Claire's Stores, Inc. announced that it is pursuing a financial restructuring in order to eliminate a substantial portion of debt from the Company's balance sheet and position Claire's for long-term success pursuant to a chapter 11 reorganization process commenced in the United States Bankruptcy Court for the District of Delaware by Claire's and certain of its U.S. affiliates. Claire's international subsidiaries are not part of the Company's U.S. chapter 11 filings.

The Company's management is confident that, through the restructuring process, Claire's will cement its position as one of the world's leading specialty retailers of fashionable jewelry, accessories, and beauty products for young women, teens, "tweens" and kids for many years to come.  Unlike other retailers that have come before it, Claire's has commenced its restructuring process from a position of unique operational strength:

• The Company expects to report adjusted EBITDA for FY2017 (on a 52-week basis) of approximately $212 million, up nearly 13% from FY2016. A reconciliation of net income to adjusted EBITDA is included in this release.
• The Company expects to report an adjusted EBITDA margin for FY2017 (on a 52-week basis) of approximately 16.1%, up nearly 170 basis points from FY2016.
• The Company expects to report net sales and net income for FY2017 (on a 52-week basis) of approximately $1,318 million and $29 million, respectively.
• Claire's is growing, not shrinking, its business. The Company expects its concessions business to grow by more than 4,000 stores in 2018.
• Claire's continues to be the world's leading ear piercer, having pierced over 100,000,000 ears worldwide, and approximately 3,500,000 ears in FY2017 in the United States alone. The Company's iconic ear piercing services are unmatched and cannot be replicated online.
• The Company is utilizing the chapter 11 process to effectuate a balance sheet—not an operational—restructuring. 
• The Company is current on payments to its trade vendors, and has ample liquidity to maintain strong partnerships with its domestic and non-domestic suppliers, including by making timely payments on customary trade terms.
• The Company has obtained $135 million in debtor-in-possession (DIP) financing commitments, including an asset-based lending facility and a term loan from Citigroup Global Markets Inc. ("Citi").
• The Company's restructuring efforts are supported by holders of approximately 72% of the Company's First Lien Debt, 8% of its Second Lien Notes, and 83% of its Unsecured Notes.

The Company has commenced its restructuring process having executed a Restructuring Support Agreement (the "RSA") with its Ad Hoc Group of First Lien Creditors led by Elliott Management Corporation and Monarch Alternative Capital LP that collectively holds approximately 72% of the Company's First Lien Debt, 8% of its Second Lien Notes, and 83% of its Unsecured Notes.  Pursuant to the transactions contemplated by the RSA, members of the Ad Hoc Group of First Lien Creditors have agreed to provide the Company with approximately $575 million of new capital, including financing commitments for a new $75 million asset-based lending facility, a new $250 million first lien term loan, and $250 million as a preferred equity investment.  With these commitments in place, Claire's expects to complete the chapter 11 process in September 2018, emerge with over $150 million of liquidity, and reduce its overall indebtedness by approximately $1.9 billion. 

"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 Chief Executive Officer.  Mr. Marshall continued, "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 expects to operate its business in the ordinary course during its restructuring process, and its Claire's® and Icing® locations worldwide will continue to provide their customers with the assortment of products and quality of service they have come to expect to find in the Company's stores.  In connection with its restructuring, the Company has filed a series of customary motions seeking court approval of the Company's honoring wage-, benefits-, and critical- and foreign-vendor-related claims. Cash flows from operations, coupled with the RSA and the Company's fully-underwritten $135 million DIP facility from Citi, will provide Claire's with ample liquidity to enter into, operate within, and emerge from chapter 11 seamlessly.

Lazard Frères & Co. LLC is serving as investment banker to Claire's; FTI Consulting, Inc. is serving as restructuring advisor to Claire's; Hilco Real Estate, LLC is serving as real estate advisor to Claire's; and Weil, Gotshal & Manges LLP is serving as legal counsel to Claire's.

The Ad Hoc First Lien Group is represented by Willkie Farr & Gallagher LLP and Millstein & Co.