Toys R Us appeals to investors for £120m lifeline

The fight for survival intensifies as crucial payment deadlines loom at the end of the month.
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Toys R Us has appealed to investors for a £120m lifeline as crucial payment deadlines loom at the end of the month.

The UK arm of the troubled retailer was shown a glimmer of hope last week when reports emerged that HMV owner Hilco was among those looking to take on the ailing toy seller.

The Telegraph reports that potential buyers would have to stump up around £50m immediately to pay off the consortium of bank lenders that have provided financing to its US parent company.

It entered bankruptcy protection in September and gained access to $2.2bn from a consortium led by JP Morgan.

According to sources who have seen proposals for Toys R Us in the UK, the retailer is also seeking around £70m in the first year to fund a major overhaul of its store estate and more competitive pricing.

The chain has already won approval from creditors to close 26 loss-making stores with the loss of around 800 out of 3,200 jobs. Toys R Us told potential buyers it could also cut around 20 per cent of staff from central overheads and reduce stock ranges by a tenth to further bring down costs.

Toys R Us also wants to reduce floorspace of its 79 remaining stores by more than a third and secure rent reductions.

It then plans to open more than 30 small express stores in unserved regions and invest more in its online shopping capabilities.

Turnaround specialists were this weekend poring over Toys R Us finances to decide whether the chain can be saved.

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