Iconic surf brand reported to be filing for
bankruptcy as early as tomorrow, says Bloomberg Biz.
Nothing lasts forever. Not the Roman Empire,
not the German Third Reich, not the ASP and, now, not the most
iconic of all surf brands, Quiksilver.
Quiksilver. Yeah.
As reported by Blooomberg Business this morning,
“Quiksilver Inc. is preparing to file for bankruptcy as soon as
Tuesday evening in a deal that would hand control of the
beleaguered surfwear chain to investment firm Oaktree Capital
Management, according to people with knowledge of the
deliberations.
“As part of a prearranged Chapter 11 restructuring, Oaktree
would provide $175 million in debtor-in-possession financing and
assume control of the reorganized company, said a person familiar
with Quiksilver’s thinking, who asked not to be identified because
the proceedings aren’t yet public. Any plan would require court
approval.
“Representatives for Huntington Beach, California-based
Quiksilver and Oaktree didn’t immediately respond to requests
for comment.
“The company had been trying to attract bidders for a
management-led buyout, ideally outside of a bankruptcy, people
familiar with the situation said last week. But that approach would
have made it harder to abandon the company’s costly leases,
something Chapter 11 will allow Quiksilver to do.
“Oaktree, based in Los Angeles, already has a connection to the
surfwear industry. The firm, together with Centerbridge Partners,
is the largest backer of Billabong International Ltd., the
Australian brand. Oaktree has a total of more than $100 billion
under management.
“Quiksilver shares tumbled as much as 78 percent to 10 cents in
late trading Tuesday after Bloomberg News reported on the
bankruptcy plan. The stock had already lost 79 percent of its value
this year, closing at 46 cents earlier in the day. The company
received a warning from the New York Stock Exchange in July that
its low stock price put it at risk for being delisted.
“Quiksilver rode the fashion trend toward surfer and
skateboarding styles in the 1990s and early 2000s, along with
names like Billabong and Pacific Sunwear of California Inc. The
company, which teamed up with athletes such as surfer Kelly Slater
and skater Tony Hawk, sponsored surfing competitions around the
world.
But a shift away from surfer fashion — along with broader
pressures on the apparel industry — took their toll. After a period
of heady expansion, Quiksilver struggled to compete with
fast-fashion retailers like H&M. Those brands lured away
Quiksilver’s teen customers with lower prices and on-trend clothes,
and the company lost its cachet with athletes.
“The chain suffered a 13 percent decline in sales last year,
with its net loss widening to $309.4 million.
“Quiksilver has been working with FTI Consulting Inc. on a
restructuring, and is using Peter J. Solomon Co. as its investment
banker. The company plans to continue with a store-closing effort
after filing for bankruptcy, according to one of the people.
Quiksilver’s European and Asia-Pacific operations won’t be part of
the filing, the person said.”
