Action sports clothing manufacturer and retailer Quiksilver Inc. said a U.S. Bankruptcy Court judge today gave the go-ahead on $175 million in debtor-in-possession financing.
The court had earlier approved $115 million of that DIP financing “on an interim basis,” but today’s ruling is for the full amount of the original package. Another $10 million was approved by the judge and earmarked to go to what the company said are “critical vendors.”
Quiksilver in September filed for Chapter 11 bankruptcy protection after a rough set of years in which the business struggled under a high debt load that dated back to the 2005 failed purchase and later sale — at a significant haircut — of Skis Rossignol. The debt load was exacerbated by increased competition in the action sports and broader retail landscape.
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“We will continue to work in close cooperation with the creditors’ committee to execute our financial and operational restructuring, which is designed to restore the company to long-term financial health,” Quiksilver chief executive officer Pierre Agnes said. “We look forward to emerging from the Chapter 11 process a stronger company, better positioned to prosper into the future.”
The financing is being provided by Oaktree Capital Management and Bank of America.
Oaktree’s participation has been viewed as particularly interesting to the company’s reorganization and a source of hope for turnaround. The firm reportedly has interest in potentially combining Quiksilver with Australia-based Billabong International Ltd. at some point. The Los Angeles-based asset management firm went in on a deal in 2013 with Centerbridge Partners to provide long-term financing to Billabong International.
Parallels have been drawn between the Quiksilver and Billabong businesses, with both having multibrand portfolios as well as sizable retail businesses. Both businesses’ challenges became particularly acute during the recession as their sheer size made it difficult to react nimbly to the changing marketplace.
Billabong turned profitable — for the first time in several years — in its recently ended fiscal year, which closed in June. The company continues to place its turnaround efforts on core brands, such as its namesake along with Costa Mesa, Calif.-based RVCA and Element.