Shortly after downgrading Boardriders’ credit rating, Standard & Poor’s upgraded it slightly from SD to CCC as the parent company of Quiksilver, Billabong, Roxy and other action sports brands completed a new transaction with its lenders. It notably obtained a “super senior term loan” that provides it with much-needed liquidity to help it resume its planned growth initiatives. One of the loan’s tranches has a high leverage covenant of 6.5 times Ebitda, giving the company a little more than one year to execute its turnaround plan. However, S&P feels that the group’s reported Ebitda will barely cover its interest expense and that the company will thus generate negative cash flow over the next two years. “We believe a default could become inevitable within six months if low sales numbers keep the company unprofitable and cause another liquidity shortfall, or if it becomes highly apparent it will violate its leverage covenant prompting it to engage in another distressed restructuring transaction,” the agency added, noting that a default would become inevitable within six months if the turnaround plan is not successful.