Corporate Accounting Research Assignment

Part (a)

i) Facts

If the partial sale of Nixon proceeded, Billabong would sell 48.5% of Nixon to TCP. Billabong would still retain 48.5% of Nixon and remaining 3% shares would be purchased by Nixon’s management (Nixon Joint Venture 2012, p.1).

There are other relevant facts as following:

 Billabong has rights to future upside in Nixon (Strategic Capital Structure Review Update 2012, p.1).

 It brings Billabong enormous long-term benefits from the stable predictive growth of the Nixon brand (Nixon Joint Venture 2012, p.1).

 Billabong will get some directors on the Board. They would sit with TCP and the Nixon management Board (Interim 2012 Earnings Transcript 2012, p.7).

 Billabong has entered into a long-term supply agreement with Nixon which would bring benefits for both of them (Interim 2012 Earnings Transcript 2012, p.14).

 Billabong had the capability to do many things at last. The Company is gaining quite a bit of flexibility which enables it to make decisions in certain areas (Interim 2012 Earnings Transcript 2012, p.21).

Corporate Accounting Assignment 1179511, 1191356

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ii) Assumptions

There are some assumptions that need to be made due to Billabong and TCP have an equal percentage of voting rights. The two key shareholders of Nixon (Billabong and TCP) each own 48.5% of Nixon which is a large proportion. It is reasonable to say that they would attend every annual general meeting. In addition, shareholders are interested in the management of Nixon. They would make decisions about the direction of Nixon in AGMs. Even though Billabong and TCP have an equal amount of Nixon shares, it is not necessary for them to equally share management