Oscar Schafer, in this Barron's roundtable column, makes an interesting argument for Quicksilver the surfing and action sports apparel company. As a distressed investor, I bookmarked the following insights for future reference:

• Global apparel brands with an authentic and rich heritage are very valuable. In a world of free and perfect information they are harder to build since it is becoming increasingly hard to gain potential customers attention.
• The valuation needle can move to 10 to 15 times EBITDA for go private transactions.
• These brands get in trouble when they lever up too much for acquisitions or other expansion gambles.  High levels of debt can be very risky.
• The recovery catalyst for these situations revolves around a commitment  trimming the cost structure to allow operating earnings to reduce the debt load and interest expenses.

Our biggest position in distressed apparel is American Apparel (APP). We believe that when APP returns to optimal health, which should happen within two to three years, the company will generate 15% to 20% of sales in EBITDA at full capacity. At $800 million in revenues, the company could generate $120 million of EBITDA at a minimum. 

How much is that worth?