Apparel and accessories retailer Claire's Stores Inc. is preparing to file for bankruptcy in the coming weeks, Bloomberg News reported March 8, citing unnamed sources.
The decision should ease the retailer's $2 billion debt load, which is over 10 times a key measure of its annual earnings, the report said. Privately held Claire's amassed the debt pile when Apollo Global Management LLC made a leveraged buyout of the company in 2007, according to Bloomberg. More than $1.4 billion of the company's debt matures in 2019, plus it has a $60 million interest payment due March 13.
Claire's is closing in on a deal to pass company control from Apollo to lenders including Elliott Capital Management LLC and Monarch Alternative Capital LP. Venor Capital Management LP and Diameter Capital Partners LP are also involved in the plans, according to the report.
A spokesman for Apollo declined to comment to Bloomberg, while representatives for Claire's and the creditors declined to comment or did not respond to messages from the news organization.
On Sept. 14, 2017, Fitch Ratings put the mall-based retailer on its bonds of concern list, signaling that the company was likely to default in 2018.
The Bloomberg report noted that Claire's has sought out new revenue streams in the face of dwindling shopping mall traffic and online competition. It cited Claire's agreements to sell products at CVS Health Corp. and Giant Eagle supermarkets.
