Mr Brandon said plans to restructure its debt pile would "provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide".
When reports surfaced recently that Toys "R" Us was weighing a bankruptcy filing, Chinese toy scooter maker Pinghu Mijia Child Product Co. put all of the retailer's orders on hold, fearing it wouldn't get paid, according to sales manager Justin Yu. Along with the investors our goal is to work with our debt holders and other creditors to overhaul the $5 billion long term debt on our balance sheet. Three private-equity firms bought Toys "R" Us in 2005 in a leveraged buyout, adding substantially to its borrowings; it pays around $400m a year in interest costs, even as it tries to compete with Amazon.
The company's Canadian unit intends to seek protection in parallel proceedings, it said in a statement. Many expected a bankruptcy, but the filing, just ahead of the vital holiday selling season, underlines how squeezed the firm has become. If Toys "R" Us can emerge from bankruptcy with less debt plus money to reinvest in its business, the process could mark a turning point.
The Chapter 11 filing is among the largest ever by a speciality retailer and casts doubt over the future of its about 1,600 stores and 64,000 employees.
The surprise cancellation came on the heels of Toys "R" Us admitting on September 6 that it had hired a restructuring law firm, Kirkland & Ellis, to help it with $400 million in debt that's coming due in 2018 - a disclosure that had already spurred some vendors to halt shipments to stores.
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In fact, the retailer's owners roughly a year ago started speaking to lenders in an effort to split the troubled U.S. arm from its more profitable global business, a lender said.
Dave Brandon, the company's chief executive, emphasised that shops would carry on operating as usual and claimed that the best era of Toys "R" Us was still to come. "They're a major buyer and I would say that the majority of toy makers in China would have some contracts with them".
By the time Lazarus retired in 1994, the company had grown to more than 1,000 stores.
Mattel's shares dropped 6.2 percent on word that Toys "R" Us was planning for bankruptcy. Toys R Us suppliers started stepping back a little too late - reminding suppliers everywhere that paying attention to your buyer's financial health is as important as managing your own. Toys " R " Us, Inc.is headquartered in Wayne, NJ, and has almost 65,000 employees worldwide. USA toy sales rose 6 per cent last year on top of a seven per cent increase in the prior year, says NPD Group Inc., a market research firm.