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Hope for Toys 'R' Us Canada as potential buyers line up

By SmartCoverage Team on March 20th, 2018

As mentioned on Thursday, Toys ‘R’ Us officially filed for bankruptcy and has begun the process of selling off their American and Canadian real estate locations.

The company began talks to sell 200 of its best performing store locations in a “package deal” that includes some 80 retail locations in Canada.

The Financial Post is reporting that Toys ‘R’ Us Canada now has multiple “non-binding offers for the company’s Canadian stores, even as the toy chain’s U.S. stores ready for liquidation.”

Court documents filed south of the border show that the Canadian outlets could be taken over by a new buyer “within weeks” that would permit the 82-store chain to stay alive in Canada.

“The debtors are actively negotiating with potential bidders for a reverse merger of New Jersey-based Toys ‘R’ Us, Inc.’s equity interests in Toys ‘R’ Us Canada, according to documents filed at the U.S. Bankruptcy Court in Richmond, Va. Interested parties have been given access to an electronic data room with detailed financial records for the business. The deal would ideally salvage up to 200 of the top-performing U.S. stores, the documents said.”

If enough bids come through the pipeline for the stores, the company will hold an auction for the businesses on March 29, to be closed no later than April 16th for the Canadian stores.

In total, Toys ‘R’ Us announced that they would close 740 stores in the United States and 106 in the United Kingdom. The fate of the Canadian stores was unknown, seeing as they performed relatively well in terms of sales as of late.

All of the legal matters are occurring in the US, because equity transfers must take place in the location of the business owner. If any of the American stores get transferred into this Canadian purchase, they will be exempt from the ensuing liquidation processes.

“The only interested buyer to declare its intentions openly for the Canadian unit is toymaker MGA Entertainment, producer of Bratz dolls and Little Tikes toys.”

MGA executive Isaac Larain echoed what other retail analysts have said about the Canadian offshoot: “Toys ‘R’ Us Canada is a good business … They run it efficiently, and have good leadership. At the right price, it makes economical sense.”

Other bidders are believed to be vying for control of the toy chain, as well. Projections for January to May sales numbers in Canada this year include a surplus of $35.5 million in cash balance, without need for credit.

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