Billabong to raise cash, shares slide, GM dealers in trouble: Economy roundup

Surf and sports retailer Billabong will embark on a share sale to raise $290 million, after the sluggish retail environment forced it to lower its full-year guidance.

The company will attempt to raise $200 million from institutional investors and $90 million from retail investors. Billabong is predicting profit for the full-year will be between $160 million to $165 million, down from $176.4 million a year ago.

It says any funds from the capital raising will go towards paying off its net debt, which currently stands at $450 million.

“This will strengthen the company’s balance sheet in the current operating environment and enhance financial flexibility,” it said in a statement.

The Australian sharemarket has opened lower today after a horror week that saw the market lose 4.3% of its value.

The benchmark S&P/ASX200 index was down 56.2 points or 1.5% to 3717 points at 12.15 AEST. The dollar also fell back to US75 cents.

Westpac lost 3.37% to $19.76, with ANZ also falling 1.44% to $15.05. Commonwealth Bank shares fell 1.31% to $35.35, while BHP Billiton lost 1.43% to $32.86.

The Federal Government will construct the world’s largest solar power station at a cost of $1.4 billion, Prime Minster Kevin Rudd has announced.

The Government says tender details will be announced later this year, with successful bidders announced in the first six months of 2010.

“The Government plans to invest with industry in the biggest solar generation plant in the world, three times the size of the world’s current biggest, which is in California,” Rudd said.

Meanwhile, the Treasury has said Opposition Leader Malcolm Turnbull’s plan to lift tobacco taxes as opposed to restricting the private health insurance rebate for high-income earns would result in a $3.2 billion shortfall.

The Treasury claimed that Turnbull’s plan, which he said would replace the $1.9 billion in savings that the Government is seeking from rolling back the insurance rebate, would actually collect $3.2 billion less than Labor’s plan.

In the US, troubled carmaker General Motors has dropped about 1600 of its dealers in a move that fuels fears the company will file for bankruptcy in the next fortnight.

Combined with Chrysler, more than 2300 auto retailers have been told they will be left behind by the two companies. GM has been attempting to stay alive and pay off $US27 billion in bond debt.

The news comes ahead of an expected troubled week for Wall Street, with jobless data from the Labor Department predicted to drive down investors’ confidence.