Billabong International Limited : Despatch of letters to eligible and ineligible shareholders

COMPANY SECRETARY

1 Billabong Place

Burleigh Heads

QLD 4220 Australia

P O Box 283

Burleigh Heads

QLD 4220 Australia

Tel: +61 7 5589 9899

Fax: +61 7 5589 9654

www.billabongbiz.com

BILLABONG INTERNATIONAL LIMITED

ABN 17 084 923 946

27 February 2014
Dear Shareholder

BILLABONG INTERNATIONAL LIMITED A$50 MILLION ACCELERATED RENOUNCEABLE ENTITLEMENT OFFER

On 21 February 2014, Billabong International Limited ("Billabong") announced a non-underwritten accelerated renounceable pro rata entitlement offer of new Billabong ordinary shares ("New Shares") (with retail entitlements trading) to raise up to approximately A$50 million ("Entitlement Offer")1.

The additional capital raised by the Entitlement Offer will complete the recapitalisation plans announced by Billabong on 19 September 2013
and provide Billabong with the opportunity to apply at least A$20 million2 of the amount raised toward the part prepayment (with no prepayment penalty) of the term loan facility provided by a consortium of Centerbridge Partners L.P and Oaktree Capital Management L.P. Proceeds in excess of A$20 million will be applied to the term loan facility or used by Billabong for general corporate purposes.
lf you are an eligible shareholder, you will be able to subscribe for 3 New Shares for every 8 existing Billabong ordinary shares held on the Record Date of
7.00pm (Sydney time) on 26 February 2014 ("Entitlement").The offer price is A$0.28 per New Share ("Offer Price"). New Shares issued under the Entitlement
Offer will rank equally with existing Billabong ordinary shares from issue. Fractional Entitlements will be rounded up to the nearest whole number of shares.
Following completion of the Entitlement Offer, Billabong will have issued approximately 180 million New Shares resulting in total Billabong ordinary shares on issue of approximately 990 million. The Entitlement Offer is not underwritten.
The Entitlement Offer comprises an offer to certain eligible institutional shareholders ("Institutional Entitlement Offer") and an offer to Eligible Retail Shareholders (defined below) to participate at the Offer Price and the offer ratio noted above ("Retail Entitlement Offer"). The Retail Entitlement Offer is being made by Billabong under a prospectus issued under section 713 of the Corporations Act (2001) (Cth) ("Corporations Act") lodged with the
Australian Securities and Investment Commission ("ASIC") and the Australian Securities Exchange ("ASX") (as amended or replaced) ("Prospectus").

"Eligible Retail Shareholders" are those persons who are registered as a holder of existing Billabong ordinary shares as at 7.00pm (Sydney time) on the Record Date (26 February 2014) and who:

• have a registered address in either Australia or New Zealand;

• are not in the United States and are not acting for the account or benefit of a person in the United States;

• were not invited to participate (other than as nominee, in respect of other underlying holdings) in the Institutional Entitlement Offer and were not treated as ineligible institutional shareholders under the lnstitutional Entitlement Offer; and

• are eligible under all applicable securities laws to receive an offer under the Retail Entitlement Offer.

This letter is not an offer document but rather an advance notice of some key terms and conditions of the Prospectus. Full details of the Retail Entitlement Offer are set out in the Prospectus, copies of which will be available on the ASX website and the Billabong website at www.billabongbiz.com from 26 February 2014.
As an Eligible Retail Shareholder, you will be mailed a Prospectus, together with a personalised entitlement and acceptance form ("Entitlement and Acceptance Form") which contains details of your Entitlement from 28 February 2014. You should read the entire Prospectus carefully before deciding whether to participate in the Retail Entitlement Offer.

As an Eligible Retail Shareholder, you may take any of the following actions:

• take up all or part of your Entitlement (see Section 3.1.1 of the Prospectus);

• sell all or part of your Entitlement to persons meeting certain eligibility criteria:

• on ASX (see Section 3.1.2 of the Prospectus); or

• by transferring it directly to another eligible person (see Section 3.1.3 of the Prospectus); or

• do nothing and let your Entitlement be sold through the Retail Shortfall Bookbuild (see Section 3.1.4 of the Prospectus).

Your Entitlement may have value and it is important you determine whether to (in whole or in part) take up, transfer, sell or do nothing in respect of your Entitlement. You should ensure that you understand the tax consequences of any action that you take or of doing nothing (see Section 9 of the Prospectus, which provides information on potential taxation implications for Australian resident and foreign resident Shareholders).

1 The offer ratio for the Entitlement Offer is 3 New Shares for every 8 existing shares, and to be consistent with the agreement between Billabong and the C/O Consortium, the C/O Consortium will not be taking up or selling their rights in respect of the Placement shares (and such shares shall not be part of any shortfall book build). As a result, it is expected that the Entitlement Offer will result in the issuance of up to 180,273,753 shares at A$0.28 per share, and will raise up to approximately A$50 million.

2 Billabong also has the discretion to determine whether to apply the proceeds from the Entitlement Offer in excess of A$20 million to the part prepayment of the Term Loan Facility with no prepayment penalty. Proceeds of the Entitlement Offer that Billabong does not apply to the Term Loan Facility will be used by Billabong for general corporate purposes. In the event the Entitlement Offer raises less than A$20 million, Billabong is not obliged to make up any shortfall from the A$20 million to prepay the Term Loan Facility.

Announcement of the Entitlement Offer Friday, 21 February 2014

Retail Entitlements trading on ASX begins on a deferred settlement basis Wednesday, 26 February 2014

Record Date for eligibility in the Entitlement Offer 7.00pm (Sydney time) Wednesday, 26 February 2014

Prospectus lodged with ASIC and ASX Wednesday, 26 February 2014

Retail Entitlement Offer opens Thursday, 27 February 2014

Entitlements under the Retail Entitlement Offer trading on the ASX begins on a normal
settlement basis Friday, 28 February 2014

Despatch of the Prospectus Friday, 28 February 2014

Retail Entitlements trading on the ASX ends Tuesday, 11 March 2014

New Shares under the Retail Entitlement Offer commence trading on ASX on a deferred
settlement basis Wednesday, 12 March 2014

Retail Entitlement Offer closes 5.00pm (Sydney time) Tuesday, 18 March 2014

Retail Bookbuild Tuesday, 25 March 2014

Settlement of the Retail Entitlement Offer Friday, 28 March 2014 lssue of New Shares under the Retail Entitlement Offer Monday, 31 March 2014
New Shares under the Retail Entitlement Offer commence trading on a normal
settlement basis Tuesday, 1 April 2014

Retail premium proceeds (if any) distributed to shareholders Wednesday, 2 April 2014

Despatch of holding statements to holders of New Shares issued under the Retail
Entitlement Offer and Retail Shortfall Bookbuild Wednesday, 2 April 2014

The above timetable is indicative only and subject to change. Billabong reserves the right to amend any or all of these dates and times without notice subject to the Corporations Act, the ASX Listing Rules and other applicable laws. ln particular, Billabong reserves the right to extend the closing date of the Retail Entitlement Offer, to accept late applications under the Retail Entitlement Offer (either generally or in particular cases) and to withdraw the Retail Entitlement Offer without prior notice. Any extension of the closing date will have a consequential effect on the issue date of the New Shares.
lf you have any further questions, you should contact your stockbroker, solicitor, accountant or other professional adviser or call the Billabong Entitlement Offer Information Line on 1300 640 142 (within Australia) or +61 3 9415 4686 (outside Australia) between 9.00am and 5.00pm (Sydney time) Monday to Friday.

The Billabong Board is pleased to offer this opportunity to you. Yours sincerely,
Company Secretary
Billabong International Limited
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES.

Important information

This letter is issued by Billabong International Limited, ABN 17 084 923 946 (''Billabong"). This letter is not a prospectus or offering document under Australian law or under any other law. lt is for information purposes only and does not constitute an offer, invitation or recommendation to subscribe for, retain or purchase any securities in Billabong in any jurisdiction. This letter will not form any part of any contract for the acquisition of Billabong ordinary shares. This letter does not constitute an offer to sell, or the solicitation of an offer to buy, any securities ¡in

the United States. No action has been, or will be, taken to register, qualify or otherwise permit a public offering of the New Shares in any jurisdiction outside Australia or New Zealand. ln particular, neither the Entitlements nor the New Shares referred to herein have been, nor will be, registered under the U.S. Securities Act of 1933 (the "Securities Act")or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the Entitlements may not be issued to, purchased or traded by, or taken up or exercised by, and the Entitlements and New Shares may not be offered or sold to, persons ¡in the United States or persons who are acting for account or benefit of persons in the United States except pursuant to an exemption from, or in a transaction not subject to,the registration requirements of the Securities Act and applicable U.S. state securities laws. The Entitlements and the New Shares to

be offered and sold in the Retail Entitlement Offer may only be offered and sold outside the United States in 'offshore transactions'(as defined in Rule 902(h) under the Securities Act) in reliance on Regulation S under the Securities Act. The entitlements and the New Shares to be offered and sold in the Retail Entitlement Offer may only be sold outside the United States in

'offshore transactions' (as defined in Rule 902(h) under the Securities Act) in compliance with Regulation S under the Securities Act.

This release contains certain forward-looking statements. Forward-looking statements include those containing words such as "anticipate", "believe", "expect", "project", "forecast", "estimate", "likely", "intend", "should", "could", "may", "target", "plan", consider", "foresee", "aim", "will" and other similar expressions. Any forward-looking statements, opinions and estimates provided in this release are based on assumptions and contingencies which are subject to change without notice and involve known and unknown risks and uncertainties and other factors which are beyond the control of Billabong.This includes any statements about market and industry trends, which are based on interpretations of current market conditions.The provision of this document is not, and should not be considered as, financial product advice.The information in this document is general information only, and does not take into account your individual objectives, taxation position, financial situation or needs. lf you are unsure of your position, please contact your accountant, tax advisor, stockbroker or other professional advisor.

1 Billabong Place

Burleigh Heads

QLD 4220 Australia

P O Box 283

Burleigh Heads

QLD 4220 Australia

Tel: +61 7 5589 9899

Fax: +61 7 5589 9654

www.billabongbiz.com

BILLABONG INTERNATIONAL LIMITED

ABN 17 084 923 946

27 February 2014

Dear Shareholder

RE: BILLABONG INTERNATIONAL LIMITED NON-UNDERWRITTEN ACCELERATED RENOUNCEABLE ENTITLEMENT OFFER - NOTIFICATION TO INELIGIBLE RETAIL SHAREHOLDERS

On 21 February 2014, Billabong International Limited ("Billabong") announced that it was conducting an accelerated renounceable pro-rata entitlement offer (with retail entitlements trading) to eligible Shareholders to subscribe for 3 new Billabong shares ("New Shares") for every 8 existing Billabong shares ("Shares") held ("Entitlement"), at an offer price of $0.28 per New Share ("Offer Price") (the "Entitlement Offer").

The Entitlement Offer comprises an offer to eligible institutional shareholders ("Institutional Entitlement Offer") and an offer to Eligible Retail

Shareholders (as defined below) to participate on the same terms ("Retail Entitlement Offer").

This letter is to inform you about the Entitlement Offer, and to explain why you are not eligible to participate in the Entitlement Offer.

The Retail Entitlement Offer is being made by Billabong under a prospectus issued under section 713 of the Corporations Act 2001 (Cth) (as amended or replaced) ("Prospectus"). The Institutional Entitlement Offer raised approximately $19 million, and the Retail Entitlement Offer will raise up to approximately $31 million.

The Prospectus was lodged with the Australian Securities and Investments Commission and the Australian Securities Exchange ("ASX") on

26 February 2014 and is being mailed to Eligible Retail Shareholders (as defined below).

The Retail Entitlement Offer is being made to Eligible Retail Shareholders (as defined below) on the basis of 3 New Shares for every 8 Shares held at

7.00pm (Sydney time) on 26 February 2014 ("Record Date").

The restrictions upon eligibility are because of legal limitations in the jurisdiction in which you are located, the relatively small number of shareholders in your jurisdiction, the relatively small number of shares that shareholders in your jurisdiction hold and the potential cost of complying with regulatory requirements in your jurisdiction.

Billabong has determined, pursuant to ASX Listing Rule 7.7.1(a), that it would be unreasonable to make offers to shareholders in all countries outside

Australia and New Zealand in connection with the Retail Entitlement Offer.

Accordingly, in compliance with ASX Listing Rule 7.7.1(b), Billabong wishes to advise you that it will not be extending the Retail Entitlement Offer to you and you will not be able to subscribe for New Shares under the Retail Entitlement Offer. Shareholders who are eligible to participate in the Retail Entitlement Offer ("Eligible Retail Shareholders") are shareholders who:

a) are registered as a holder of Shares as at 7.00pm (Sydney time) on the Record Date;

b) have a registered address on the Billabong share register in Australia or New Zealand;

c) are not in the United States and are not acting for the account or benefit of persons in the United States;

d) were not invited to participate (other than as nominee, in respect of other underlying holdings) in the Institutional Entitlement Offer and were not treated as ineligible institutional shareholders under the Institutional Entitlement Offer; and

e) are eligible under all applicable securities laws to receive an offer under the Retail Entitlement Offer.

Unfortunately, as you do not satisfy the eligibility criteria for an Eligible Retail Shareholder stated above, you will not be sent the Prospectus or be able to subscribe for New Shares under the Retail Entitlement Offer.

A number of New Shares equal to the number of Entitlements not taken up by Eligible Retail Shareholders (along with those of ineligible retail shareholders) will be sold by Goldman Sachs Australia Pty Ltd (the "Sole Lead Manager") in a bookbuild process following the Retail Entitlement Offer (the "Retail Entitlement Bookbuild"). The Retail Entitlement Bookbuild is expected to be completed on 25 March 2014.

The premium over the Offer Price per New Share that may be achieved under the Retail Entitlement Bookbuild (if any, and net of any applicable withholding tax) will be paid to ineligible shareholders and eligible shareholders who do not take up their full Entitlement in proportion to the number of New Shares represented by their Entitlement.

There is no guarantee that any value will be received for the Entitlements through the Retail Entitlement Bookbuild. The ability to sell New Shares under the Retail Entitlement Bookbuild and the ability to obtain any premium will be dependent upon various factors, including market conditions. Further, the bookbuild price may not be the highest price available, but will be determined having regard to a number of factors, including having binding and bona fide offers which, in the reasonable opinion of the Sole Lead Manager will, if accepted, result in otherwise acceptable allocations to clear the entire book. To the maximum extent permitted by law, none of Billabong, the Sole Lead Manager, their respective related bodies corporate, and affiliates, and the directors, officers, employees and advisers of any of them, will be liable, including for negligence, for any failure to procure applications under the Retail Entitlement Bookbuild at a price in excess of the Offer Price.

The Entitlements in the Retail Entitlement Offer will be tradeable on the Australian Securities Exchange. However, the assignment, transfer and exercise of Entitlements trading on ASX will be restricted to persons meeting certain eligibility criteria. In particular, persons in the United States

(and persons acting for the account or benefit of persons in the United States) and persons who are otherwise ineligible to participate in the Retail Entitlement Offer will not be eligible to purchase or trade Entitlements on ASX or take up or exercise Entitlements purchased on ASX or transferred from another person.

Any proceeds received may have Australian and overseas tax consequences, depending on individual circumstances. You should seek professional tax advice regarding the taxation of any proceeds received.

This notice is to inform you about the Retail Entitlement Offer. This letter is not an offer to issue New Shares to you, nor an invitation for you to apply for

New Shares. You are not required to do anything in response to this letter.

If you have any questions in relation to any of the above matters, please contact the Billabong Entitlement Offer Information Line on 1300 640 142 (within Australia) or +61 3 9415 4686 (outside Australia) between 9.00am and 5.00pm (Sydney time) Monday to Friday.

On behalf of the Board and management of Billabong, thank you for your continued interest. Yours sincerely

MARIA MANNINg

Company Secretary

Billabong International Limited

This notice does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. Securities may not be offered or sold in the United States or to, or for the account or benefit of, a person in the United States absent registration or an exemption from registration. The Entitlements and the New Shares to be offered and sold in the Retail Entitlement Offer have not been and will not be registered under the U.S. Securities Act of 1993, as amended ("Securities Act"), or under the securities laws of any state or other

jurisdiction of the United States. Accordingly, the Entitlements in the Retail Entitlement Offer may only be exercised or taken up by, and the New Shares to be offered and sold in the Retail Entitlement Offer may only be offered or sold to persons that are not in the United States and are not acting for the account or benefit of a person in the United States, in each case in "offshore transactions" (as defined in Rule 902(k) under the U.S. Securities Act) in reliance on Regulation S under the Securities Act.

Note: The provision of this document is not, and should not be considered as, financial product advice.The information in this document is general information only, and does not take

into account your individual objectives, taxation position, financial situation or needs. Before acting on the information, you should consider the appropriateness of the information, having regard to your objectives, taxation position, financial situation or needs.

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