Tags: toys r us | retail | bankruptcy | liquidation

Toys 'R' Us Said to Be Prepping Liquidation of US Operations

Image: Toys 'R' Us Said to Be Prepping Liquidation of US Operations
(Photo: Aaron Chown/AP)

Thursday, 08 March 2018 05:01 PM

Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter.

While the situation is still fluid, a winding down of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said.

A representative for Toys “R” Us declined to comment.

The toy chain’s U.S. division entered bankruptcy in September with the goal of emerging as a leaner business with a more sustainable debt load. The company secured a $3.1 billion debtor-in-possession loan to maintain operations while it developed a plan to reduce its unmanageable $5 billion debt. But Toys “R” Us’s results worsened more than expected during the holidays, casting doubt on the chain’s viability.

The situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy. Toys “R” Us’s U.K. unit put itself in the hands of a court administrator after talks to sell the business fell apart. Its European arm is seeking takeover bids. And talks are being held to offload the growing Asian business, the company’s most profitable arm. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.

The downfall of Toys “R” Us can be traced back to a $7.5 billion leveraged buyout in 2005, when Bain Capital, KKR & Co. and Vornado Realty Trust loaded the company with debt to take it private. For years, the retailer was able to refinance its debt and delay a reckoning. But the emergence of online competitors, like Amazon.com Inc., weighed on results. The company’s massive interest payments also sucked up resources that could have gone toward technology and improving operations.

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Toys "R" Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter.
toys r us, retail, bankruptcy, liquidation
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2018-01-08
Thursday, 08 March 2018 05:01 PM
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