Chitchat Huge Debts unable to pay, TOYS я Us going Bankrupt

http://www.channelnewsasia.com/news/business/toys-r-us-files-for-bankruptcy-protection-9229958


Toys 'R' Us files for bankruptcy protection
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Shoppers pass by the Toys R Us store at Times Square in New York on Nov 22, 2010. (File Photo: Reuters/ Brendan McDermid)
19 Sep 2017 12:14PM (Updated: 19 Sep 2017 12:36PM)
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SINGAPORE: Toys ‘R’ Us Inc has filed for bankruptcy, following weeks of intense speculation as the retailer faced intense pressure from skittish suppliers.

It is the latest sign of turmoil in the retail industry caught in a viselike grip of online shopping and discount chains.

Toys 'R' Us said it received a commitment for over US$3 billion in debtor-in-possession financing from lenders including a JPMorgan-led bank syndicate and certain of the company's existing lenders.

The new financing, subject to court approval, is expected to immediately improve the company's financial health and support its ongoing operations during the court-supervised process, Toys 'R' Us said.

The company's Canadian unit intends to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice, Toys 'R' Us said in a statement.

The retailer's operations outside of the United States and Canada, including about 255 licensed stores and joint venture partnerships in Asia, which are separate entities, are not part of the Chapter 11 filing and CCAA proceedings, Toys 'R' Us said.

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The filing is among the largest ever by a specialty retailer and casts doubt over the future of the company's nearly 1,600 stores and 64,000 employees. It comes just as Toys 'R' Us is gearing up for the holiday shopping season, which accounts for the bulk of its sales.

Toys 'R' Us filed the petition in the US Bankruptcy Court for the Eastern District of Virginia in Richmond, Virginia.

The company has $4.9 billion in debt with US$400 million in interest payments due in 2018 and another $1.7 billion due the following year.

"Today marks the dawn of a new era at Toys"R"Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," said Dave Brandon, the company's chairman and CEO, said in a press release.


"We are confident that these are the right steps to ensure that the iconic Toys"R"Us and Babies"R"Us brands live on for many generations," he added.

Channel NewsAsia has reached out to the company's Singapore operations.
Source: CNA/am
Read more at http://www.channelnewsasia.com/news/business/toys-r-us-files-for-bankruptcy-protection-9229958

Just bite the dust and let it become a happy memory for most of us.

https://hk.news.yahoo.com/玩具反斗城申破保-重組四億美元債項-223000501.html

玩具反斗城申破保 重組四億美元債項
[星島日報]
星島日報
2017年9月20日 上午6:30
玩具反斗城申破保 重組四億美元債項

【星島日報報道】上世紀曾盛極一時的玩具零售專門連鎖集團玩具反斗城，終於敵不過之前槓桿收購留下的沉重債務負擔以及近年網上網下崛起的業界對手夾擊，最終走上破產保護以求重生之路。

玩具反斗城聲明稱，已正式在維珍尼亞州申請第11章破產保護，加拿大公司亦有意向安大略最高法院申請破保，但美國及加拿大以外的分店將不受影響，包括海外約255間專利分店，以及與利豐（494）馮氏家族旗下的馮氏零售合資經營的亞洲業務。澳洲玩具反斗城計畫在聖誕節前，為該國總數的39間的分店網絡增加5家店面。

外電報道，內地部分供應商早前已停止向玩具反斗城付運貨品，部分原因是貨品付運保險成本過高。在廣東省生產兒童玩具車的平湖米家兒童用品生產商銷售經理余先指，由於擔心無法收到貨款而暫停生產玩具反斗城的定單。本港玩具生產商以往亦有多次遇上美國買家出問題的事，也對供貨玩具反斗城持保留態度。

中國玩具及嬰童用品協會發言人認為，即使玩具反斗城發生營運困難，中國出口玩具總額每年仍有強勁增長，不至於出現行業前景問題。

由私人公司馮氏零售佔15%的玩具反斗城亞洲表示，公司是獨立個體，財務上獨立於其他地方經營的玩具反斗城公司，旗下店鋪如常運作。

美國玩具反斗城申請破保時，列舉債務及資產超過10億美元，並在提出申請前，已獲得包括摩根大通牽頭銀團在內的逾30億美元融資。公司已經聘請律師行重組明年到期的4億美元債項。在玩具反斗城申請破保前，已有10多家美國大零售商，包括Payless、Gymboree等申請破產保護。玩具反斗城沒關閉分店計畫，全球1600家分店將繼續正常營運，聘用僱員達6.4萬人。

分析師指，玩具反斗城可說是戰後出生人士集體回憶的標誌，敗於2005年被私募基金通過槓桿收購後留下的債務，以及近年大零售對手沃爾瑪和網購流行而崛起的亞馬遜的迎頭痛擊，以致無法走出虧困財務狀況。

近年玩具反斗城每年單是現金利息開支已高達5億美元，無法投放更多現金用於店面擴張、採購，以及更關鍵的發展網上銷售業務。

睇更多

https://www.bloomberg.com/news/arti...-in-game-of-chicken-that-turned-into-dominoes



How Toys ‘R’ Us Collapsed So Quickly
By Tiffany Kary
, Jodi Xu Klein
, and Emma Orr
September 19, 2017, 3:20 PM EDT September 20, 2017, 12:00 AM EDT

Speed of collapse into bankruptcy surprises some investors
Talks on out-of-court settlement stumbled as vendors defected

Toys ‘‘R’’ Us Inc., which somehow managed to sustain a crushing debt load for more than a decade after its 2005 buyout, finally succumbed this week to a “dangerous game of dominoes” that toppled the retailer in a matter of days.

Until the past few weeks, markets had reflected little doubt that a rescue deal would get done before the crucial holiday shopping season, as Toys ‘‘R’’ Us negotiated to restructure about $400 million of borrowings due next year. But while creditors held out for a sweetened offer, people with knowledge of the matter said, the company started preparing for a possible Chapter 11 filing. That kicked off a chain of events that showed how quickly a retailer can buckle when key suppliers and creditors get spooked.

“The bankruptcy became a self-fulfilling prophecy,” said Hugh Ray, an attorney with McKool Smith in Houston. Credit managers and vendors “convinced each other it was a crisis, and the rumors fed on each other.”

The speed of their downfall was reflected in debt markets, where Toys ‘‘R’’ Us bonds that traded at almost par on Sept. 1 plunged to as low as 18 percent of face value this week. The upfront cost to insure $10 million of debt against default skyrocketed from about $300,000 on Sept. 5 to $2.5 million at the end of last week. By Monday, the eve of the bankruptcy filing, it was $7.7 million.

It’s not as if creditors weren’t well aware of troubles at Toys ‘‘R’’ Us. The Wayne, New Jersey-based company has operated for over 10 years with debt that now totals $5 billion and costs the chain around $400 million a year.
Scotch Tape

“They’ve been trying to hold it together with Elmer’s glue and Scotch tape,” said John Lekas, senior portfolio manager at Leader Capital Corp., with about $300 million of assets.

But now cash has run short and Toys ‘‘R’’ Us has fallen behind competitors, without the ability to invest in its business and future, Chief Executive Officer David Brandon said in a court declaration.

The company hired Lazard Ltd., Kirkland & Ellis LLP and Alvarez & Marsal to restructure, and by August it was talking with a group of its term loan lenders to give it more “liquidity and afford breathing room” that would take it through the key holiday season, according to the filing.

What ensued in the eyes of some creditors was a game of chicken, with the prospect of bankruptcy if the company and debt holders failed to reach an agreement, according to people familiar with the negotiations.

To investors, it looked like the company was trying to win concessions such as maturity extensions, according to the people, who asked not to be identified because the talks were confidential. Falling bond prices added pressure to negotiate rather see the value on their holdings evaporate, the people said. Creditors in turn demanded more of a stake in exchange for agreeing to take losses on their holdings and keep the company out of court, the people said.

Those talks went nowhere, and on top of that, the news of a potential court filing leaked on Sept. 6 on CNBC. This spooked suppliers, who would have some of the weakest claims in a bankruptcy case, and set off what Brandon in the court filing called a “dangerous game of dominoes.’

Within a week, almost 40 percent of the vendors were refusing to ship toys and other products without immediate cash payment and in some cases, payment of all outstanding obligations. The vendors faced pressure at their end, too, as their credit insurers and financing firms also withdrew.
Daunting Odds

The company had considered a debt extension, according to statements in bankruptcy court by David Kurtz of Lazard. But this would have left the retailer worse off, with too much debt and interest to pay and not enough resources to execute a turnaround, Kurtz said.

By the third week of August, it was apparent that the odds were heavily stacked against the company, and it shifted to preparations for a Chapter 11 filing, Kurtz told the court. The timing was rushed to avoid having to announce the failure to revise the 2018 notes in the September earnings statement, and the company would probably have to include a warning that its survival was in doubt, driving away trade creditors, Kurtz said.

By Brandon’s reckoning, “the timing of all this could not have been worse,” according to the court filing. The moves left Toys ‘‘R’’ Us needing an extra $1 billion of new liquidity as it heads for the holiday sales season, according to the filing.

“For Toys, it probably isn’t something that needed to happen as quickly as it did, but once the vendors got nervous, it became unavoidable,” Bloomberg Intelligence analyst Noel Hebert said. “Vendors remain the most critical piece for retailers, particularly those -- like Toys -- who already face tightened liquidity terms.”

— With assistance by Sridhar Natarajan, Matthew Townsend, Lisa Lee, Eliza Ronalds-Hannon, and Sally Bakewell