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Toys R Us desperate for funds: Sky News
Posted on Friday, 09 February 2018 15:15
Hilco Capital, the company which bought HMV out of administration, is one of several potential rescuers said to be considering an acquisition of the UK-based operations of Toys R Us, Sky News reported.
According to insiders cited by the broadcaster, the investor, which specialises in distressed retailers, has already submitted a letter of intent ahead of a deadline for prospective suitors to express an interest.
Hilco has been in talks with Toys R Us UK executives this week amid fears for the fate of 3,000 workers at the once popular toy store chain.
The retailer has faced a number of troubles in recent years with its US parent filing for bankruptcy protection in North America in September after the business ran up USD 5.00 billion in debt and was struggling to compete with online shoppers.
Sky News first reported on the potential sale earlier this week, citing sources as saying Toys R Us UK is seeking offers as its future hangs in the balance.
Advisors have also proposed that the group considers selling over 230 stores across Europe.
Sources told the broadcaster that bankruptcy is getting closer and closer with a cash call, expected later this month, expected to help save Toys R Us, suggesting administration is inevitable without the funds.
In December, the business avoided a collapse after creditors supported a rescue deal through a pension protection fund to keep three quarters of stores open.
According to Sky News, the sale of the UK and European operations are expected to be separate and are being run by Lazard and Alvarez & Marsal.
However, analysts told the Guardian today that restructuring companies such as Hilco tend to wait for a firm to enter into administration before making a move.
The group saved HMV after it filed for bankruptcy in 2013.
Toys R Us has around 3,200 employees in the UK and had already outlined plans to cut up to 800 jobs through a company voluntary arrangement in a bid to help improve its capital by closing 26 loss-making stores.
In the US, the business posted a net loss of USD 622.00 million in the quarter ended 28th October 2017, on revenues of USD 2.12 billion.
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