Will Toys R Us lenders swap $760 million debt for Asian unit?

Senior lenders to Toys R Us will make an opening bid of $760 million for the retailer’s Asia operations, according to a report from Bloomberg.

The site was the first to break the news that lenders would make a so-called ‘credit bid’ by using their senior secured notes in the Asia business, rather than cash, and win ownership of the unit during an auction next month in New York.

Noteholders eligible to participate include York Capital Management Global Advisers LLC, Barclays Bank Plc and Cerberus Capital Management, according to related court papers.

However, before the auction is scheduled, Toys R Us want a US federal judge to strip the company’s minority partner in Asia, Fung Retailing, of its right-of-first-refusal purchase option as well as forcing Fung to agree to sell its 15 per cent stake in the joint venture.

Earlier this year a lawyer for Toys R Us had told the judge overseeing the company’s bankruptcy that it had multiple bids worth more than $1bn for the Asia business. It has been unable to get one of the potential buyers to commit, blaming interference by Fung – a 15 per cent owner.

By naming the lender group, Toys R Us would set the ground floor for the proposed September auction.

About Robert Hutchins

Robert Hutchins is the editor of Licensing.biz and ToyNews. Hutchins has worked his way up from Staff Writer to the position of Editor across the two titles, having spent almost eight years with both ToyNews and Licensing.biz, and what now seems like a lifetime surrounded by toys. You can contact him by emailing robert.hutchins@biz-media.co.uk or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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