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Billabong sued for $168 million in Indonesia

Billabong sued for $168 million in Indonesia
March 15, 2010

Surfwear brand Billabong International is being sued by its former Indonesian licensee, CV Bali Balance, over the termination of its distribution licence.

The civil claim in the Denpasar District Court includes a claim for compensation of $US53 million ($58.29 million) for specific loss which CVBB claims to have suffered from the alleged invalid termination, and $US100 million ($109.99 million) for "unspecified" damages arising from the termination.

Billabong said it was highly unlikely that the civil claim would have any material adverse effect on its business or operations outside Indonesia.

It also would not affect revenue, profitability or the group's financial condition. Billabong's business in Indonesia represented about 0.7% of the its global sales in 2008/09.

Billabong said it terminated the licence in 2005 relying on a right of termination in the agreement with the licensee.

Billabong said that, although CVBB had signed a deed acknowledging the validity of the termination at the time, it now was disputing it.

"Billabong believes, on the basis of the legal advice it has received, that there is absolutely no basis whatsoever for CVBB's civil claim," the company said in a statement.

"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."

Since the termination, Billabong has been conducting its business in Indonesia directly through its wholly-owned subsidiary, PT Billabong Indonesia.

But the company said litigation inherently was uncertain and there was a possibility of some judgement in Indonesia coming from the claim.

The company added "any judgement obtained would be enforceable against the assets of Billabong in Indonesia, which are immaterial to the Billabong group."



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