MISFIT TOYS ‘R’ US
Cash-strapped Toys ‘R’ Us, despite obtaining $3 billion in Chapter 11 financing, is still not getting all its shipments from nervous suppliers, The Post has learned.
Some lenders who finance and insure toy makers’ orders are refusing to ship containers of dolls, car sets, slime and other toys because they are having trouble pricing the risk of doing business with the chain, sources said.
As a result, containers of Toys ‘R’ Us goods are piling up at Asian ports as they wait to be loaded eventually onto ships to be delivered to some 18 US distribution centers and from there to the retailer’s 1,697 stores, the sources said.
The specialized lenders, called factors, are still weighing their risk and don’t know how to price their loans, one toy industry insider said. Without a factor signing off, no supplier will ship their goods.
If a resolution isn’t reached soon, Toys ‘R’ Us could be missing some inventory at the start of the upcoming holiday season, sources said.
“The factors have the power right now,” said one toy industry expert who did not want to be identified.
Toys ‘R’ Us filed for Chapter 11 on Sept. 18 because in the days preceding the move toy makers had grown antsy with the embattled chain.
Some demanded cash payment before they would ship, Toys ‘R’ Us Chief Executive David Brandon revealed in a court filing this week.
The $3 billion debtor-inpossession financing deal was supposed to cure those jitters.
To a large extent it has — but some more cautious lenders are holding back.
“It’s a huge decision whether these companies want to expose themselves to further risk,” said bankruptcy lawyer Jeffrey Cohen, who said he has spoken with a dozen toy makers who are owed between $50,000 and $30 million for goods they’ve already shipped to the bankrupt chain.
Deal or no deal, the toy makers may cancel up to 20 percent of their Toys ‘R’ Us orders, according to Jefferies analyst Stephanie Wissink.
“We are seeing some de- lays in the vendors releasing their shipments because of their concerns about Toys ‘R’ Us’ ability to compete in the holiday season,” Wissink told The Post.
CEO Brandon conceded as much this week. “The company has fallen behind some of its primary competitors on various fronts,” he said in the court filing, “including the general upkeep and the condition of our stores, our inability to provide expedited shipping options, and our lack of a subscription-based delivery service.”