Quiksilver Inc. Takes the Plunge, Sells 2.3 Million Shares to Public

Quiksilver Inc. and its eight shareholders caught a big wave Tuesday when the Newport Beach surf wear designer’s initial stock offering of 2.3 million shares was sold for $18.7 million.

The shareholders, who sold 1.3 million shares, relinquished 57.5% of their interest to the public. The company added 1 million shares of new stock to the offering. Wedbush, Noble, Coke Inc. in Los Angeles was managing underwriter for the issue.

Quiksilver, a 10-year-old company that bases its average 40% annual growth rate on its popular swimwear for surfers, plans to ride the wave across the country as it expands its East Coast and West Coast markets for beach wear and casual clothing into the heartland.

“We’re very excited,” Robert McKnight, the company’s president, said about the offering. “I think it’s going to enable us to grow” with a well-filled war chest. “The financing will keep our image strong.”

The $8.125-a-share offering will net the company nearly $7 million after brokerage costs, while the eight shareholders will net up to $9.6 million.

The eight shareholders are left with 42.5% of the company--which now has 4 million shares outstanding--and want to ensure Quiksilver’s ability to bring out new products and to distribute throughout the country.

“Growing without any money scared us more than going public,” McKnight said. The company is among the first of the Orange County-based surf wear companies--a list that includes Maui & Sons, Raisins, Ocean Pacific Sunwear, Billabong and Gotcha--to go public.

Quiksilver’s competition will be stiff, industry analysts said. Among the top-selling brand names facing Quiksilver are Hang Ten and Ocean Pacific Sunwear’s OP, both of which have done “incredible business” between the coasts, McKnight said.

Quiksilver sells its beach and casual apparel, particularly its board shorts--specially designed swim trunks for surfers that account for 35% of the company’s revenues--through 1,300 retail outlets, including Bullock’s, Nordstrom and the Broadway department stores.

“Quiksilver is growing rapidly and doing a very good job,” said Edward F. Johnson, a research analyst at Johnson Redbook Service in New York. “And it seems to be run by good management.”

McKnight, who founded the firm with professional surfer Jeff Hakman, said Quiksilver will continue to grow “slow and sure and safe” at about 40% a year even though the offering would enable it to take greater leaps.

Hakman has since left the firm to head the Quiksilver Europe label through his Napali Manufacturing Co. in Biarritz, France, McKnight said. The Quiksilver products distributed by McKnight, Hakman and operators in six other countries are licensed through Quiksilver of Australia.

Clothing Made by Outside Shops

McKnight’s company will use $3 million of the proceeds from the offering to buy out its license from the Australian company, but it plans to continue its design relationship with that company and the other licensees, he said.

Quiksilver, which designs and distributes its products, has its clothing made by outside shops--four in Orange County and two on the East Coast, McKnight said.

For its fiscal year ended Oct. 31, the company posted a $409,000 net income on $18.6 million in sales.