Billabong says claim unlikely to impact group
Billabong International Limited (BBG) said it is the subject of a $53 million civil claim requesting compensation in the Denpasar District Court in Indonesia by its former Indonesian licensee, CV Bali Balance (CVBB), plus US$100 million for 'unspecified' damages arising out of the termination. The surfwear retailer said it believes it is highly unlikely that the civil claim would have any material adverse effect on its business or operations outside Indonesia or on the revenue, profitability or financial condition of the Billabong Group as a whole.
Billabong said it was issuing the statement now to ensure that any media coverage that may result from the commencement of the civil claim is made with knowledge of Billabong's position on these matters.
In explaining the background of the claim, the company said it terminated the licence in 2005 relying on a right of termination in the agreement.
”Upon termination, the licence had approximately three years left until expiry,” Billabong said.
”Although CVBB signed a deed acknowledging the validity of the termination at the time, it is disputing the validity of termination.”
The company said it as been conducting its business in Indonesia directly through its wholly owned subsidiary, PT Billabong Indonesia since the termination.
Billabong said Indonesia represented approximately 0.7% of the group's global sales in FY09.
The company said that on the basis of the legal advice it has received that there is no basis whatsoever for CVBB's civil claim.
”In Billabong's view, the civil claim is simply tactical litigation in Indonesia to attempt to influence the settlement discussions which are ongoing between Billabong and CVBB,” the company said.
As at 1032 AEDT, Billabong shares were up 5c to $10.71.
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