Claire’s, the fashion and jewelry mall retailer, is filing for Chapter 11 bankruptcy.
Claire’s says that it is planning to use the Chapter 11 bankruptcy to restructure its debt. If all goes well, the company says that this will reduce its debt by roughly $1.9 billion.
According to Claire’s, it has a majority approval of from its Ad Hoc Group of First Lien Creditors led by Elliott Management Corporation and Monarch Alternative Capital LP. This group holds 72% of its First Lien Debt, 8% of its Second Lien Notes, and 83% of its Unsecured Notes.
The Ad Hoc Group of First Lien Creditors has agreed to provide Claire’s with $575 million of new capital if it completes its Restructuring Support Agreement. This includes $75 million for a new “asset-based lending facility, a new $250 million first lien term loan, and $250 million as a preferred equity investment.”
Claire’s says that it has also secured a new $135 million in debtor-in-possession financing commitments from Citigroup Global Markets Inc. It will use these funds to help it operate through the bankruptcy. The company says that it plans to emerge from Chapter 11 in September with $150 million of liquidity.
The Chapter 11 bankruptcy filing specifically affects Claire’s U.S. business and some of its affiliates in the country. It notes that it won’t have an affect on its international operations. It also points out that this restructuring won’t include changes to its operations.
The bankruptcy was filed in the United States Bankruptcy Court for the District of Delaware.
As of this writing, William White did not hold a position in any of the aforementioned securities.
