Claire’s files for bankruptcy; plans to keep stores open
A heavy debt load and lower mall traffic has taken its toll on Claire’s Stores.
The tween/teen jewelry and accessories retailer has filed for Chapter 11 bankruptcy protection in a move that it expects will reduce its debt by about $1.9 billion. Claire’s was acquired in 2007 in a leveraged buyout by private equity firm Apollo Global Management LLC for $3.1 billion. Claire’s international subsidiaries are not included in the filing.
"This transaction substantially reduces the debt on our balance sheet and will enhance our efforts to provide the best possible experience for our customers," said Ron Marshall, Claire's CEO. "We will complete this process as a healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners, and franchisees."
Claire’s, which has more than 7,500 locations in 45 countries, indicated it has no plans to close stores. The retailer recently has been expanding to new areas, including signing agreements to sell its goods at CVS and Giant Eagle. Claire’s said it plans to grow its concession business by more than 4,000 stores in 2018.
According to the filing, the company has an agreement with its creditors, Elliott Management Corporation and Monarch Alternative Capital LP. The firms, which collectively hold approximately 72% of Claire’s first lien debt, 8% of its second lien notes, and 83% of its unsecured notes, will infuse the company with approximately $575 million of new capital.
The company expects this investment, along with a commitment of $135 million debtor-in-procession financing from Citi, to help it emerge from Chapter 11. Claire’s expects to operate its business in the ordinary course during its restructuring process.
Claire’s expects to complete the Chapter 11 process in September.
The tween/teen jewelry and accessories retailer has filed for Chapter 11 bankruptcy protection in a move that it expects will reduce its debt by about $1.9 billion. Claire’s was acquired in 2007 in a leveraged buyout by private equity firm Apollo Global Management LLC for $3.1 billion. Claire’s international subsidiaries are not included in the filing.
"This transaction substantially reduces the debt on our balance sheet and will enhance our efforts to provide the best possible experience for our customers," said Ron Marshall, Claire's CEO. "We will complete this process as a healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners, and franchisees."
Claire’s, which has more than 7,500 locations in 45 countries, indicated it has no plans to close stores. The retailer recently has been expanding to new areas, including signing agreements to sell its goods at CVS and Giant Eagle. Claire’s said it plans to grow its concession business by more than 4,000 stores in 2018.
According to the filing, the company has an agreement with its creditors, Elliott Management Corporation and Monarch Alternative Capital LP. The firms, which collectively hold approximately 72% of Claire’s first lien debt, 8% of its second lien notes, and 83% of its unsecured notes, will infuse the company with approximately $575 million of new capital.
The company expects this investment, along with a commitment of $135 million debtor-in-procession financing from Citi, to help it emerge from Chapter 11. Claire’s expects to operate its business in the ordinary course during its restructuring process.
Claire’s expects to complete the Chapter 11 process in September.