Claire’s Stores has begun a private offer to exchange its outstanding 8.875% senior secured second lien notes due 2019, 7.750% senior notes due 2020 and 10.500% senior subordinated notes due 2017 for up to $40 million of new senior secured term loans maturing 2021, up to $130 million of new senior secured term loans maturing 2021 and up to $60 million of new senior term loans maturing 2021.

The term loans will be made pursuant to term loan agreements to be entered into by the company, its subsidiary CLSIP and Claire’s Gibraltar, respectively. The Bank of New York Mellon Trust Company is serving as administrative agent. Each of the term loans will have a maturity date of the fifth anniversary of the settlement date and will bear interest at a rate per annum of 9.0%. The Claire’s Stores term loan will be guaranteed by all of Claire’s Stores domestic subsidiaries and secured on a first priority basis by substantially all the assets of Claire’s Stores and the guarantor subsidiaries.

The CLSIP term loan will be secured by substantially all the assets of CLSIP, consisting only of certain intellectual property assets to be contributed to CLSIP by a subsidiary of Claire’s Stores and an agreement between CLSIP and such subsidiary that provides that Claire’s Stores may continue to have exclusive use of such intellectual property in return for annual payments of $12 million. The CLSIP Term Loan will be guaranteed by CLSIP’s parent, CLSIP Holdings, which will secure the guarantee with a pledge to the equity of CLSIP. It will not be guaranteed by Claire’s Stores or any of its other subsidiaries. The Claire’s Gibraltar term loan will be unsecured and not guaranteed by Claire’s Stores or any of its other subsidiaries.

In connection with the exchange offer, Claire’s Stores will complete a refinancing transaction with the lenders under its existing $115 million revolving credit facility. According to a related 8k filing, Credit Suisse is administrative agent for the transation. In  addition:

  • Claire’s Gibraltar will be party to a new $40 million credit agreement maturing February 4, 2019 with the lenders of the U.S. credit facility, the proceeds of which will be used to reduce outstanding amounts under the U.S. credit facility by $40 million.
  • Claire’s Stores will be parties to a new ABL credit agreement maturing February 4, 2019, providing for revolving credit loans that will have a primary lien on ABL collateral, and availability subject to a borrowing base, of up to $75 million less any amounts outstanding under the U.S. credit facility, the proceeds of which ABL credit facility will be used to reduce outstanding amounts under the U.S. credit facility.
  • The availability of the U.S. credit facility will be reduced to an amount equal to $75 million less any amounts outstanding under the ABL credit facility from time-to-time.
  • The maturity of the U.S. credit facility will be extended until February 4, 2019.

Claire’s is a specialty retailer of fashion jewelry and accessories for young women.