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Rhône to significantly improve Quiksilver liquidity position
12 Jun '09
3 min read
Quiksilver Inc announced that it has entered into an agreement with Rhône, an international private equity firm with offices in New York, London and Paris, for a 5-year senior secured term loan of approximately $150 million. This new capital from Rhône will significantly improve the Company's liquidity position and is expected to provide the cornerstone to solidify Quiksilver's regional banking relationships around the world. The new financing will enable the Company to refocus its attention on its industry leading boardsport and outdoor lifestyle brands, Quiksilver, Roxy and DC, and on improving the operating profitability of its business worldwide.
In addition, Quiksilver has entered into a written commitment with Bank of America and GE Capital, as joint lead arrangers, to refinance its existing Americas facility in the form of a new 3- year $200 million asset-based credit facility. The Company is also in discussions with its French banking partners to consolidate its European debts into a new committed multi-year facility and expects a positive resolution in the near term.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Rhône is a strong strategic partner with an international presence and extensive experience investing in globally diversified businesses across a number of sectors. Our agreement with Rhône not only provides the financial stability necessary to complete our new Americas and European financing efforts, but it also allows us to improve our global business and increase the efficiency of our worldwide operations. We are pleased to have addressed our liquidity concerns so that we can now sharpen our focus on streamlining the business and making great product within our three great brands - Quiksilver, Roxy and DC.”
M. Steven Langman, Managing Director and Co-Founder of Rhône, stated, “Rhône is enthusiastic about this opportunity to partner with Quiksilver in the continued development of its leading brands. Bob has assembled a first-rate management team, and we are confident that the liquidity and support provided by Rhône will allow the company to implement its dynamic strategy.”
The senior secured term 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. Rhône 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. Concurrent with the extension of the term loan, Quiksilver will appoint two new directors designated by Rhône to its board of directors.
Quiksilver intends to use the proceeds from the term loan to pay down existing indebtedness. Rhône's commitment to fund the term loan is subjectto the satisfaction of certain terms and conditions, including completion of the refinancing of Quiksilver's multi-year facility in Europe and other customary closing conditions and is expected to close before the end of July. Peter J. Solomon Company served as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Quiksilver in this transaction. Lazard Frères & Co. LLC served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to Rhône.
In addition, Quiksilver has entered into a written commitment with Bank of America and GE Capital, as joint lead arrangers, to refinance its existing Americas facility in the form of a new 3- year $200 million asset-based credit facility. The Company is also in discussions with its French banking partners to consolidate its European debts into a new committed multi-year facility and expects a positive resolution in the near term.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “Rhône is a strong strategic partner with an international presence and extensive experience investing in globally diversified businesses across a number of sectors. Our agreement with Rhône not only provides the financial stability necessary to complete our new Americas and European financing efforts, but it also allows us to improve our global business and increase the efficiency of our worldwide operations. We are pleased to have addressed our liquidity concerns so that we can now sharpen our focus on streamlining the business and making great product within our three great brands - Quiksilver, Roxy and DC.”
M. Steven Langman, Managing Director and Co-Founder of Rhône, stated, “Rhône is enthusiastic about this opportunity to partner with Quiksilver in the continued development of its leading brands. Bob has assembled a first-rate management team, and we are confident that the liquidity and support provided by Rhône will allow the company to implement its dynamic strategy.”
The senior secured term 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. Rhône 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. Concurrent with the extension of the term loan, Quiksilver will appoint two new directors designated by Rhône to its board of directors.
Quiksilver intends to use the proceeds from the term loan to pay down existing indebtedness. Rhône's commitment to fund the term loan is subjectto the satisfaction of certain terms and conditions, including completion of the refinancing of Quiksilver's multi-year facility in Europe and other customary closing conditions and is expected to close before the end of July. Peter J. Solomon Company served as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Quiksilver in this transaction. Lazard Frères & Co. LLC served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to Rhône.
Quiksilver Inc
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