TOYS R US plans to close all US stores 33000 jobs at risk
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(Reuters) - Bankrupt Toys ‘R’ Us Inc is preparing to sell or close all 885 stores in its U.S. chain, risking up to 33,000 jobs, after failing to reach a deal to restructure billions of dollars in debt, a person familiar with the matter said on Wednesday.
With shoppers flocking to online platforms like Amazon.com Inc (AMZN.O) and children choosing electronic gadgets over toys, Toys ‘R’ Us has struggled to service debt from a $6.6 billion leveraged buyout by private equity firms KKR & Co LP (KKR.N) and Bain Capital and real estate investor Vornado Realty Trust (VNO.N) in 2005.
Toys ‘R’ Us had been closing one-fifth of its U.S. stores as part of efforts to emerge from one of the largest ever bankruptcies by a specialty retailer.
But creditors decided they can get more from liquidating assets of the toy seller, the largest in the United States and one of the best known in the world, rather than finding a way to keep the business alive, the person said, speaking on condition of anonymity to discuss the private negotiations.
A Toys ‘R’ Us spokeswoman declined to comment.
The company is expected to make a filing with the bankruptcy court late on Wednesday, the person said.
The planned closure in coming months is a blow to generations of consumers and hundreds of toy makers that sold products at the chain, including Barbie maker Mattel Inc (MAT.O), board game company Hasbro Inc (HAS.O) and other large vendors such as Lego.
In Britain, the remaining 75 Toys ‘R’ Us shops will close within six weeks, joint administrators for the retailer said earlier on Wednesday, after they were unable to find a buyer for all or part of the business, resulting in the loss of about 3,000 jobs.
The Wall Street Journal earlier on Wednesday reported that Toys ‘R’ Us Chief Executive David Brandon told U.S. staff about the likely closures on a conference call.
Efforts to restructure collapsed this month after lenders decided, absent a clear reorganization plan, they could recover more by closing stores and raising money from merchandise sales, sources with knowledge of the matter said.
“It’s a relentlessly difficult retail environment for mall-based retailers. There just aren’t the same feet coming through the doors,” said Brian Davidoff, a financial restructuring lawyer.Read More...