Oaktree supports bankrupt Australian surfwear brand Quiksilver

The company said in a filing that it had asked for bankruptcy court approval for $175 million in debtor-in-possession financing from Oaktree and Bank of America. This capital, combined with other sources of liquidity, is expected to be sufficient to support ongoing operations in the US and overseas. Quiksilver's European and Asia-Pacific businesses remain healthy and are not part of the bankruptcy proceeding.

Oaktree will provide all necessary funding for the Chapter 11 process - which will see net debt reduced by more than $500 million - and then complete a debt-for-equity swap after the restructuring is completed.

Quiksilver, which was founded in Australia in 1969 and is best known for its Quiksilver, Roxy and DC brands, has struggled due to weak demand in North America. Announcing a 16% year-on-year drop in second quarter revenue and a net loss of $37.6 million in June, the company said it would not achieve the significant profit improvement in North America anticipated when it provided guidance for the 2015 financial year.

The company posted revenue of $1.57 billion for the 12 months ended October 2014, down from $1.81 billion the previous year, while the net loss widened from $232.6 million to $309.8 million. Quiksilver relied on the US for 35% of its revenue last year, compared to 7% in Australia and New Zealand.

Two years ago, Oaktree backed surfwear company Billabong in similar circumstances, albeit not out of bankruptcy. Oaktree and Centerbridge Partners agreed to provide up to $360 million in debt and subscribed to new shares and options allowing them to take an up to 40.8% stake in the Australia Securities Exchange-listed company.

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• Topics
• PIPEs
• Credit/Special Situations
• Restructuring
• Consumer
• Australasia
• North America
• USA
• Australia
• Oaktree Capital
• Distress
• PIPE
• Structured finance
• Consumer