Surfwear company Billabong has launched a $225 million fund raising venture it says is vital for its future.
The company will issue new shares to existing shareholders at a 44 per cent discount to current prices, and use the funds to reduce its debt from $325 million to about $100 million, it said.
Billabong has also extended its loans to ensure repayments are not due until least July 2014.
"Today's capital raising is a vital step forward for Billabong," recently appointed chief executive Laura Inman said in a statement.
"It not only further strengthens the balance sheet, but also assists in continuing to execute on previously announced initiatives and to execute on the transformation strategy."
Billabong announced a major restructure in February in response to its declining financial performance.
The moves included the closure of stores and 400 job cuts, plus the sale of its accessories brand Nixon Inc.
The company said the sale had produced $US285 million, which was used to pay down its debt.
Billabong had so far closed 45 stores, with another nine expected to go by the end of June, and then a further 84 by the end of June 2013.
No detail was given on how many jobs had been cut as part of the store closures.
But the company has downgraded its earnings guidance for the year to June 30, as trading conditions in Australia, Europe and the United States remained poor.
Billabong now expects underlying earnings, which exclude one-off costs from the restructure, to be $130 million to $135 million.
That's down from its forecast provided in February of earnings slightly above $157 million.
Pro-forma earnings, which would exclude the proceeds of the Nixon sale, are expected to be between $83 million and $88 million.
Trading conditions are expected to remain soft in the next financial year, but pro-forma earnings in 2012/13 are expected to be higher than in 2011/12, Billabong said.
More to come