Oaktree Capital Working on Buying Quiksilver
Oaktree Capital Management, the Los Angeles–based investment firm, is ramping up its effort to buy Quiksilver Inc. out of bankruptcy.
According to Bloomberg News, Oaktree is getting ready to hire AlixPartners, a Los Angeles consultancy, to do research into the retailer’s assets and map out an operational plan. In 2014, AlixPartners advised on the merger between Jos. A. Bank Clothiers and Men’s Wearhouse.
In a filing with the U.S Bankruptcy Court in Delaware on Sept. 9, documents show that the maker of brands such as Quiksilver, Roxy and DC Shoes had total debt of $826 million and $337 million in assets. In the filing, Quiksilver said about $500 million of its debt would be cut under the restructuring plan.
The bankruptcy filing does not affect Quiksilver operations in Asia or Europe.
Senior lender Oaktree Capital Management, which owns 73 percent of the company’s senior debt, will convert that to equity and take majority ownership of the company, based in Huntington Beach, Calif. Oaktree won court permission to provide $175 million in bankruptcy financing after it agreed to drop a $20 million breakup fee.
The retailer is expected to close at least 30 stores to be in a better operating position.
Quiksilver has gone through a revolving door of executives lately trying to patch up its financial problems.
Chief Executive Pierre Agnes, who months ago replaced former CEO Andy Mooney, said the bankruptcy and financing from Oaktree will allow the company to “satisfy our ongoing obligations to customers, vendors and employees” and “re-establish Quiksilver as the leader in the action-sports industry.”
The company, which has about 680 stores that sell its beach and skateboard-oriented clothes and shoes, saw its sales last year drop 13 percent, which contributed to its net loss of $309.4 million.
Last year, Quiksilver sold its licensed-apparel subsidiary Hawk Designs Inc. for $19 million.
As the financial situation got worse, cofounder Bob McKnight, who led the company for many years, returned to Quiksilver as its chairman.
While many people believed that Quiksilver’s merchandise and company plans didn’t keep up with changing consumer tastes, others cited past financial mismanagement decisions made when the U.S. economy was roaring, saddling the company with high debt that continued to plague it for years.