Yesterday it was reported that Toy R Us will close down all their stores in the US and Britain, prompting several of you to write with a reminder.
From the New York Post last fall:
Bain Capital has a knack for throwing big toy retailers into bankruptcy. The buyout firm founded by Mitt Romney — which got slammed this week by the Chapter 11 filing of Toys ‘R’ Us — also saw its reputation dinged a dozen years earlier with the shuttering of KB Toys, which at the time had been the nation’s second-biggest retailer. In both instances, critics say Bain and its private-equity partners left the chains vulnerable by saddling them with heavy debt loads as they took them private, crippling their capacity to compete in brutal price wars that have dogged the industry.
From Wolf Street last week:
Toys ‘R’ Us is another one of many private-equity stories that form the core of the brick-and-mortar meltdown. In 2005, during the leveraged buyout boom, PE firms Kohlberg Kravis Roberts (KKR), Vornado Realty Trust, and Bain Capital Partners acquired the shares of Toys ‘R’ Us for $6.6 billion. The firms funded the deal in large part by using Toys ‘R’ Us to borrow the money to fund its own acquisition – hence “leveraged buyout.” This operation stripped out cash and left the company buckling under its debts.