Quiksilver named on list of companies likely to default on debt

Iconic Australian-born surfwear label Quiksilver has been named by ratings agency Moody’s on a list of 283 companies that are most at risk of defaulting on their debt.

 

The surfwear and sporting goods company was founded by Alan Green and John Law in the Victorian coastal town of Torquay in the 1970s, but quickly moved its operations to the United States.

 

The company listed on the New York Stock Exchange in 1986 and Green and Law retain a 12% stake. They were listed on last year’s Rich 200 with a combined fortune of $308 million.

 

But Quiksilver is struggling with the global recession. The company is saddled with around $400 million of debt and its shares have plummeted from $US8.66 to $US1.10 in the last 12 months.

 

Moody’s debt list includes many of the biggest names in corporate America, including General Motors, Eastman Kodak, MGM Mirage, Chrysler and Unisys. Companies in the auto industry, retail, hospitality, media and gaming sectors are among the most prominent. The companies on the list have a combined $US260 billion in bonds and bank debt.

 

Another company with Australian connections on the list is OSI Restaurant Partners, which owns the Australian-themed Outback Steakhouse restaurant chain. There are four Outback Steakhouse restaurants in New South Wales.

 

OSI, which owns seven restaurant chains, lost $US506.4 million in the last three months and is carrying $US1.72 million in debt.

 

Moody’s list, called the Bottom Rung, is seen as an attempt by the ratings agency to restore its battered reputation. Business commentators heavily criticised ratings agencies such as Moody’s and S&P for their role in the global financial crisis, after the company gave sub-prime mortgage backed securities AAA ratings.

 

Moody’s says it will update the list each month.

 

 

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