Trendy surfwear chain Quiksilver has filed for bankruptcy in the U.S., but assured the City its European arm remains strong.
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Quiksilver added that holders of its Eurobonds, sufficient to waive any technical default arising from the filing, had agreed to allow it to reorganize its USA operations under Chapter 11.
Oaktree Capital Management, a global investment firm, will fund $175 million (£113.73m) needed to restructure the company in the US and the 100 countries in which it operates.
The company’s shares had lost almost 80 percent of their value this year by Tuesday’s close at 45 cents. The chain, which was founded in 1969, sells wet-suits and helmets, as well as clothing aimed at “mountain and ocean lovers” in its own stores and specialty surf and skateboarding shops.
The corporate, based mostly in Huntington Seashore, California, plans to proceed with an ongoing store-closing plan within the Americas.
The company expanded across the globe and has sponsored the sports biggest names.
The company’s brands include Roxy clothing and DC shoes and boots. The proposed plan, which requires court approval, has the backing of 73% of the company’s senior most class of debt, Quiksilver said in court papers.
Marshal Cohen, chief industry analyst of The NPD Group Inc., said Quiksilver simply fell out of fashion with many non-surfing youths and was hurt by its reliance on a demographic that tends to treat brands as a “revolving door”.
But the cash-strapped company has struggled in recent years, plagued by business issues that slowed the delivery of Quiksilver products to stores in North America.
Adriano de Souza of Brasil advanced to the Quarter Finals of the Quiksilver Pro Gold Coast on March 12, 2015 in Gold Coast, Australia.
Oaktree’s involvement in both Billabong and Quiksilver has triggered speculation that the investment company may see scope for a merger of the two retailers down the track.
But a shift in tastes – along with broader pressures on the apparel industry – took its toll.
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Quiiksilver’s previously reported second-quarter revenue dipped to $333 million, it chalked up a loss of $88.9 million on 2014 sales of $1.57 billion, and it pulled guidance for the rest of fiscal 2015.
