Toys 'R' Us U.K., Maplin Electronics Go Into Administration

(Bloomberg) -- Two U.K. retailers, Toys "R" Us Inc.’s U.K. unit and Maplin Electronics Ltd., called in administrators on Wednesday, after both failed in their attempts to find buyers.

Toys "R" Us said Simon Thomas and Arron Kendall, partners at Moorfields Advisory Limited, are acting as joint administrators of the British division of the U.S. retailer to oversee “an orderly wind-down of the store portfolio over the coming weeks.” Thomas said in the emailed statement that administrators will continue to seek a buyer for all or part of the business.

Maplin had failed to secure new capital amid sterling’s devaluation, a weak consumer environment and the withdrawal of credit insurance, Chief Executive Officer Graham Harris said in a statement.

U.K. retailers are struggling to cope with competition from online and the inflationary impact of a weaker pound since the U.K. voted to leave the European Union in 2016.

Bonds Pressured

Bonds issued by New Look Retail Group Ltd., a fashion chain, are quoted at less than half their face value after a streak of bad results. The firm is considering a Company Voluntary Arrangement, a process that could help it close stores and renegotiate rents, the Sunday Times reported on Feb. 25.

Department store chain House of Fraser Ltd.’s bonds are at about 75 pence on the pound. Its competitor Debenhams Plc, the most-shorted stock in the FTSE All-Share Index, is laying off staff and is at risk of breaching covenants on its loans, according to a UBS Group AG report published earlier this month.

Toys "R" Us’s U.K. business couldn’t meet a 15 million-pound ($21 million) value added tax liability due this month after failing to secure new financing, a person familiar with the matter said on Tuesday. Weak trading during the crucial Christmas shopping season thwarted the company’s plans to restructure the business in the U.K. through store closures and rent cuts, as agreed in December with creditors, the person said.

Chapter 11

Toys "R" Us started Chapter 11 proceedings in the U.S. in September as it buckled under debt that dated from a $7.5 billion leveraged buyout in 2005 led by Bain Capital, KKR & Co. and Vornado Realty Trust and amid increasing online competition.

The chain is also in discussions to offload its 85 percent stake in the Asian venture to Hong Kong’s billionaire Fung brothers, who own the remainder of the business, separate people familiar with the matter said on Tuesday.

--With assistance from Joe Easton

To contact the reporter on this story: Luca Casiraghi in London at lcasiraghi@bloomberg.net.

To contact the editors responsible for this story: Abigail Moses at amoses5@bloomberg.net, Chris Vellacott

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