Gulf News

Private equity hits the ceiling in turnaround plays

The imminent closure of Toys R Us stores in US reveals weakness of debt-heavy plans

- By Michael Corkery

the buyout 12 years earlier. It was paying $400 million in interest payments each year. “This company had a long history of taking on debt and kicking the can down the road for 10 years, and refinancin­g,” said Douglas M. Foley, a lawyer at McGuireWoo­ds.

With sales falling and debt payments mounting, the company’s lawyer said in September that Toys R Us had “too much debt”. It filed for Chapter 11 bankruptcy protection, seeking to shed some of its debt and reorganise its business.

?? New York Times ?? ■ A Toys “R” Us in Maplewood, Minnesota. Toys “R” Us is the latest failure of financial engineerin­g, albeit one that could portend a new, potentiall­y more ominous outlook for private equity in the digital era.
New York Times ■ A Toys “R” Us in Maplewood, Minnesota. Toys “R” Us is the latest failure of financial engineerin­g, albeit one that could portend a new, potentiall­y more ominous outlook for private equity in the digital era.
?? New York Times ?? ■ Liam Dosse, 6, searches for toys during his weekly trip to Toys “R” Us in Maplewood, Minnesota.
New York Times ■ Liam Dosse, 6, searches for toys during his weekly trip to Toys “R” Us in Maplewood, Minnesota.
?? New York Times ?? ■ Customers line up at a Toys “R” Us in Portland, Oregon. Toys R Us said t had no option than to begin winding down about 730 stores around the US.
New York Times ■ Customers line up at a Toys “R” Us in Portland, Oregon. Toys R Us said t had no option than to begin winding down about 730 stores around the US.

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