Quiksilver Proposes Debt-for-Equity Deal
Huntington Beach, Calif.–based surf giant Quiksilver Inc. has proposed a debt-for-equity exchange that could result in Rhone, the private equity firm that lent Quik $150 million in 2009, owning 30 percent of the company.The deal proposes an exchange of $75 million of the outstanding principal amount of Quik’s senior secured-term loans for an aggregate of approximately 16.7 million shares of its common stock at an exchange price of $4.50 per share, a release from Quiksilver said. If consummated, the initial $75 million debt-for-equity exchange will transfer ownership of 24.2 percent of Quiksilver to Rhone.
The surfwear maker also has the option to require Rhone to exchange up to $65 million of the remaining outstanding principal amount of senior secured-term loans for additional shares of common stock at the same price per share. If Quik exercises this option in full, Rhone would own approximately 30 percent of the company’s outstanding shares.
According to the release, as of April 30, 2010, the outstanding principal balance of the senior secured-term loans stands at approximately $159.4 million. The deal has been approved by Quik’s independent directors but has yet to be approved by the company’s stockholders. If approved, the debt-for-equity exchange would take effect before the end of the fiscal year, Oct. 31.
“This exchange offer is an important step toward further de-leveraging our balance sheet and will provide us with additional operating flexibility in an improving business environment,” said Bob McKnight, Quiksilver’s chief executive and chairman of the board. “Additionally, the Rhone offer demonstrates a real vote of confidence by a major investor who is willing to commit to a further equity investment amid a volatile stock market.
Quiksilver’s stock price jumped to $4.84 per share on the news, up from $4.47 the day before.
