HOFFMAN ESTATES, Ill., Sept. 20, 2016 /PRNewswire/ -- Claire's Stores, Inc. (the "Company") today announced an agreement to refinance the Multicurrency Revolving Facility Agreement among Claire's (Gibraltar) Holdings Limited ("Claire's Gibraltar"), certain of its operating subsidiaries, and HSBC Bank PLC (the "Europe Credit Facility"), and the expiration and results of its previously announced private offer to exchange (the "Exchange Offer"). The Exchange Offer to holders of the Company's 8.875% Senior Secured Second Lien Notes due 2019 ("Second Lien Notes"), 7.750% Senior Notes due 2020 ("Unsecured Notes") and 10.500% Senior Subordinated Notes due 2017 ("Subordinated Notes" and together with the Second Lien Notes and Unsecured Notes, the "Notes") was made pursuant to a confidential offer to exchange statement dated August 12, 2016, as amended on August 29, 2016, and a related letter of transmittal.
Europe Credit Facility Refinancing
Claire's (Gibraltar) Intermediate Holdings Limited, a newly formed direct wholly owned subsidiary of Claire's Gibraltar and intermediate holding company of the subsidiaries of Claire's Gibraltar ("Claire's Intermediate Gibraltar"), and the operating subsidiaries party to the Europe Credit Facility have entered into an amendment and restatement thereof with HSBC PLC, effective September 20, 2016 (the "Europe Credit Facility Amendment and Restatement"). Claire's Gibraltar is not a guarantor or obligor of the Europe Credit Facility Amendment and Restatement. The Europe Credit Facility Amendment and Restatement is secured by the equity interests in Claire's Intermediate Gibraltar and by equity interests in its direct and indirect subsidiaries and certain of their respective assets. The Europe Credit Facility Amendment and Restatement permits certain distributions of cash to the Company, amends certain of the covenants and provides for security to secure the obligations of Claire's Intermediate Gibraltar and the operating subsidiaries to HSBC PLC. The Europe Credit Facility Amendment and Restatement has the same maturity date as the Europe Credit Facility had, but requires a paydown to zero by December 31, 2016 and no borrowings are permitted thereafter unless certain conditions are met, some of which are to be determined by HSBC PLC.
The Europe Credit Facility Amendment and Restatement will satisfy the Europe Credit Facility Condition to the Company's Exchange Offer and the permitted cash distributions to the Company will be sufficient to enable the Company to pay unpaid interest on its outstanding indebtedness that was due September 15, 2016.
Expiration of Exchange Offer
The Exchange Offer expired at one minute after 11:59 p.m. on September 19, 2016 (the "Expiration Time"). As of the Expiration Time, approximately $332.9 million aggregate principal amount of Notes had been tendered, including approximately $228.9 million aggregate principal amount of Second Lien Notes, approximately $103.3 million aggregate principal amount of Unsecured Notes and approximately $0.8 million aggregate principal amount of Subordinated Notes.
The Exchange Offer was not fully subscribed. As previously agreed, certain funds managed by affiliates of Apollo Global Management, LLC (the "Apollo Funds") and Claire's Inc., the parent of Claire's Stores ("Claire's Inc." and together with the Apollo Funds, the "Affiliated Holders"), will effect a similar exchange (the "Affiliated Holder Exchange") of approximately $183.6 million aggregate principal amount of Claire's Stores' 10.500% PIK Senior Subordinated Notes due 2017 ("PIK Notes") held by the Apollo Funds and approximately $58.7 million aggregate principal amount of Subordinated Notes held by Claire's Inc.
All of the conditions to the Exchange Offer, including the requirement that the Exchange Offer, together with the Affiliated Holder Exchange, result in the tender of at least $400.0 million aggregate principal amount of Notes or PIK Notes, are expected to be satisfied or waived. Accordingly, settlement of the Exchange Offer and the Affiliated Holder Exchange is expected to occur promptly.
Upon completion of the Exchange Offer and the Affiliated Holder Exchange, the Company's outstanding debt will be reduced by approximately $396 million, debt maturities will be extended, and the Company estimates it will realize annual cash interest savings of approximately $24 million.
Claire's Stores, Inc. is one of the world's leading specialty retailers of fashionable jewelry and accessories for young women, teens, tweens and girls ages 3 to 35. The Company operates through its stores under two brand names: Claire's® and Icing®. As of July 30, 2016, Claire's Stores, Inc. operated 2,801 stores in 17 countries throughout North America and Europe, excluding 806 concession locations. The Company franchised 596 stores in 29 countries primarily located in the Middle East, Central and Southeast Asia, Central and South America, Southern Africa and Eastern Europe. More information regarding Claire's Stores is available on the Company's corporate website at www.clairestores.com.
This press release contains "forward-looking statements" which represent the Company's expectations or beliefs with respect to future events. Statements that are not historical are considered forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those factors include, without limitation: our level of indebtedness; general economic conditions; changes in consumer preferences and consumer spending; unwillingness of vendors and service providers to supply goods or services pursuant to historical customary credit arrangements; competition; general political and social conditions such as war, political unrest and terrorism; natural disasters or severe weather events; currency fluctuations and exchange rate adjustments; failure to maintain our favorable brand recognition; failure to successfully market our products through other channels, such as e-commerce; uncertainties generally associated with the specialty retailing business, such as decreases in mall traffic; disruptions in our supply of inventory; inability to increase same store sales; inability to renew, replace or enter into new store leases on favorable terms; increase in our cost of merchandise; significant increases in our merchandise markdowns; inability to grow our company-operated store base, expand our international store base through franchise or similar licensing arrangements or expand our store base through store concessions; inability to design and implement new information systems; data security breaches of confidential information or other cyber-attacks; delays in anticipated store openings or renovations; results from any future asset impairment analysis; changes in applicable laws, rules and regulations, including laws and regulations governing the sale of our products, particularly regulations relating to heavy metals and chemical content in our products; changes in anti-bribery laws; changes in employment laws, including laws relating to overtime pay, tax laws and import laws; product recalls; increases in the costs of healthcare for our employees; increases in the cost of labor; labor disputes; loss of key members of management; increases in the cost of borrowings; unavailability of additional debt or equity capital; and the impact of our substantial indebtedness on our operating income and our ability to grow. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from the Company's forward-looking statements are included in the Company's filings with the SEC, specifically as described in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2016 filed with the SEC on April 26, 2016. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. The historical results contained in this press release are not necessarily indicative of the future performance of the Company.
Other Claire's Stores, Inc. press releases, a corporate profile and the most recent Form 10-K and Form 10-Q reports are available on Claire's business website at: www.clairestores.com.
Ron Marshall, Chief Executive Officer
Phone: (847) 765-1100, or E-mail, firstname.lastname@example.org
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SOURCE Claire's Stores, Inc.