NO MORE GAMES
KKR caves to DC pressure on ‘Toys’ $everance
Toys ‘R’ Us workers could get some severance after all.
KKR & Co., one of three owners that saddled the bankrupt toy chain with billions in debt — which in large part led to the toy chain’s demise last month — has hinted that it is working on a plan to cough up some dough for the retailers’ out-of-a-job workers.
“We have been in touch with representatives of the Toys’ employees, and expressed our desire to help them,” KKR said in a July 6 letter to 19 Washington lawmakers.
The senators and representatives pressured Henry Kravis’ New York firm and the chain’s co-owners to provide some financial relief to the idle workforce.
Up to now, KKR had profited from the hard work of the chain’s 33,000 workers — but dropped them like a bad habit once Toys ‘R’ Us failed. The workers had been demanding some severance and had asked Congress for some help.
A Friday letter from the lawmakers to KKR, Vornado Realty Trust and Bain Capital about “immediate severance” and other issues got a response within 24 hours from KKR.
Toys ‘R’ Us filed for Chapter 11 protection in September and liquidated its stores through the spring and early summer. The chain, known for its Geoffrey the Giraffe mascot and catchy “I Don’t Wanna Grow Up” jingle closed its last store on June 30.
“We believe we have found a path outside of the bankruptcy process to help those who need it most, and we are committed to supporting this,” KKR’s Ken Mehlman wrote in a two-page response to last week’s letter.
The Toys ‘R’ Us owners bought the chain in a $6.6 billion leveraged buyout in 2005. Its Chapter 11 is the third-largest retail bankruptcy ever.
The workers, many of whom have worked for the company for decades, claim they are owed $75 million in severance from all its owners.
Vornado and Bain have not yet responded to the letter.
KKR has been in discussions with a worker advocacy group — RiseUp Retail — since the end of June, said Carrie Gleason, a campaign director for the group.
At that time, the governor of Minnesota said the state was halting new investment in KKR.
Public pensions invest in KKR. Other states, including Washington, considered not investing in KKR, as well.
KKR is in discussions to pay some portion of the $25 million that advocates estimate it owes the workers, according to people familiar with the talks.
The funds could go to “hardship cases,” former Toys ‘R’ Us store manager Tracy Forbes told The Post, “but our goal is to get severance for everyone.”
KKR is “playing a helpful role in reaching out to Bain and Vornado and even the creditors,” Gleason added. “But we are far from getting the full amount. Bain and Vornado have not yet come to the table.”
KKR declined to comment beyond its letter.
“To be clear, we did not want the US operations to be liquidated,” KKR wrote in its letter. “But the creditors had a different and prevailing view.”
Lawmakers weren’t convinced.
“Leveraged buyouts — such as those facilitated by your companies — often result in mass job loss, closure of profitable businesses, and unnecessary financial burdens for local government,” the lawmakers wrote.