Billabong faces lawsuit over link in Indonesia

SYDNEY - Surfwear brand Billabong International is being sued by its former Indonesian licensee, CV Bali Balance (CVBB), over the termination of its distribution licence in Indonesia.

The civil claim in the Denpasar District Court includes a claim for compensation of US$53 million ($75.8 million) for specific loss which CVBB claims to have suffered from the alleged invalid termination, and US$100 million for "unspecified" damages arising from the termination.

Billabong said it was highly unlikely 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 per cent of its global sales in 2008/09.

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

On termination, the licence had had about three years left until expiry.

Billabong said 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 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 judgment in Indonesia coming from the claim.

"Any judgment obtained would be enforceable against the assets of Billabong in Indonesia, which are immaterial to the Billabong group," the company said.

- AAP