• Company wants to exchange $800 million of notes for new loans
  • Deal would reduce Claire’s debt and buy it more time

Claire’s Stores Inc., the struggling tween-jewelry retail chain, is asking bondholders to exchange almost $800 million of notes for new loans that would cut the company’s debt load and buy it more time to turn around its business.

The Hoffman Estates, Illinois-based company, seeking to rein in the debt it took on in a 2007 leveraged buyout by Apollo Global Management LLC, is offering to swap three securities with $796.5 million of outstanding principal for as much as $230 million of new 9 percent term loans due 2021, the company said in an Aug. 12 statement. Some of the new senior loans would be backed by certain of the company’s assets, Claire’s said. As part of the exchange, the company would complete a refinancing transaction with lenders under its existing $115 million revolving credit facility, it said.

The offer is conditioned on a minimum of $400 million of notes being tendered in the exchange offer, the company said. The parent of Claire’s and funds managed by affiliates of Apollo hold about $242 million of subordinated notes issued by the retailer. While they won’t participate in the exchange, they have agreed to do a similar debt exchange if participation falls short, according to the statement.

Claire’s deal for bondholders comes after the retailer lost about $514 million over the past three years as mall traffic slowed, competition from online and specialty stores gained momentum, and a rising U.S. dollar crimped overseas sales and profits. The company’s notes are trading at distressed prices, with its $450 million of 8.875 percent second-lien notes maturing 2019 priced at a six-month low. The price of Claire’s $320 million of 7.75 percent senior unsecured notes maturing 2020 are trading at their lowest levels since June 2014.

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