Quiksilver, Inc. announced yesterday a major financial restructuring plan that includes a Private Equity loan as well as a bank credit facility. The Company secured a $150 million 5-year term senior loan from international Private Equity house Rhone Group with offices in New York, London and Paris. In addition, Bank of America and GE Capital have refinanced the Quiksilver Americas facility in the form of a 3 year, $200 million asset based credit facility. Quiksilver may also plan to consolidate its European debt with one or more of the French banks.
The loan will bear a coupon rate of interest of 15% of which up to 7.5% is payable in-kind (PIK) with the remainder payable in cash. Rhone will also receive detachable warrants providing the right to acquire approximately 20% of the then-outstanding shares of Quiksilver’s common stock at a strike price of $1.86, which is the volume weighted average closing price over the 60-day period ended June 2, 2009. The warrants expire seven years from issue.
The capital raised with help improve the Company's liquidity position and also help them secure further loans or credit terms in the future by bulking up their balance sheet. Quiksilver, Roxy and DC will be the focus brands for the company going forward and expect to see heavy involvement from Rhone in improving operating performance as they have appointed two directors now to the Board. In these economic times, I can see the possibility of more companies turning to Private Equity in order to help finance operations.