Peter J Solomon Company

Case Study

Video
Quiksilver

Quiksilver, Inc. designs, produces, and distributes branded apparel, footwear, accessories, and related products. It offers shirts, walk shorts, t-shirts, fleece, pants, jackets, snowboard wear, footwear, hats, backpacks, wetsuits, watches, eyewear, and other accessories under the Quiksilver brand name. The company also provides a range of sportswear, swimwear, footwear, backpacks, snowboard wear, snowboards, bedroom furnishings, and other accessories primarily for young women, girls, and infants under the Roxy brand name. 

In addition, it offers skateboard shoes, snowboard boots, sandals, and apparel for young men and juniors under the DC brand name. Additionally, the company provides products under the Raisins, Radio Fiji, Leilani, Hawk, Lib Technologies, Gnu, and Bent Metal brand names.

It sells its products in approximately 90 countries in the Americas, Europe, and the Asia Pacific through various distribution channels, including surf shops, skateboard shops, snowboard shops, and its proprietary concept stores, as well as through select department stores, independent specialty or active lifestyle stores, and specialty chains. Quiksilver, Inc. was founded in 1976 and is headquartered in Huntington Beach, California.

Assignment

PJSC was hired to raise additional capital in order to recapitalize Quiksilver’s balance sheet and preserve value for equity.

Challenge

Weak market conditions and poor Company performance resulted in reduced cash flow and limited liquidity for this leading global apparel and footwear company with iconic brands.

A series of covenant defaults resulted in requested exit by lead lender, on behalf of the bank group.
The Company pursued PIPE (Private Investment in Public Equity) transactions to refinance existing banks – which failed due to declining EBITDA and significant leverage.

Process

PJSC devised a program to raise a new asset-based facility coupled with a secured term loan.
Key to the transaction was securing a first lien on trademarks and a second lien on inventory/receivables as security for the new loan.

Broad investor/lender process conducted with banks, specialized funds, hedge funds and private equity firms.

The Company was successful in raising:

  • New $200 million asset-based loan with Bank of America and GE Capital.
  • New $150 million term loan with Rhône Capital

Proceeds were used to pay down existing debt and provide additional liquidity.

Results

The Rhône Capital’s term loan infusion stabilized the Company and endorsed its business plan.

Rhône gained two seats on the Quicksilver board.

Equity value was preserved and Chapter 11 filing was averted.