Quiksilver Inc (USA) said Monday it has completed an exchange of shares for $140 million in debt, a move that stands to bolster its once crippling balance sheet. Quiksilver exchanged 31.1 million shares worth about $140 million for the debt, which was held by with New York-based Rhone Group LLC. The debt stems from a deal struck with Rhone last year that helped Quiksilver finance a U.S. line of credit and consolidate its European debt. The Rhone financing was seen as a lifesaver for Quiksilver, when the company was nearly sunken by 2005’s $560 million ill-fated buy of French ski maker Rossignol. The shares for debt exchange with Rhone “provides us with additional operating and financial flexibility,” Chief Executive Bob McKnight said. After retiring the debt, Quiksilver expects to rework its credit lines with better terms and strike a deal to pay off $25 million in remaining debt owed to Rhone. The moves are expected to boost profits, as the Rhone loans carried a 15% interest rate, steeper than Quiksilver’s debt before the financing deal. Quiksilver has given up a sizable chunk of the company to rework its finances. Rhone now owns nearly a third of Quiksilver, up from 16% before. Quiksilver said it had entered a pact with Rhone that caps its ownership. “Rhone has become a major presence in our board room and they have added significant value to our business,” McKnight said.

Source OCBJ