Huntington Beach action sports conglomerate Boardriders Inc. had its debt rating lowered by S&P following a recent $155 million issuance by the company.
S&P on Friday lowered Boardriders’ rating on its term loan from CCC+ to D, and lowered the company’s issuer credit rating from CCC+ to SD, or selective default.
Boardriders’ portfolio consists of Quiksilver, Billabong, Roxy, DC Shoes, RVCA and Element.
The breakdown of the new debt the company had recently issued included $65 million from investment firm Oaktree Capital Management, $45 million from other existing lenders and $45 million from a European government, S&P reported.
The new debt, which stands senior to the company’s outstanding balance on its existing term loan, were funneled to repay an asset-based loan, transaction fees and fund the company’s business operations, S&P said.
“We believe the transaction is tantamount to a default on the term loan because the company is distressed and term loan lenders were not adequately compensated for accepting a more junior position in the capital structure,” the ratings agency said.
S&P said when it reevaluates the company issuer rating “in the near term,” Boardriders would likely be raised to somewhere in the CCC range.
Boardriders nearly a year ago announced it would embark on what it said was to be a multi-year growth strategy the key components of which included a boost to women’s product, digital, category expansion and speedier product development timelines.
The update also came with a number of executive changes that created several new positions at the company seen as being in line with the strategy.