Shares of Huntington Beach, Calif.-based Quiksilver Inc. plunged nearly 67 percent in after-hours trading amid a report that the company could file for Chapter 11 bankruptcy as soon as tonight.
Rumors have been swirling that the action sports apparel company and retailer had been shopping for a buyer and more recent reports said the firm had shed about 80 positions from its headquarters this month.
Calls to Quiksilver spokespeople as well as executive chairman and founder Bob McKnight on Tuesday were not returned.
The latest report has Los Angeles-based private equity firm Oaktree Capital Management LP set to provide some $175 million in debtor-in-possession financing in a prearranged bankruptcy, which would bring control of two of the largest companies in the action sports industry under one owner.
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Oaktree, along with Centerbridge Partners, struck a long-term financing deal in 2013 with Australia-based Billabong International Ltd. that put an end to a drawn-out battle for the then-struggling company, which is now in the midst of a turnaround under chief executive officer Neil Fiske.
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Quiksilver shares closed at 45 cents to a market value of $78.14 million at the close of trading today.
Quiksilver, much like many of the larger action sports brands, struggled under tough times during the recession that led to layoffs, reductions in sku counts and a restructuring of executive teams.
But the company’s troubles went back further than the recession, to the failed acquisition of Skis Rossignol in 2005. The company paid $320 million for Rossignol and in 2008 unloaded the struggling brand in a fire sale for $147 million. But the buy left Quiksilver saddled with debt that it carried into the recession and a competitive landscape that now includes fast-fashion players and more mainstream chains elbowing their way into the action sports market.