Claire's Stores, Inc. Announces Amendments to Exchange Offer; Execution of Support Agreement; Extension of Early Tender Time and Expiration Time

HOFFMAN ESTATES, Ill., Aug. 29, 2016 /PRNewswire/ -- Claire's Stores, Inc. ("Claire's Stores" or the "Company") today announced that it has amended the terms of its previously announced private offer to exchange (the "Exchange Offer") any and all of its outstanding 8.875% Senior Secured Second Lien Notes due 2019 (the "Second Lien Notes"), 7.750% Senior Notes due 2020 (the "Unsecured Notes"), and 10.500% Senior Subordinated Notes due 2017 (the "Subordinated Notes", and collectively the "Notes") held by Eligible Holders (as defined below), for up to $40.0 million of new Senior Secured Term Loans maturing 2021 of Claire's Stores, Inc. (the "Claire's Stores Term Loans"), up to $130.0 million of new Senior Secured Term Loans maturing 2021 of CLSIP LLC ("CLSIP"), which is a newly formed unrestricted subsidiary of Claire's Stores (the "CLSIP Term Loans") and up to $60.0 million of new Senior Term Loans maturing 2021 of Claire's (Gibraltar) Holdings Limited, the holding company of Claire's Stores' European operations (the "Claire's Gibraltar Term Loans", and collectively, the "Term Loans"). The amended terms and conditions of the Exchange Offer are set forth in a confidential amended and restated offer to exchange statement dated August 29, 2016 and a related letter of transmittal (together, the "Amended Offer to Exchange Statement").

As described in more detail below, the amendments include the following changes to the Exchange Offer:

• To the extent the Exchange Offer is not fully subscribed, tendering holders of Second Lien Notes and Unsecured Notes will receive additional Term Loans of up to $83.64 and $21.36, respectively, per $1,000 of Notes tendered.
• To the extent funds managed by affiliates of Apollo Global Management, LLC (the "Apollo Funds") and Claire's Inc., the parent of Claire's Stores ("Parent" and, together with the Apollo Funds, the "Affiliated Holders"), participate in the transaction pursuant to the Affiliated Holder Exchange (as defined below), and receive Term Loans, all such Term Loans held by the Affiliated Holders and their affiliates will be pay-in-kind.
• Parent will contribute approximately $11.5 million of cash to the capital of Claire's Stores upon completion of the Exchange Offer, subject to the receipt of the consent of the lenders under the Claire's Stores U.S. Credit Facility to include such cash contribution in the calculation of Claire's Stores' EBITDA for purposes of compliance with the financial ratio requirements contained therein. Claire's Stores will agree to use commercially reasonable efforts to obtain such consent. If such consent is not obtained within 45 days after the completion of the Exchange Offer, Parent will pledge such $11.5 million of cash as collateral securing the CLSIP Term Loans. If such consent is obtained thereafter, Parent may withdraw such cash for the sole purpose of making the cash contribution.

In addition, the Company announced that holders of approximately $300 million aggregate principal amount of Notes have committed to participate in the Exchange Offer.  Participation by these holders, together with the Affiliated Holder Exchange, will ensure that the $400 million minimum tender condition to the Exchange Offer (the "Minimum Tender Condition") is satisfied.

Finally, the Company announced that the Early Tender Time and the Withdrawal Time have been extended to 5:00 p.m., New York City time, on September 1, 2016 and the Expiration Time has been extended to one minute after 11:59 p.m., New York City time, on September 12, 2016.

As previously announced, for each $1,000 principal amount of Notes validly tendered and not validly withdrawn at or prior to the Early Tender Time and accepted for exchange by the Company, Eligible Holders will be eligible to receive the "Total Consideration" set forth in the table below, which includes an early participation premium of $30 in principal amount of Claire's Gibraltar Term Loans per $1,000 of Notes.  For each $1,000 in principal amount of Notes validly tendered and not validly withdrawn after the Early Tender Time and at or prior to the Expiration Time and accepted for exchange by the Company, Eligible Holders will be eligible to receive only the "Exchange Consideration" set forth in the table below.

The following table sets forth the Total Consideration, which includes the early participation premium, and Exchange Consideration for the Notes:

(1) Excludes amount held by Claire's Inc.

The amendments provide that, to the extent that the Exchange Offer is not fully subscribed for the Total Consideration at the Expiration Time and as a result a portion of the $230 million principal amount of Term Loans remains unallocated (the "Unsubscribed Term Loans"), holders of Second Lien Notes and Unsecured Notes validly tendered (and not validly withdrawn) and accepted in the Exchange Offer will receive additional Term Loans (the "Additional Consideration") of up to the following principal amounts:

To the extent the amount of Unsubscribed Term Loans is less than the aggregate principal amount of Term Loans required to allocate the maximum potential Additional Consideration to the tendering holders of Second Lien Notes and Unsecured Notes, then such tendering holders will receive a pro rata portion of the Unsubscribed Term Loans (based upon the aggregate principal amount of Notes accepted in the Exchange Offer), but no more than the maximum potential Additional Consideration set forth above.

As previously announced, Parent owns approximately $58.7 million aggregate principal amount of the Subordinated Notes.  The Apollo Funds own approximately $183.6 million aggregate principal amount of Claire's Stores' 10.500% PIK Senior Subordinated Notes due 2017 (the "PIK Subordinated Notes").  No Affiliated Holder will participate in the Exchange Offer. However, to the extent the Exchange Offer is not fully subscribed for the Total Consideration, following the allocation of the maximum Additional Consideration, the Affiliated Holders have agreed to effect a similar exchange of Subordinated Notes, in the case of Claire's Inc., and PIK Subordinated Notes, in the case of the Apollo Funds, for Term Loans on the same economic terms offered in the Exchange Offer for the Unsecured Notes (that are tendered prior to the Early Tender Time and including any Additional Consideration that is actually paid) concurrently with the completion or termination of the Exchange Offer (the "Affiliated Holder Exchange").  The Affiliated Holder Exchange, which will only occur after the allocation of the maximum Additional Consideration to tendering holders, will count towards satisfaction of the $400 million Minimum Tender Condition. The amendments provide that interest payable on any Term Loans held by the Affiliated Holders participating in the Affiliated Holder Exchange or their affiliates will be pay-in-kind.

Tenders may be validly withdrawn at any time on or prior to the Withdrawal Time, but not thereafter unless the Withdrawal Time is further extended or as otherwise required by law. 

The consummation of the Exchange Offer is subject to the Company's right to amend the Exchange Offer prior to the Expiration Time. 

Documents relating to the Exchange Offer will only be distributed to "Eligible Holders" of Notes who complete and return an eligibility form confirming that they are a bank, institutional lender or other institution that meets the financial and other requirements specified in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended, for an "accredited investor" and that they were not formed for the specific purpose of participating in the Exchange Offer (collectively, the "Eligible Holders").

The complete terms and conditions of the Exchange Offer, as amended and restated, as well as the terms of the Term Loans, are described in the Amended and Restated Offer to Exchange Statement, copies of which may be obtained by Eligible Holders by contacting D.F. King & Co., Inc., the information and exchange agent in connection with the Exchange Offer, at 800.967.7574 (toll-free) or 212.269.5550 (banks and brokers) or by visiting www.dfking.com/claires to complete the eligibility process.

This press release shall not constitute an offer to exchange, nor a solicitation of an offer to exchange any security.  No recommendation is being made as to whether holders of the Notes should exchange Notes for Term Loans.

Company Overview

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 April 30, 2016, Claire's Stores, Inc. operated 2,831 stores in 17 countries throughout North America and Europe, excluding 733 concession locations. The Company franchised 579 stores in 29 countries primarily located in the Middle East, Central and Southeast Asia and Central and South America, and Southern Africa. More information regarding Claire's Stores is available on the Company's corporate website at www.clairestores.com.

Forward-looking Statements

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.

Additional Information

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.

Contact Information
J. Per Brodin, Executive Vice President and Chief Financial Officer
Phone: (847) 765-1100, or E-mail, [email protected]

SOURCE Claire's Stores, Inc.

Related Links

http://www.clairestores.com