OREANDA-NEWS. S&P Global Ratings lowered its corporate credit rating on Florida-based Claire's Stores Inc. to 'CC' from 'CCC-' and placed it on CreditWatch with negative implications.

We affirmed the 'C' issue-level rating on the senior secured second-lien debt and senior unsecured debt facilities and placed them on CreditWatch negative. The recovery rating is '6', indicating our expectations for negligible recovery in the event of a default.

Our 'CCC-' issue-level rating on the company's senior secured first-lien debt facilities is unchanged. The recovery rating remains '3'.

"On Aug. 12, 2016, Claire's announced an exchange offer for any and all of $450 million 8.875% senior secured second lien notes due 2019, $320 million 7.750% senior notes due 2020, and $ 26.5 million 10.500% senior subordinated notes due 2017 for new term loans that mature in 2021. The company also plans to refinance its existing $110 million U. S. revolving credit facility due 2017 and extend the maturity to 2019," said credit analyst Samantha Stone. "The consummation of the exchange offer is subject to among other factors, the completion of the U. S. revolver refinancing and consent from the European revolving credit facility lender or a refinancing of the facility. The early participation deadline is Aug. 25, 2016, with a final expiration date of Sept. 9, 2016, unless extended."

We are placing our ratings on CreditWatch with negative implications because we expect to lower the issuer credit rating to 'SD' and the rating on the affected debt facilities to 'D' upon completion of the exchange offer.

Following the consummation of the exchange and downgrade to default, we plan to re-assess the company's capital structure, liquidity assessment, earnings profile and update the recovery ratings profile.