Investors filed a lawsuit against Boardriders Inc., the parent of Quiksilver and Billabong, over a $431 million rescue financing package they said elevated the interests of a select group of lenders and private-equity backer Oaktree Capital Management LP., according to the Wall Street Journal.

Intermediate Capital Group PLC, York Capital Management and other lenders filed a lawsuit in the Supreme Court of New York Friday. The August deal provided Boardriders with $110 million in fresh capital from a group of lenders.

In late September, Boardriders saw its debt ratings upgraded by S&P Global Ratings as the ratings company saw the transaction providing liquidity to help fund an operational turnaround. Still, S&P said it viewed the transaction as tantamount to default due to the company’s distressed position and because term loan lenders did not receive adequate compensation for being relegated to a junior position in the capital structure.
S&P said it is now raising its issuer credit rating on Boardriders to ‘CCC’ from ‘SD’, which reflects an updated view of the company’s still distressed credit risk underpinned by an unsustainable capital structure, high debt service burden, and potentially tight covenant cushion when the covenant becomes effective in first quarter 2022.  Photo courtesy Boardriders