Toys “R” Us Inc., the retailer that has been trying to sell shares to the public for almost two years, is changing tack as sales stagnate to address $1.3 billion of maturing debt without the equity offering.
The world’s largest toy seller, purchased by privateequity firms KKR & Co. and Bain Capital LLC along with Vornado Realty Trust for $6.6 billion in 2005, is seeking to add $300 million to a term loan due in 2018 to help pay off bonds that mature next year, two people with knowledge of the matter said Monday.
The Wayne, N.J.-based retailer has $1.3 billion in debt coming due within 12 months and $5.2 billion in total, according to the company.
Toys “R” Us, which registered for an initial public offering in May 2010 to repay debt, will rely on credit markets to manage its maturities next year. While an IPO would “significantly help refinancing,” Kim Noland, a credit analyst with debt research firm Gimme Credit LLC in New York wrote in a report released Monday, the company can’t place one in time.
“They don’t throw off enough free cash flow to reduce debt using cash flow so they have to rely on the capital markets,” Noland said in an interview. “That’s risky because operating results need to appeal to investors and capital markets need to be open.”
Business, Pages 26 on 03/28/2012