Skip to content Skip to sidebar Skip to footer

J.Crew Group, Inc. closes private offer to holders of 7.75%/8.50% Senior PIK Toggle Notes due 2019

NEW YORK, 2017-Jul-15 — /EPR Retail News/ — J.Crew Group, Inc. (the “Company”) today (July 13, 2017) announced the closing of the previously announced private offer (the “Exchange Offer”) to holders of the $566.5 million aggregate principal amount of 7.75%/8.50% Senior PIK Toggle Notes due 2019 (the “Old Notes”) issued by Chinos Intermediate Holdings A, Inc. (the “Old Notes Issuer”), a direct wholly-owned subsidiary of Chinos Holdings, Inc., the ultimate parent of the Company (“Parent”).

Following acceptance in the Exchange Offer of 99.85% of the Old Notes, eligible note holders received:

  • $249,596,000 aggregate principal amount of 13% Senior Secured Notes due 2021 issued by J. Crew Brand, LLC and J. Crew Brand Corp. (the “Issuers”), both wholly-owned subsidiaries of the Company;
  • 189,688 shares of Parent’s 7% non-convertible perpetual preferred stock, series A, no par value per share, with an aggregate initial liquidation preference of $189,688,000; and
  • approximately 15% of Parent’s common equity, or 17,362,719 shares of Parent’s class A common stock, $0.00001 par value per share.

In addition, concurrently with the Exchange Offer, the Company announced completion of previously disclosed related transactions, including the following:

Term Loan Transactions.  Following receipt of requisite consents for approval by lenders holding approximately 88% of the outstanding principal amount of loans under the Company’s term loan agreement, the Company entered into the previously disclosed term loan amendment.  In connection with the term loan amendment, the Company purchased $150 million principal amount of term loans under the term loan agreement held by lenders who consented to the term loan amendment at par plus accrued interest. This repurchase was financed with additional borrowings under the term loan agreement of $30 million principal amount (at a 2% discount), as well as the issuance in a private placement of $97 million principal amount (at a 3% discount) of new 13% Senior Secured Notes due 2021 issued by the Issuers, the proceeds of which were loaned on a subordinated basis to the Company. The balance of the repurchase price of term loans was funded with cash resources of the Company.

As permitted by the term loan amendment, a Company subsidiary contributed to a subsidiary of the Issuers the remaining undivided 27.96% ownership interest of certain U.S. intellectual property rights not previously transferred. The intellectual property initially contributed and the remaining undivided interest contributed secure the $346.6 million principal amount of new notes issued by the Issuers in the Exchange Offer and the private placement, with the priorities previously disclosed.

The term loan amendment also includes a direction to the term loan administrative agent to dismiss, with prejudice, certain litigation relating to the assignment of the initial transferred intellection property (and related matters), which will be effected pursuant to an agreed stipulation.

Equity Recapitalization. A majority in interest of the current holders of Parent’s Class L Common Stock, par value $0.001 per share, including affiliates of TPG Capital, L.P. and Leonard Green & Partners, L.P. elected to convert all the outstanding shares of Class L Common Stock into (i) 110,000 shares of Parent’s 7% non-convertible perpetual preferred stock, Series B, no par value, with an initial liquidation preference of $1,000 per share ($110 million aggregate initial liquidation preference) that will be pari passu with the new Series A preferred stock issued in the Exchange Offer, and (ii) 95,350,555 shares of Parent’s Class A common stock.

In connection with the Recapitalization, the Principal Investors Stockholders’ Agreement, dated as of March 7, 2011, among Parent, the Old Notes Issuer, Chinos Intermediate Holdings B, Inc., an indirect wholly-owned subsidiary of Parent, the Company, the Sponsors and the other stockholders party thereto, was amended and restated to provide that the holders of the Class A common stock (including participants in the Exchange Offer) will be subject to certain rights and obligations as set forth in greater detail therein.

The Company intends to implement a new management incentive plan, pursuant to which it is expected that certain officers and employees of the Company will be entitled to receive equity awards of up to 10% of the Class A common stock outstanding after the Exchange Offer and up to $20 million in initial liquidation preference of additional new Series B preferred stock of Parent. The Class A common stock component of the new management incentive plan will dilute all holders of the Class A Common Stock. Any additional new Series B preferred stock will be in addition to the new Series B preferred stock issued in the Exchange Offer.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, nor an offer to sell or a solicitation of an offer to purchase, any securities. The New Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities laws and, unless so registered, the New Securities may not be offered, sold, pledged or otherwise transferred within the United States or to or for the account of any U.S. person, except pursuant to an exemption from the registration requirements thereof.  Accordingly, the New Securities were issued only (i) to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) and (ii) to non-“U.S. persons” who are outside the United States (as defined in Regulation S under the Securities Act). Non U.S.-persons may also be subject to additional eligibility criteria.

Cautionary Note Regarding Forward-Looking Statements

Certain statements herein, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events, and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including ongoing litigation, the Company’s substantial indebtedness and the indebtedness of its indirect parent, the retirement, repurchase or exchange of its indebtedness or the indebtedness of its indirect parent, its substantial lease obligations, its ability to anticipate and timely respond to changes in trends and consumer preferences, the strength of the global economy, declines in consumer spending or changes in seasonal consumer spending patterns, competitive market conditions, its ability to attract and retain key personnel,  its ability to successfully develop, launch and grow its newer concepts and execute on strategic initiatives, product offerings, sales channels and businesses, its ability to implement its growth strategy, material disruption to its information systems, its ability to implement its real estate strategy, adverse or unseasonable weather, interruptions in its foreign sourcing operations, and other factors which are set forth in the section entitled “Risk Factors” and elsewhere in the Offering Memorandum and in the Company’s Annual Report on Form 10-K, Quarterly Report on Form 10-Q and in all filings with the SEC made subsequent to the filing of the Form 10-Q. Because of the factors described above and the inherent uncertainty of predicting future events, the Company cautions you against relying on forward-looking, whether as a result of new information, future events or otherwise.

About J.Crew Group, Inc.

J.Crew Group, Inc. is an internationally recognized omni-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of July 13, 2017, the Company operates 277 J.Crew retail stores, 118 Madewell stores,,, the J.Crew catalog,, and 179 factory stores (including 39 J.Crew Mercantile stores). Certain product, press release and SEC filing information concerning the Company are available at the Company’s website

SOURCE: J.Crew Group, Inc.

EPR Retail News