Boardriders Inc. Credit Rating Lowered To #CCC+# From #B-#; Outlook Negative

Stocks and Financial Services Press Releases Thursday June 29, 2017 09:26
CHICAGO--29 Jun--S&P Global Ratings
CHICAGO (S&P Global Ratings) June 28, 2017--S&P Global Ratings today loweredits corporate credit rating on California-based Boardriders Inc. to 'CCC+'from 'B-'. The outlook is negative.

At the same time, we lowered our issue-level rating on the company's €200million unsecured notes (with approximately €20 million outstanding) due 2017and €136 million unsecured notes due 2020 to 'B-' from 'B'. Our recoveryrating on each tranche remains '2', which indicates our expectation forcreditors to receive substantial (70%-90%; rounded estimate: 75%) recovery inthe event of payment default.

We estimate the company had about $290 million of funded debt outstanding asof April 30, 2017.

The downgrade reflects Boardriders's underperformance relative to S&P'sprevious expectations. As a result, we have revised our forecast forfixed-charge coverage for both 2017 and 2018 to the low 1.0x area from 1.5x.Given Boardriders's very weak fixed-charge coverage, we believe its capital

structure is unsustainable unless it significantly improves its operations andthe ability to grow its revenue, which could be difficult because of the weakretail environment.

The negative outlook reflects the company's high debt burden and thin creditmetrics. Even though its credit metrics have improved in the last twoquarters, EBITDA remains weak, and weaker-than-expected results in the secondhalf of the year could cause the fixed-charge coverage ratio to be sustainedin the low 1x area.

We could lower the ratings again if the company is not able to generatepositive cash flow in the next 12 months and liquidity weakens such thatQuicksilver needs to rely on its revolver to operate or if its fixed-chargecoverage ratio declines further.

We would consider revising the outlook to stable if the company is able togenerate more than $10 million of free cash flow for the year and maintainsits fixed-charge coverage ratio in the low 1x area. We would consider raisingthe ratings if the company strengthens its credit metrics such thatfixed-charge coverage approaches 1.5x and we believe it can be sustained atthat level.

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