Oaktree May Combine Reorganized Quiksilver With Rival Billabong

  • Adviser tells court two brands could be joined `at some point'
  • Retailer's bankruptcy plan calls for Oaktree to gain control

Oaktree Capital Management LP may consider combining bankrupt surfwear retailer Quiksilver Inc. with Billabong International Ltd., a brand the investment firm already owns a stake in, a judge in Delaware was told Wednesday.

Durc Savini, an investment banker at Peter J. Solomon Co. who is working with Quiksilver, testified that “at some point” Oaktree may put the clothing companies together if it’s able to bring Huntington Beach, California-based Quiksilver out of bankruptcy under its control.

Savini added that he never directly approached Oaktree about a transaction with Billabong and that he doesn’t believe Billabong “has the balance sheet to support” such a deal. Oaktree owns about 20 percent of Australia-based Billabong.

Quiksilver is in court defending its proposal to borrow as much as $175 million from Oaktree and Bank of America Corp., part of a broader plan to have Oaktree covert its debt into equity and assume control of the company. 

The maker of surf-style clothing is seeking court approval of the financing over a competing proposal from Brigade Capital, which is championed by Quiksilver’s unsecured creditors.

The New York Post reported earlier that a Quiksilver-Billabong combination was being considered, citing a source close to the matter that it didn’t name.

The case is In re Quiksilver Inc., 15-11880, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Before it's here, it's on the Bloomberg Terminal.