Quiksilver Stock Down in
Early Morning Trading 0
Quiksilver’s stock fell 18 percent in early morning trading as investors worried about the high interest rates on its new financing agreements and other issues regarding its liquidity.
- more up to the minute data here
Shares of Quiksilver Inc., which makes outdoor clothing and equipment, fell more than 18 percent early Tuesday as analysts worried about its near-term prospects after it took new loans at higher interest rates.
“We view progress on the refinancing of the business as a positive and see a light at the end of the tunnel for near-term liquidity concerns,” Thomas Weisel Partners LLC analyst Jim Duffy said in a research note. “The cost of financing, however, is daunting.”
Quiksilver is taking a $150 million over five years from Rhone, a private-equity firm, and has secured a $200 million credit facility.
Duffy said the $150 million loan comes with a 15 percent interest rate and gives the private-equity firm warrants for 20 percent of the shares priced at $1.86.
The analyst said interest payments are expected to cost the company $110 million per year. Duffy suspended the firm’s rating on Quiksilver shares until the company finishes all refinancing.
The company still need to renegotiate certain uncommitted lines of credit in Europe, Wedbush Morgan Securities analyst Jeff Mintz told investors.
Monday, Huntington Beach, Calif.-based Quiksilver reported a fiscal second-quarter profit of $2.8 million, reversing a year-ago loss of $206.2 million that included hefty costs related to now-discontinued operations. But a weak outlook sent shares lower in aftermarket trading.
Its shares tumbled 67 cents to $2.95 in Tuesday morning trading.
subscribe to comments RSS
Comments are closed