Toys `R' Us Draws 11th-Hour Offer From Little Tikes's Larian
(Bloomberg) -- Billionaire Isaac Larian, the toy marketer whose lineup includes Little Tikes and Bratz dolls, offered to save part of Toys “R” Us from liquidation with an almost $900 million bid for stores in the U.S. and Canada.
Larian would pay $675 million and $215 million for outlets in Canada, he said Friday in a statement. The funds will come from Larian himself and bank financing, including UBS Group AG and Bank of America Corp., Larian told Bloomberg in an emailed statement.
The would-be rescuer is the chief executive officer of MGA Entertainment Inc., which sells toys including L.O.L. Surprise! and Baby Born. Larian previously started a GoFundMe campaign to help keep Toys “R” Us open, with the page now showing pledges of $200 million from Larian and other investors, and an additional $58,998 from various public contributions.
The crowdfunding “was meant to bring community awareness to the effort of saving Toys ‘R’ Us,” he said via email. “We are financing this from personal funds as well as bank financing.”
Larian’s statement said a formal bid had been put in, but he said later via email that “the bids are going in today.” He’s working with advisers, whom he declined to name, and said he intends to bid for about 274 U.S. stores. Representatives for Toys “R” Us and UBS declined to comment, and BofA didn’t immediately respond to a message.
Toys "R" Us has until April 16 to notify Larian and any other bidders whether their offers are sound enough to be part of an auction. Under bidding rules approved by a bankruptcy judge, bidders must meet certain minimum qualifications.
Should Larian win the auction, his bid would need approval from a bankruptcy judge and could face opposition from lenders if the value falls below rival bids from firms bent on liquidating the retailer.
The court rules say a company must accept the bid that offers the “highest and best” value, which will sometimes lead to a fight in front of the judge over which bid meets that definition. If a lower-valued offer keeps the company alive and saves jobs, the bidder can try to argue it should prevail over a higher-paying competitor.
For bids to be considered, the debtor must file a proposed form-of-sale agreement, and interested parties get the chance to object before a given deadline, Bloomberg Intelligence litigation analyst Negisa Balluku said. Toys has a bid-deadline scheduled for its Canadian assets today, April 13, a sale-objection deadline on April 16 and an auction on April 18.
Larian would join a list of bidders taking last-minute looks at parts of Toys "R" Us. The company drew multiple offers of over $1 billion for its Asian business, a lawyer for Toys “R” Us said Wednesday in bankruptcy court. Those come amid efforts to wind down U.S. operations, after attempts to restructure the Wayne, New Jersey-based business and keep it operating collapsed.
The company filed for bankruptcy in September, hoping to shed debt and turn around the business, but after dismal sales during the holiday season, it opted to liquidate.
Toys has said it will shut all of its U.S. stores and is in the process of collecting bids from liquidation companies. The company said last month it may be able to save about 200 U.S. stores by selling them as part of auction for the Canadian division.
A complete shutdown would be a blow to toymakers such as MGA and other suppliers, since Toys “R” Us ranked as the industry’s biggest retailer. It could also cost tens of thousands of workers their jobs. Last month the company said in court papers that it had about 30,000 employees working in the stores and distribution centers it plans to close by the end of the year.
“The liquidation of Toys ‘R’ Us is going to have a long-term effect on the toy business,” Larian, whose closely held company is based in Van Nuys, California, said in the statement. “The industry will truly suffer.”
The case is Toys “R” Us, 17-34665, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
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