While famed Australian surf wear brand Quicksilver has filed for chapter 11 bankruptcy in the US, a victim of massive acquisition debts and attempts to push the brand on the mass market, the Australian-based Asia-Pacific arm of the business is unaffected and Quiksilver Inc president Greg Healy says the local arm is going gangbusters and under no threat.
“It is important to emphasize the Company’s European and Asia-Pacific businesses and operations remain strong and are not part of this filing,” Healy said.
“This is going to be a positive step for the business as a whole – for the US where hard decisions need to be made and for the successful European and Asia Pacific businesses, which can continue to perform and grow without the constant drag of the US business.
He said it was business as usual for Australasian arm, which also runs the brands Roxy and DC Shoes, and is currently rolling out its Boardriders concept stores.
“Our second Australian Boardriders store in Torquay – the birthplace of Quiksilver – and 16th Boardriders store globally– where we combine retail, music, bar, brands and food – is set to open in coming days… this underlines our confidence in the business in this part of the world,” he said.
Healy said the problem for the US business was that it had too much debt, and more recently attempted to maximise sales volumes by moving into department stores and damaged the brand with its young customer base.
“I moved to the US a few weeks ago with a clear task to identify what needed to be done in the US business and to implement the necessary changes to get it back on the right track. The new CEO Pierre Agnes and I realised we needed to overhaul the US business and return to an acceptable level of debt. Filing for the protection of Chapter 11 of the US Bankruptcy Code for our U.S. subsidiaries allows us to restructure our debt.”
The company has asked Bankruptcy Court to approve $175 million in new debtor-in-possession financing from Oaktree Capital Management and Bank of America, and believes it will be enough to fund its ongoing operations in the US and abroad.
Quicksilver CEO Pierre Agnes said Oaktree Capital’s backing will enable the business to finish its turnaround plan for the US operations, which include the continuation of its existing store rationalisation program.
“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,” he said.
In the USA, sales dropped 14% last year and the company posted a $US309.4 million loss.
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