Standard & Poor’s has downgraded the debt ratings for Boardriders in relation to a recent offering of $155 million intended to improve its liquidity position. The new offering includes $65 million worth of term loans contributed by the company’s major shareholder, Oaktree Capital Management, $45 million contributed by other existing lenders and $45 million through a credit facility backed by an unnamed European government. The rating agency said the new offering is “tantamount to a default” because the company is “distressed” and its lenders were not adequantely compensated for accepting a more junior position in the capital structure. The parent company of Quiksilver, Billabong and other action sports brands has also issued $492 million in preferred stock as additional compensation to the lenders. S&P feels that Boardriders will have trouble generating consistently positive cash flow before its next significant debt maturity occurs in 2023. Previously, in June, the other major rating agency, Moody’s, had changed its outlook for the company from stable to negative, mentioning the significant deterioration in earnings and cash flow resulting from the Covid-19 pandemic, which has led to temporary store closures and lower discretionary spending. As of May 20, Boardriders still had around $100 million in cash on its balance sheet and $15 million available to draw on its revolving credit line, but Moody’s feared that it will generate negative cash flow in the very near term, straining its ability to respect its loan covenants.