Toys ‘R’ Us seeks approval to sell Canadian division
It appears likely Toys “R” Us’ operations in Canada will live to see another day.
The bankrupt retailer cancelled an auction for its assets in Canada and will seek approval from the court on Tuesday to sell them to Toronto-based Fairfax Financial Holdings Ltd. The investment firm had submitted a $236.8 million “stalking-horse” bid (C$300) to buy Toys “R” Us’ Canadian operations, which includes 82 stores.
According to U.S. bankruptcy court documents, the auction received no qualified bids other than the offer from Fairfax. U.S. toy tycoon Isaac Larian Isaac Larian, CEO of MGA Entertainment, previously put in a formal bid of $675 million to buy 274 U.S. Toys “R” Us’ stores, which the retailer rejected as being too low. Larian also had put in a $215 million offer to buy Toys “R” Us’ Canadian operations, but he dropped it after being outbid by Fairfax. Larian is now focused on sweetening his bid to buy 274 Toys “R” Us’ U.S. stores. Toys “R” Us is currently holding liquidation sales at its stores throughout the United States.
“We were about 10% below the winning bid for Toys “R” Us Canada. So that gives me hope for our U.S. bid,” he told CNN Money on Monday. “We have the financing we need. It’s now a matter of determining how much more we’re able to bid.”
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Sears CEO offers to buy Kenmore, other assets
ESL Investments, the hedge fund run by Sears Holdings Corp. chairman and CEO Eddie Lampert, has thrown another lifeline to the struggling department store retailer to help raise cash.
ESL sent a letter to the retailer in which it said it is willing to make a proposal to buy the Kenmore appliance brand, Sears’ home improvement business and parts direct division, and some of the chain’s real estate. The offer comes after Sears has been unable to find a buyer for the assets.
The letter, signed by Lampert, noted that Kenmore and the other assets in question have “substantial value” and that divesting one or more of them would enable Sears to improve its debt profile and liquidity position. ESL described Kenmore as an “iconic brand” and said it would be prepared to close a deal for the brand within 90 days.
The hedge fund valued Sears’ home improvement and parts direct businesses at a combined $500 million and said it would pay for them in cash.
ESL also said it would “be open to making an offer” for Sears’ real estate (including the assumption of $1.2 billion in debt obligations), with an expectation that Sears would continue operating its stores, leasing back from ESL.
“We continue to see value in Sears and its underlying assets and believe strongly that with an appropriate runway Sears will be able to complete its transformation to respond to the challenging retail environment,” ESL said in the letter. “We also are of the view that the portfolio of Sears’ assets has substantial value that is not being reflected in the capital markets or being maximized under the current organizational structure.”
Sears said the letter from ESL will be “reviewed and considered” by an independent board of directors. Sears and ESL said that Lampert would not take part in any discussions, negotiations or decisions “except to the extent specifically requested by that committee.”
To read the full letter, click here.
SEARS, YOU NEED A DIFFERENT DELIVERY CO. THE ONE USED IN HANOVER MA STINKS AND YOU ARE LOSING CUSTOMERS BECAUSE OF THEM
Toys ‘R’ Us Canada gets lifeline
An investment firm has submitted a $236.8 million “stalking-horse” bid (C$300) to buy Toys “R” Us’ Canadian operations.
The offer, submitted by Fairfax Financial Holdings Ltd., comes before the court-approved bankruptcy auction on April 23 in New York. Fairfax was selected by the retailer as the stalking horse for the sale of its 82-store Canadian unit and will acquire the division if it is not outbid.
If the deal goes through, after the takeover, Fairfax would be able to continue operating Toys “R” Us stores in Canada under the company’s existing name.
On April 13, toy tycoon Isaac Larian, CEO of MGA Entertainment, put in a formal bid of $675 million to buy 274 U.S. Toys “R” Us’ stores. The retailer rejected Larian’s offer, reportedly saying it was low. Larian also put in a $215 million offer to buy Toys “R” Us’ Canadian operations.
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