Charming Charlie, LLC

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About

“Charming Charlie is a Houston-based specialty retailer focused on fashion jewelry, handbags, apparel, gifts and beauty products.  Charming Charlie brings value to their customers by providing them with high quality, style, affordable price points, a broad assortment of product, and stores merchandised by color rather than category. The Company currently operates more than 260 stores in the United States and can be found online at www.CharmingCharlie.com.” From press release.

                                                      

Corporate Highlights

April 24, 2018: The Company emerged from bankruptcy after closing over 100 stores.

December 1, 2017: The Company announced measures to “stabilize its business in support of a Back-To-Basics” strategy, including plans to close under-performing stores in the U.S from 375 currently ; ending international operations; close its LA office and flagship NYC store and reduce headcount in its Corporate Support and Distribution Center.

The Company is working with turnaround advisor AlixPartners LLP, amongst others.

2004: Founded by entrepreneur Charlie Chanaratsopon. The Company became known for its color-coordinated display of jewelry, handbags and apparel. Its early success put Chanaratsopon, chief executive officer and majority owner of the company, on the Forbes America’s Richest Entrepreneurs Under 40 list. Charming Charlie has had investments from private equity firms TSG Consumer Partners and Hancock Park Associates.

BDC Credit Reporter View

Snapshot: After emerging from bankruptcy, the Company is owned by its former lenders, headed by affiliates of THL credit, including TCRD, with a lower debt burden. 

IIQ 2018: Following the restructuring virtually all BDC exposure is in $33.6mn in new term loans due 2023 . The debt is priced at LIBOR + 10.00% and is current.Cion has $1.3mn invested in equity at cost, with a FMV of zero.

April 24, 2018: The Company emerged from Chapter 11 bankruptcy proceedings whereby TCRD converted its DIP facilities, Pre-petition Term Loan and DIP Roll-up Term Loan into two new exit first lien term loans and a non-controlling common equity interest. On the same date, TCRD funded $0.894mn of the remaining unfunded commitments under its DIP facilities and used an additional $2,236 to purchase another lender’s existing DIP revolving credit facility, all of which converted to the exit first lien term loans. As a result of these transactions, TCRD’s debt investment in Charming Charlie is comprised of $24,602 in the exit first lien term loans. In addition, the BDC provided $8,946 of commitments under a vendor financing facility (see tickmark 29 for further description). For the three months ended June 30, 2018, as part of this conversion and in accordance with GAAP, recorded a realized loss of $3.125mn. Along with other THL Credit funds, TCRD owns a controlling interest in the Company post-bankruptcy.

On December 11, 2017 the Company entered into a Restructuring Support Agreement with “a majority of its Term Loan lenders and Equity Sponsors” and voluntarily filed for Chapter 11. BDC lenders provided additional financing in the form of $20.0mn of DIP financing from “a majority of its existing Term Loan lenders” and a separate $35mn “DIP Asset Based Loan” with “its current lenders”. O Total exposure just before April 2018 exit from bankruptcy $35mn.

IIIQ 2017: Cion places loan on non accrual. Debt written down by BDCs approx (20%).

November 23, 2016:  News reports indicated the Company was meeting with investment bankers who might serve as advisors on restructuring negotiations with its lenders.

IVQ 2015: Company placed on Watch List (CCR 3) as all 3 BDCs write down values. PFLT is highest at (15%) discount.

Starting in 2015, Moody’s downgraded the Company’s public ratings, citing a slowdown in same-store sales and lower margins and concerns about liquidity, and worried about a 2016 step-down in leverage allowed under its Senior Secured Term debt.

IQ 2015:  BDC exposure drops $10mn to $30mn, following $10mn reduction in exposure by TCRD.

IVQ 2013: Debt restructured with TCRD increasing exposure to $27mn, all in first lien due in 2019, with subordinated debt repaid. Three other BDCs join lending group. Total exposure at cost :$48.5mn.

IQ 2011: TCRD invests $11.1mn in subordinated loan to Company.