In summary it said:
- The Rossignol deal will close in November, but at a reduced price.
- After Rossignol closes, Quiksilver will have $100 million in availability liquidity.
- The company plans to raise additional money, and potential sources include existing lenders or broader capital markets. In addition, because of the turbulent credit markets, it has hired Morgan Stanley to help it raise money and evaluate other options, including raising private equity funds and other strategic alternatives.
- Quiksilver maintained its guidance for its fiscal fourth quarter and full year ended today.
Here's the full release:
Quiksilver, Inc. Provides Rossignol Sale Update?Friday October 31, 9:00 am ET
Rossignol Sale Expected to Close in Early November
European Banks Amend Credit Facility
Company Engages Morgan Stanley as its Financial Advisor
HUNTINGTON BEACH, Calif.--(BUSINESS WIRE)--Quiksilver, Inc. (NYSE:ZQK - News) today confirmed that the previously announced sale of the "Rossignol Group" is expected to close in early November. The Company indicated that key conditions which were required to close the transaction have largely been met after the buyer secured committed financing and the parties agreed to recast the terms of the sale due to the recent challenges in the global credit markets. The revised transaction reduces the cash payment to Quiksilver upon closing from €75 million to €30 million and reduces the seller's note from €25 million to €10 million. The transaction also allows Quiksilver to continue to distribute Rossignol apparel through the 2008/2009 winter season, enabling the Company to realize an additional €5 to €10 million benefit from the collection of in-season receivables. The parties may also extend the Rossignol apparel license and distribution arrangement upon mutual agreement. Together, these revisions to the transaction will cause a corresponding increase to the loss that Quiksilver expects to recognize upon the sale of Rossignol.
With committed financing in place, the completion of the sale transaction is only subject to final workers council advice and other customary closing conditions. Rossignol's workers council has already reviewed the originally proposed transaction and provided its requisite advice consistent with French law. Quiksilver expects that the workers council will complete its process in a timely manner, thus allowing for the close of the transaction in early November.
Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, "In this time of unprecedented challenge in the global credit markets, price concessions were required to achieve a final sale of Rossignol. We remain convinced that the timely close of this transaction is in the best interest of Quiksilver's stakeholders and we look forward to completing the sale in early November. I'm delighted that we can now fully concentrate our efforts on our core apparel and footwear brands Quiksilver, Roxy and DC."
Quiksilver also announced that it had secured an amendment to its €70 million line of credit in Europe due to mature on October 31. Under terms of the amendment, Quiksilver will reimburse its European bank group €15 million on October 31 and the remaining €55 million will be extended until March 14, 2009. Quiksilver also stated that it expects to have approximately $100 million of available liquidity after the close of the Rossignol sale, net of payments due upon close of the transaction and net of other debt obligations due in fiscal 2008.
As previously disclosed the Company continues to evaluate potential financing alternatives and plans to seek additional financing. Potential sources of alternative funding include Quiksilver's existing lenders, whether for short or long term financing, and the broader capital markets. In light of the current turmoil in the global capital markets, the Company has expanded its review to include private equity investment capital and other strategic alternatives. Quiksilver has retained Morgan Stanley as its financial advisor to assist in this process.
The company noted that for accounting purposes it will perform its regular annual assessment of the value of its intangible assets as of October 31, 2008 and that current market conditions and valuation metrics could cause an impairment in goodwill or other long-term intangible assets. Any resulting impairment charge would be recorded as a non-cash expense in Quiksilver's financial statements for the quarter and for the fiscal year ending October 31, 2008 and would not affect its operations, cash flows or covenants associated with the Company's debt.
Quiksilver is scheduled to report financial results for its fourth quarter and fiscal year ending October 31, 2008 on December 18, 2008. Based on information currently available, the Company also disclosed that it expects to achieve the consensus estimate of analysts tracked by Thomson First Call for income from continuing operations of 87 cents per share for fiscal 2008, excluding potential charges such as those mentioned above.