Quiksilver U.S. Launches Pre-Arranged Chapter 11 Restructuring With Support of 73% of U.S. Secured Noteholders
September 09 2015 - 12:11AM
Business Wire
Foreign Subsidiaries Unaffected By Chapter
11 Filing
Announces $175 million DIP financing and Plan
Sponsor Agreement with affiliates of Oaktree Capital Management,
L.P.
Quiksilver, Inc. (NYSE:ZQK) (the “Company”) today announced that
it commenced voluntary proceedings for relief under chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware (the “Bankruptcy Court”) for its
U.S. subsidiaries. The chapter 11 filing, which is supported by 73%
of the Company’s senior most class of debt, will facilitate
Quiksilver’s financial and operational restructuring, which is
designed to restore the Company to long-term financial health.
The Company’s European and Asia-Pacific businesses and
operations remain strong and are not part of this filing.
Additionally, holders of the Company’s Eurobonds sufficient to
waive any technical default arising from the filling have agreed to
allow the Company to reorganize its U.S. operations in chapter
11.
Following the filing, Quiksilver will continue to operate in the
ordinary course of business as a “debtor-in-possession” under the
jurisdiction of the Bankruptcy Court. Contemporaneously with the
filing, the Company has requested that the Bankruptcy Court approve
$175 million in new debtor-in-possession financing ("DIP") with
affiliates of Oaktree Capital Management, L.P. (“Oaktree”) and Bank
of America, N.A. The Company anticipates that such financing, in
conjunction with other existing sources of liquidity, will be more
than sufficient to fund its ongoing operations in the U.S. and
abroad. The Company also requested various forms of “first day”
relief from the Bankruptcy Court to ease the U.S. subsidiaries’
transition into chapter 11 and protect its stakeholders and
customers.
The Plan Sponsor Agreement (“PSA”) with Oaktree provides a
comprehensive blueprint for the Company’s emergence from chapter 11
as a going concern pursuant to a plan of reorganization, under
which Oaktree has agreed to provide all necessary funding for the
chapter 11 process and will convert its substantial debt holdings
into a majority of the stock in the reorganized Company on exit.
The PSA contains certain conditions, including confirmation of a
plan of reorganization by the Bankruptcy Court.
Oaktree is a leader among global investment managers
specializing in alternative investments, with over $100 billion in
assets under management. The firm, which emphasizes a
value-oriented and risk controlled approach to investments, has a
proven track record of success assisting companies through the
restructuring process and in the action sports industry.
“After careful consideration, we have taken this difficult but
necessary step to secure a bright future for Quiksilver,” said
Pierre Agnes, Chief Executive Officer of Quiksilver. “With the
protections afforded by the Bankruptcy Code and the financing
provided by Oaktree, we will not only be able to satisfy our
ongoing obligations to customers, vendors and employees, but we
will also have the flexibility needed to complete the turnaround of
our U.S. operations and re-establish Quiksilver as the leader in
the action sports industry. Our fresh capital structure, with a
very low level of debt for our industry, will enable us to invest
in and reinvigorate our brands and products. We are confident we
will emerge a stronger business, better positioned to grow and
prosper into the future.”
Agnes continued: “Oaktree’s financial strength and expertise,
deep experience working with companies in situations similar to
ours, and successful history operating in our industry make them an
exceptional partner for us going forward. We value our wholesale
customers as well as our vendors and suppliers and appreciate their
support through this process. In addition, we thank our passionate
and dedicated employees and athletes who remain our greatest
assets. Quiksilver is, and as a result of this process will
continue to be, an iconic leader in the action sports market.”
In connection with the filing, the Company intends to continue
its existing store closing program to rationalize its store base in
the Americas. As is customary, it is anticipated that the
Bankruptcy Court will consider the Company’s request for “first
day” relief promptly. The requested relief includes requests for
the authority to make wage and salary payments, continue various
benefits for employees, and honor certain customer programs, such
as gift cards and returns on merchandise purchased prior to the
bankruptcy filing.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as the
Company's legal advisor, FTI Consulting, Inc. as its restructuring
advisor, and Peter J. Solomon Company as its investment banker.
The Company indicated that it expects to provide additional
details with respect to the chapter 11 filing as soon as they are
available. Court filings and other documents related to the
reorganization proceedings are available on a separate website
administered by the Company's claims agent, KCC, at
http://www.kccllc.net/quiksilver, or www.deb.uscourts.gov, the
official Bankruptcy Court website.
About Quiksilver:
Quiksilver, Inc., one of the world’s leading outdoor sports
lifestyle companies, designs, produces and distributes branded
apparel, footwear and accessories. The Company’s apparel and
footwear brands, inspired by a passion for outdoor action sports,
represent a casual lifestyle for young-minded people who connect
with its boardriding culture and heritage. The Company’s
Quiksilver, Roxy, and DC brands have authentic roots and heritage
in surf, snow and skate. The Company’s products are sold in more
than 100 countries in a wide range of distribution, including surf
shops, skate shops, snow shops, its proprietary Boardriders shops
and other Company-owned retail stores, other specialty stores,
select department stores and through various e-commerce channels.
For additional information, please visit our brand websites at
www.quiksilver.com, www.roxy.com and www.dcshoes.com.
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U.S. Media:Julia Young and Christine Beggan, +1
203-682-8200quiksilver@icrinc.comorEuropean Media:Marie- Aurélie
Duché, +33 5 59 51 58
49Marie-aurelie.duche@quiksilver-europe.comorAPAC Media:Tim Duncan,
+ 61 3 9600 1979tduncan@hintons.com.au