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Toys'R'Us Bonds Crash As Suppliers Set To Tighten Credit Lines

Tyler Durden's picture




 

Just two years after Toy'R'Us attempted (and failed) to IPO, Bloomberg reports that insurance companies are cutting back on their coverage of the firm's suppliers. Without this 'insurance', which protects suppliers in case a retailer fails to pay them for merchandise - as in the event of a bankruptcy - the risks of shipping to the retail chain soar.

The company’s $450 million 10.375 percent of senior unsecured bonds maturing August 2017 fell 11.5 cents to 71.1 cents on the dollar...

 

As Bloomberg reports,

Insurance companies are cutting back on their coverage of Toys “R” Us Inc. suppliers, bringing another headache to a retailer that has suffered more than two years of losses, people familiar with the matter said.

 

Coface SA and Euler Hermes Group, which sell credit insurance to vendors, are removing Toys “R” Us from some policies and declining to renew coverage in other cases, said the people, who asked not to be identified because the process isn’t public. The carriers may still negotiate with some vendors to keep providing some protection, one of the people said.

 

Losing coverage could raise concerns for toy suppliers as they weigh the risks of shipping to the retail chain, which scrapped plans for an initial public offering in 2013. Credit insurance protects suppliers in case a retailer fails to pay them for merchandise, as in the event of a bankruptcy.

 

Toys “R” Us also has been seeking additional restructuring advisers, who would look for ways to cut costs and explore the company’s next steps, said one of the people. The moves signal mounting troubles at the toy-store chain, which was taken private by Bain Capital Partners, KKR & Co. and Vornado Realty Trust in a $6.6 billion deal in 2005. Though it’s working on a comeback, Toys “R” Us has struggled to compete against online sellers and mass merchants like Wal-Mart Stores Inc.

 

The retailer has already been working with consultants at AlixPartners to cut expenses. It said last year that the firm helped it identify $150 million to $200 million in cost savings that could be achieved by the end of 2016. Toys “R” Us has since updated that target to $325 million.

*  *  *

Toys'R'Us bonds have collapsed to lows as investors recognize that credit insurers sometimes cancel existing policies if a company’s performance declines precipitously enough to place its ability to keep operating in doubt.

That occurred in the months before bankruptcy filings at RadioShack, Borders, and Circuit City.

Charts: Bloomberg

 

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Tue, 07/28/2015 - 13:22 | 6363546 Squid Viscous
Squid Viscous's picture

has to be Zio owned... Rip off artists

Tue, 07/28/2015 - 13:25 | 6363556 summerof71
summerof71's picture

in USA, giraffe rides you!

Tue, 07/28/2015 - 13:37 | 6363626 NoDebt
NoDebt's picture

Defaults 'R' Us

 

Tue, 07/28/2015 - 14:03 | 6363734 El Oregonian
El Oregonian's picture

But, but, but oBlame-a and CNBC said that everything is awesome! Record employment and the stock market is blasting to the moon! ... no?

Tue, 07/28/2015 - 14:15 | 6363779 Antifaschistische
Antifaschistische's picture

I have no expertise in toy marketing....but I am old enough to remember the "good ole days" when going into a toy store was like heaven.  Isles and isles of cool stuff.  Some made from wood.  There was a lot of painted steel in a toy store.  Even most of the toy guns had steel parts.  toy dump trucks had real rubber tires, and the Tonka name meant you better not leave this in the driveway because it may puncture your tire if you back over it.

Now days...I walk into ToyRUs...and I just see wall to wall crap.  Every thing made of plastic...and if you backed over any of it in the driveway you wouldn't even feel it.

Tue, 07/28/2015 - 13:27 | 6363565 Squid Viscous
Squid Viscous's picture

confirmed...then KKR tried to do a Vampire-Zio LBO, typical...

Tue, 07/28/2015 - 13:30 | 6363584 The Delicate Genius
The Delicate Genius's picture

What you've written is vile and racist, and really - only part of it.

http://www.aishdas.org/avodah/faxes/mmOnNachriim.pdf

Tue, 07/28/2015 - 13:48 | 6363677 Never One Roach
Never One Roach's picture

They forgot to take the Confedrate flags off their toys.

 

Tear-rists!

Tue, 07/28/2015 - 13:26 | 6363568 Hippocratic Oaf
Hippocratic Oaf's picture

and the 8.50's of 2017 senior secured still trade at a premium.

Next

Tue, 07/28/2015 - 17:18 | 6364411 Model T
Model T's picture

Well, you know what to short then.

Tue, 07/28/2015 - 13:26 | 6363569 junction
junction's picture

Before long, the Toys "R" Us Human Resources office will be handing Geoffrey the Giraffe his packet of layoff information.  

Tue, 07/28/2015 - 17:20 | 6364416 Model T
Model T's picture

"---fell to 71.5 cents to the dollar--" Still plenty of room to the bottom !! Can always go to zero.

Tue, 07/28/2015 - 13:26 | 6363558 Fukushima Fricassee
Fukushima Fricassee's picture

Fork, done, they will not even make it to Christmas. Store always sucked.

Tue, 07/28/2015 - 13:29 | 6363580 NoDebt
NoDebt's picture

Short and to the point.  I was gonna make my usual "fetch me my fork, I've found a place to stick it" comment, but I like yours better.

Tue, 07/28/2015 - 19:56 | 6365054 Bobbyrib
Bobbyrib's picture

They'll re-emerge after the bankruptcy. They might miss this holiday season though and forecasters will be forecasting the biggest Christmas season ever.

Tue, 07/28/2015 - 13:26 | 6363567 kevinearick
kevinearick's picture

Planned Parenthood: Dumb and Dumber

Like the Nazis, Illuminati, and all the other bipolar, murmuring morons, Planned Parenthood is a breeding program, breeding morons in, not out. It says so right in the title. And, if you look, you will see that all the churches are signed up, right along with G and NSF. Somebody has to feed the apes, just don’t let it be you.

Liberation from personal responsibility isn’t freedom; it’s slavery, to peer pressure majority rule, to feed the apes controlling it, its own worst enemy. Keeping 20 guys or gals around on disability checks in case you need one doesn’t confer competitive advantage. When you see a PG&E commercial promoting lesbian parenthood on your dime, are you going to hurry out and pay taxes?

Margaret Sanger: “choking human undergrowth” “morons and imbeciles” “the Minister is the man who can straighten out that idea if it ever occurs to any of their more rebellious members” “create a race of thoroughbreds.”

My wife was watching one of her religious programs the other day, and the preacher says that it’s ok for single women to raise children because they can appeal directly to God, while he was treating his daughter like a queen, to set her expectations. And he tells a joke, about a woman thanking God for groceries, delivered by the devil, a biased man concerned about her welfare.

If the critters are waiting for Trump to run out of material, they are waiting for something that isn’t going to happen. One way or the other, Trump gets paid. Let’s see; Ex/Im pork for highway pork, that’s Congress at work. Seems like just the other day the Cat CEO was boasting about a bull whip. I guess replacing labor with a dc computer and a middle class automaton to watch it wasn’t such a good idea after all.

Abortion isn’t a fight between good and evil. It’s a fight between stupid and stupid, for stupid, of, by and for stupid. What happens when two people row in opposite directions? What happens when one person with two oars rows in opposite directions? What do you expect to happen if you chase arbitrary RE inflation with natural resources?

A man is never going to understand a woman, and a woman is never going to understand a man, for a reason, and agency, I don’t know, let’s vote, isn’t the answer. The American Dream is a corporate welfare scam. Enter at your own risk. Labor has much better things to do.

Let’s see what happens? No thanks. The critters aren’t thankful for what they already have. Why give them an opportunity to complain, for more of the same?

At some point here, the little university media gangsters blowing the Internet bubble are going to run into the real mob. Having broken a few bones in my day, with and without the advantage of heavy equipment, I don’t need to watch the repeat to know what happens. When a gang surrounds a ringer, it’s what’s behind the gang that matters. They don’t call them ringers by accident.

“Dyin’ ain’t much of a livin’.”

Tue, 07/28/2015 - 13:33 | 6363604 Bill of Rights
Bill of Rights's picture

People have asked me if I believe in evil. I tell them yes.

Tue, 07/28/2015 - 13:54 | 6363703 Quus Ant
Quus Ant's picture

Evil gets all the press. 

Do you believe in good?   What is it?

Tue, 07/28/2015 - 13:29 | 6363581 Seasmoke
Seasmoke's picture

Seriously. The worst store In the country to walk thru. Nothing but plastic junk from China. My blood pressure goes higher than Jeffrey the fucking Giraffe.  For my own well being , I just want to see them all closed down !!!!

Tue, 07/28/2015 - 13:48 | 6363675 pods
pods's picture

Haven't graced a Best Buy lately have you?

I will give you that though, Toy's R US is a pretty shity store. It's like Chuck E Cheese with no pizza and higher end junk to trade tickets for.

Same clientele.  Maybe they will start cashing checks and selling rims to make their bond payments?

pods

Tue, 07/28/2015 - 13:31 | 6363588 The Delicate Genius
The Delicate Genius's picture

In 10 years we're going to have an economy based on people delivering pizzas to nail salons.

Tue, 07/28/2015 - 13:41 | 6363635 adr
adr's picture

True story. I saw a brand new Hyundai Genesis 5.0 delivering Dominoes Pizza, a $55k car.

Now either this guy has a shit ton of money and likes delivering pizza for fun, or Pizza delivery guys are getting much fatter tips than I used to.

Tue, 07/28/2015 - 14:10 | 6363759 Bloodstock
Bloodstock's picture

Ummm, smell that new car smell, it smells like pizza! Hey when did they start doing that? Dam good idea, lets IPO it!

Tue, 07/28/2015 - 14:41 | 6363883 bonin006
bonin006's picture

3rd possibility: He had a decent job, lost it and is trying to hang onto the car.

Tue, 07/28/2015 - 14:42 | 6363887 bonin006
bonin006's picture

4th possibility: pizza delivery is just a cover for drug dealing

Tue, 07/28/2015 - 15:06 | 6363962 Squid Viscous
Squid Viscous's picture

he over-leveraged for a shit car and is trying to make the payments?

Tue, 07/28/2015 - 19:59 | 6365069 Bobbyrib
Bobbyrib's picture

Yeah, soon you will see this shmuck delivering pizzas in his mom's station wagon.

Tue, 07/28/2015 - 15:38 | 6364054 Rockatanski
Rockatanski's picture

i saw a guy delivering Za in a ford f series turbo diesel, not exactly the most fuel effcient but better that EBT'ing i suppose.

Tue, 07/28/2015 - 13:32 | 6363596 Bill of Rights
Bill of Rights's picture

Merry fuck'en Christmas Dopes....Gonna be an interesting holiday for many.

Tue, 07/28/2015 - 13:37 | 6363624 adr
adr's picture

Here's how you fix Toy's R Us.

1) Get rid of baby clothes, diapers, and all the other baby related merchandise that they can't hope to compete with.

2) Stop selling tablets and computer gear unless you want to have better pricing than Best Buy and Amazon. Even so it is a losing business proposition.

3) If you are going to have a video game department, STOCK IT WITH VIDEO GAMES!

4) STOCK TOYS!!!!

5) Instead of selling every toy for 20% higher than Walmart, sell for the same if not less.

Toys R Us has a far better section of Legos, action figures, dolls, etc than Walmart but nobody wants to buy from Toys R Us because they are more expensive. Toys R Us jacked the price of a $16 toy line to $20 when every other retailer sells the toys for $16. An extra $4 on top of their already ridiculous 60% margin off MSRP is insane.

Tue, 07/28/2015 - 13:42 | 6363647 Temporalist
Temporalist's picture

I have a better plan: sell more of those cute hunter killer Global Hawk UAV drone toys. 

Tue, 07/28/2015 - 20:01 | 6365080 Bobbyrib
Bobbyrib's picture

The stores are run poorly and are being run into the ground. The PE group that owns it will be selling for pennies on the dollar.

Tue, 07/28/2015 - 13:39 | 6363630 BoPeople
BoPeople's picture

Someone has been making money on this and someone will be making money on this. More manipulation.

Tue, 07/28/2015 - 13:41 | 6363637 Osmium
Osmium's picture

Must be a really shitty company if they can't pull off an IPO.  Shake shak was even able to IPO it's shitty company.

Tue, 07/28/2015 - 13:55 | 6363708 pods
pods's picture

A couple guys selling Grilled Cheese out of a truck went public.

This must stink like the rug in a West Point Liberia brothel.

pods

Tue, 07/28/2015 - 13:43 | 6363643 Thisisbullishright
Thisisbullishright's picture

I don't have any idea how Toys R Us has remained open this long!!

Here are some others that are, I believe, not long for this world:

K-Mart, Office Depot/Max, Babies R Us, JCPenney, Ashley furniture, Basset furniture and MANY other furniture chains, Radio Shack (just went bankrupt?), barnes and noble, many mattress chains, there are many others I can't think of right now....

Any others come to mind immediately?

 

Tue, 07/28/2015 - 14:23 | 6363802 Baby Eating Dingo22
Baby Eating Dingo22's picture

Sure

Dick's

Michaels

9 out of 10 restaurants

10 out of 11 clothing stores

Candle stores

 

LL

Tile Shop

and many many more

We only need so many sellers of shit in this world

which brings us to

Mall operators and Office REITS

Tue, 07/28/2015 - 20:04 | 6365100 Bobbyrib
Bobbyrib's picture

I like Barnes and Noble. It is the only brick and mortar book store in my area (other than second hand bookstores..which are "flagged"..ew). If Barnes and Noble goes I have to order my books from Amazon.

Tue, 07/28/2015 - 13:49 | 6363684 Never One Roach
Never One Roach's picture

I knew when they started selling those "Jihadi John" action figure dolls along side the delicious Barbie Dolls, they'd get beaten down.

Tue, 07/28/2015 - 14:19 | 6363792 Baby Eating Dingo22
Baby Eating Dingo22's picture

Had they sucked Lloyd hard enough, they could have been the GoPro of investors 6 years of age and under

Tue, 07/28/2015 - 14:20 | 6363795 Zuhalter
Zuhalter's picture

Before I split with my wife she used to go there to shoplift hundreds of dollars worth of toys on Black Friday. They always shut down the anti theft alarms because they'd constantly go off. No wonder why they're going bankrupt?

Tue, 07/28/2015 - 14:32 | 6363836 Squid Viscous
Squid Viscous's picture

classy chick! and smart too!

Tue, 07/28/2015 - 14:40 | 6363874 gregga777
gregga777's picture

Isn't Bain Capital where that Republican-for-President fucking moron Mitt Romney made a fortune looting US companies and destroying US jobs?  How much is he going to get for looting Toys R s? 

Tue, 07/28/2015 - 15:03 | 6363954 Fukushima Fricassee
Fukushima Fricassee's picture

Whatever, but you can shove that Frank Davis look alike queer mother fucker , far up your ass.

Tue, 07/28/2015 - 20:22 | 6365187 BlussMann
BlussMann's picture

Temper, temper - R U a Mormon ?

Tue, 07/28/2015 - 14:55 | 6363926 highwaytoserfdom
highwaytoserfdom's picture

yea Romney and Bain and Petraeus KKR.  Heck it took Kravis 20 years to get rid of Kraft stuff and hires a war criminal creator of AL_CIA_DUH   IS IS.....  Not going to be pretty....  Taxpayers getting little tired of walking behind these elephants and jackasses  with a huge shovel  like circus clowns scooping up their fecal mater..

 you have to think this is expected Kravis  hire Petraeus  as a public relations guy.....  Total F#cking insanity

https://www.youtube.com/watch?v=_ca1HsC6MH0

"Sweet Caroline"    "Sweet Caroline"    "Sweet Caroline"   

Tue, 07/28/2015 - 20:06 | 6365111 Bobbyrib
Bobbyrib's picture

They provide jobs! /sarcasm.

Tue, 07/28/2015 - 15:29 | 6364032 large_wooden_badger
large_wooden_badger's picture

Next up: Goys'R'Us!

Tue, 07/28/2015 - 16:05 | 6364150 rejected
rejected's picture

Green Shoots!

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