Quiksilver News

However, given an uncertain global retail environment, general risk aversion at banks and frozen debt capital markets, we acknowledge that it is possible to envision a scenario where ZQK's bank group invokes call options on the aforementioned short-term lines or refuses to renew them as they expire through 2009 or turn them into long-term, committed lines. Further, it is reasonable to assume that ZQK is unable to raise debt capital and/or refinance its 2010 long-term debt.

STRATEGIC ALTERNATIVES-AN OUTRIGHT SALE

Outside of private equity, we believe "other" strategic alternatives include an outright sale of the Company. In that event, we believe the most likely strategic buyer could be VF Corp, which we view as both willing (interested) and able (capacity) to purchase ZQK. In this case, again using conservative comparable transaction multiples, ZQK's equity could command a selling price in the range of $3-$9.

VF Corp is very profitable, throws off lots of free cash and has significant balance sheet capacity to make acquisitions. As of 3Q08, VFCorp had $226 million in cash on its balance sheet along with $1.3 billion in domestic and international lines of credit.

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