SAN FRANCISCO--(BUSINESS WIRE)--Charlotte Russe (the “Company”) is pleased to announce that it has entered into a restructuring support agreement (the “Agreement”), with holders of over 98% of its Term Loan debt (the “Supporting Term Lenders”), that will reduce the Company’s Term Loan debt from approximately $214 million to $90 million. In exchange, the Supporting Term Lenders will receive 100% of the equity of Charlotte Russe, subject to dilution from a new proposed management equity incentive plan. The consummation of this restructuring transaction remains subject to several conditions, most notably that the Company obtain a threshold amount of annualized operational savings, including rent relief, and the commitment of all holders of the Term Loan debt to participate in the proposed out-of-court restructuring. The Company does not anticipate any impact or interruption to the business as a result of this transaction, which it expects to complete in early 2018.
“We appreciate the very constructive discussions we’ve had with our owners and lenders ahead of our 2019 Term Loan expiration, and we are very pleased to be taking this important step, which puts us on a clear path to reducing our long-term debt, improving our financial flexibility, reinvigorating the Charlotte Russe brand and positioning the Company for success,” said Jenny Ming, Chief Executive Officer of Charlotte Russe. “The willingness of our lenders to equitize a substantial portion of the Term Loan debt underscores their confidence in the Charlotte Russe team and their commitment to our strategic plan for profitability and future growth. I want to thank our employees, suppliers and customers for their continued support, and we look forward to the opportunities ahead.”
Principal components of the Agreement include:
- Term Loan lenders will amend the Term Loan to reduce the principal to $90 million, reduce the annual interest expense by almost 50% and extend maturity to December 2022;
- Current equity interests will either be redeemed and canceled, or transferred to the holders of the Term Loan debt, in each case for nominal cash consideration;
- New equity interests will be issued to the holders of the Term Loan debt, subject to dilution from the new proposed management equity incentive plan; and
- Annual debt service and operational expenses will be substantially reduced.
Cooley LLP is serving as the Company's legal counsel, and Moelis & Company LLC is serving as its financial advisor. The Supporting Term Lenders are advised by Milbank, Tweed, Hadley & McCloy LLP and Berkeley Research Group, LLC.
About Charlotte Russe, Inc.
Charlotte Russe is a fashion brand for young women, offering affordable on-trend apparel, shoes and accessories for all sizes, with a fun and engaging shopping experience wherever and whenever she wants. The Company operates 545 Charlotte Russe stores throughout 45 states and Puerto Rico with an ever-growing digital presence. In 2016, the Company expanded to include Peek Kids, operating 11 stores and an ecommerce site. For more information, please visit http://www.CharlotteRusse.com and on Instagram @CharlotteRusse and @Peekkids.
Cautionary Note Regarding Forward-Looking Statements
Except for the historical information contained herein, this press release contains forward-looking statements. Such statements include, but are not limited to, statements about Charlotte Russe’s beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may,” “could,” should,” “would,” “believe,” anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that a condition to the closing of the transaction will not be satisfied, other risks to consummation of the transaction, including the risk that the transaction will not be consummated within the expected time period, general and regional economic conditions, industry trends, consumer demands and preferences, competition from other retailers and uncertainties generally associated with women's apparel and accessory retailing. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.