVCA and Element.

Here’s the chart:

Billabong share price chart Jul 2016

Source; Yahoo Finance


Since 2013, Billabong’s share price has more than tripled as the surfwear retailer recovered from self-inflicted wounds.

Foolish takeaway

Billabong’s share price may have more room to run if it can continue generating positive results.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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