Toys R Us: Another Private Equity Casualty

Naked Capitalism has the article Toys R Us: Another Private Equity Casualty. The article quotes a story in Financial Times

But the blame is perhaps to be placed most squarely on its private equity ownership. Toys R Us has spent more than $250m a year servicing $5bn in long term debt, which was “not a sustainable situation,” one investor said, as the company faced increasingly crushing competition from Amazon and Walmart.

After years of rearranging its debt burden, like other big leveraged buyouts of the pre-financial crisis era, it is presenting a restructuring under bankruptcy protection as a bid for freedom. Toys R Us says it now has a chance to bring its “vision to fruition”, announcing plans to invest in marketing and technology and even promising to raise store employees’ wages.

I had no idea about the Toys R Us Bankruptcy when I wrote my previous post Toshiba to sell chip unit to Bain Capital-led group for $18 billion about my prediction of the eventual demise of Toshiba’s chip unit in the hands of Bain Capital.

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