Claire's gains with quarterly numbers; Quebecor tweaks term loan; Blue Sparkle fades away

By Sara Rosenberg

New York, June 12 - Claire's Stores Inc.'s term loan B headed higher during Friday's trading session after the company released earnings results that showed an improvement in net loss and EBITDA on a year-over-year basis.

Meanwhile, over in new deal happenings, Quebecor World Inc. came out with some changes to its exit financing credit facility, including increasing the size of the term loan and tightening the original issue discount.

In other news, Blue Sparkle LP's proposed credit facility has disappeared from the upcoming calendar as its buyout of Barclays Global Investors' iShares business doesn't look like it's happening since a new buyer for the company has emerged.

Claire's rises on earnings

Claire's Stores' term loan B was stronger during market hours on the back of the company's fiscal first-quarter results being announced late Thursday, according to a trader.

The term loan B was quoted at 63 bid, 65 offered, up from 62 bid, 63 offered, the trader said.

For the first quarter, which ended May 2, the company reported a net loss of $29 million versus a net loss of $35.6 million in the comparable period last year.

Net sales for the quarter were $293.1 million, a 10.4% decrease from $327 million in the 2008 fiscal first quarter.

"We are pleased with our performance in the first quarter relative to other retailers and with the progress we made on our 2009 company priorities. However, our sales continue to be negatively impacted by the difficult global economic conditions, said Gene Kahn, chief executive officer, in a news release.

"After Easter, our business began to soften and fell more in line with other retailers who recently reported their May sales. This trend has continued, as thus far in the second quarter our same store sales have been running in the negative high single digits. We remain committed to prioritizing, simplifying and focusing our efforts to continue to improve our merchandise offense, to drive same store sales performance, and reduce costs which should allow us to maximize cash flow and help us achieve our operating objectives," Kahn continued.

Claire's EBITDA improves

Claire's also said on Thursday evening that its adjusted EBITDA in the fiscal 2009 first quarter improved to $36.3 million from $34.3 million in the fiscal 2008 first quarter.

"In the first quarter, we continued to benefit from our cost savings initiative that began in 2008. We achieved our expense savings objectives during the first quarter, reducing selling, general and administrative expenses by $11 million, net of foreign currency effect. These reductions in costs allowed us to increase our adjusted EBITDA by $2 million, or 6%, compared to last year, despite experiencing a decline in sales. We believe we remain on track to achieve our 2009 cost savings objectives," Kahn added in the release.

At May 2, the company's cash and cash equivalents were $206.7 million and $194 million continued to be drawn under its revolving credit facility.

Claire's is a Pembroke Pines, Fla.-based specialty retailer of value-priced fashion accessories and jewelry for girls and young women.

LCDX trades up

The LCDX 12 index gained some ground on Friday despite stocks ending the day mixed, according to a trader.

The index was quoted at 87.60 bid, 87.90 offered, up from 87.20 bid, 87.60 offered, the trader said.

As for stocks, Nasdaq closed down 3.57 points, or 0.19%, Dow Jones Industrial Average closed up 28.34 points, or 0.32%, S&P 500 closed up 1.32 points, or 0.14%, and NYSE closed down 14.52 points, or 0.24%.

Quebecor revises term loan

Switching to the primary, Quebecor World made some changes to the term loan contained in its exit credit facility as a result of the tranche being massively oversubscribed by investors, according to market sources.

Under the modifications, the three-year term loan was upsized to $450 million from $325 million and the original issue discount was reduced to 90 from 88, sources said.

Pricing on the term loan was left unchanged at Libor plus 600 basis points with a 3% Libor floor, sources added.

The term loan carries 101 call protection for two years, and during those two years there's also 101 call protection against a change of control.

Quebecor revolver still working

Quebecor World's now $800 million exit facility, up from $675 million, also includes a $350 million three-year revolver that is talked at Libor plus 450 bps with a 3% Libor floor, and an unused fee that can range from 75 bps to 100 bps.

Investors are being offered two points up front on allocations of up to $50 million, and 2.5 points for allocations above $50 million.

Since launch, no changes have been made to the revolver, although Friday's commitment deadline is being pushed into next week since "banks tend to do a fair amount of extensive underwriting," one source remarked.

Credit Suisse, GE Capital Markets and Wachovia are the lead arrangers on the exit facility, with Credit Suisse the left lead on the term loan and GE the left lead on the revolver.

Prior to the changes, the term loan was rated Ba3/BB- and the revolver was rated Ba3/BB.

The facility is expected to be finalized by mid-July.

Quebecor reducing preferred stock

In connection with the term loan upsizing, Quebecor will be lowering the amount of convertible preferred shares it was planning to issue as part of its reorganization to $100 million from $200 million, sources said.

Remaining proceeds from the term loan upsizing will be used to enhance liquidity.

As previously reported, the company's new capital structure contemplated under its plan of reorganization would also include new unsecured notes, new common shares and new warrant bundles.

The new capital structure would be exchanged for the $2.7 billion of liabilities subject to compromise and for repayment of the company's debtor-in-possession financing facility.

Quebecor is a Montreal-based printing and marketing company.

Blue Sparkle vanishes from pipeline

Blue Sparkle's proposed $1.7 billion credit facility has been eliminated from the forward pipeline since it appears as if CVC Capital Partners Group Sicav-FIS SA's acquisition of iShares - which was the purpose of the loan - has been replaced by a different buyout offer.

The facility, led by Barclays, was expected to consist of an $850 million six-year senior secured term loan at Libor plus 400 bps and an $850 million seven-year senior unsecured term loan at Libor plus 550 bps.

Blue Sparkle was also going to get an about $1.4 billion 10-year pay-in-kind vendor loan priced at 7% for the acquisition.

Barclays was going to hold at least 51% of each facility for the first five years and would have been able to syndicate the remaining 49% after the first year.

BlackRock buying iShares

However, CVC Capital will no longer need the proposed credit facility since, on Friday, BlackRock Inc. announced that it has executed a purchase agreement to acquire Barclays Global Investors, including its ETF platform, iShares, from Barclays plc.

Unless Barclays receives an offer from CVC within five business days that considers to match the terms of BlackRock's agreement, the board of directors of Barclays will execute the purchase agreement with BlackRock and recommend it to Barclays' shareholders for approval.

Under the terms of the transaction, BlackRock, a New York-based investment management firm, would acquire Barclays Global Investors in exchange for 37.8 million shares of common and common equivalents in BlackRock and $6.6 billion of cash.

The cash portion of the purchase price will be funded through a mix of existing cash, committed debt facilities and proceeds from the issuance of equity securities to a group of institutional investors.

Investment grade, BlackRock, has received commitments for an up to $2 billion 364-day revolving credit facility from Barclays, Citi and Credit Suisse for the transaction. BlackRock's plan is to refinance any draw down under the revolver with the proceeds of term debt financings.

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