Slashdot Mirror
Toys R Us Cancels Bankruptcy Auction, Plans To Revive Brand (theglobeandmail.com)
Toys "R" Us may not be dead after all. According to Reuters, "The top lenders of Toys "R" Us have decided to cancel the bankruptcy auction of its brand name and other intellectual property assets and instead plan to revive the Toys "R" Us and Babies "R" Us brand names." From the report: The bankrupt retailer's debtors aim to open a new Toys "R" Us and Babies "R" Us branding company that maintains existing global license agreements and can invest and develop new retail shops. The lenders also plan to expand its international presence and further develop its private brands business. The bids were not superior to the plan to revive the brand as it did not offer "probable economic recovery" to creditors as well as benefits to stakeholders who would maintain the brands under the new independent U.S. business, the court filing showed. Under the intellectual property auction, the company had planned to sell its assets, including the brand names of Toys "R" Us, Babies "R" Us, registry lists, website domains, Geoffrey the Giraffe and other assets. The company filed for bankruptcy protection in September last year, but later said it would sell or close all 800 of its U.S. stores.
They were bained:
http://theweek.com/articles/761124/how-vulture-capitalists-ate-toys-r
Bain Capital bought Toys R Us with borrowed money. They then made Toys R Us pay back the loan and interest plus pay them huge "management" fees. Bain made a lot of money off the management fees. Toys R Us and the creditors got screwed.
Before Bain bought them they had $2 billion in the bank. They weren't making huge profits, but they were making a profit. Toys R Us wouldn't have gone bankrupt if Bain hadn't bought them.
Wrong.
The problem was Bain Capital and a leveraged buy out that added the $6.2B in debt buying itself out. (For those who don't know, a leveraged buy out is where you use an asset as leverage to get a loan. IN this case, Bain Capital needed $6B to buy TRU. So what asset did they use? Well, TRU! Thus they bought TRU using a loan backed by the company itself. ).
They had an online presence. In fact, they were among the first stores to actually have a website, and while it's not as slick as Amazon was, they were holding their own.
2005 might have been a bad time, but they weathered through it, which means it's not the financial crisis that did them in. It's the debt - $6.2B is a lot of debt that corporate raiders added to them. They struggled, but their cashflow was enough to pay off their obligations, until 2015-2016 when they didn't make enough money to cover their obligations. Things spiraled from there.
"Private investors" my ass. It was Bain Capital and leveraged buy outs that did them in. Their numbers reflect this. You only call it "private investors" as a way to dodge the truth of the "investment".
Amazon, Wal-Mart, and Target were all competitors, and yet they still managed. The only reason right now they can think of revival is after Bain Capital left and got the real investors screwed over. But once they got paid out, hey, no more crushing debt. Then again, those investors pretty much should've known they were buying into a Bain Capital investment.
Anyhow, it's all screwy, because you know who else owns the name? A bunch of financial investors in Canada who bought over the Canadian operations and still run it today. And you can bet they likely want their share of the US operations (TRU Canada loaned TRU corporate a bunch of money that actually put TRU Canada in trouble in 2015-2016 because TRU corporate defaulted. Except TRU Canada came out of it thanks to good revenue).