Toys 'R' Us may liquidate assets, close United States stores

Toys 'R' Us may liquidate assets, close United States stores

What makes the woes of Toys "R" Us even more newsworthy is that, as CNN Money's the last megastore dedicated to toys.

According to the Los Angeles Times, the company is making liquidation plans after it failed to find a buyer or agree to a debt restructuring deal with lenders.

Toys R U.S. isn't alone.

Claire's Stores Inc., another chain that sells some toys, also is said to be nearing bankruptcy - though it's not at the point of being shut down.

Toys "R" Us' $583 million of first-lien bonds due in 2021 dropped as much as 4 cents on the dollar to 83.9, according to bond-pricing system known as Trace. CNBC reported in February that Toys R Us was at risk of breaching a covenant in its bankruptcy loan, which carried the potential to force the business to liquidate.

As word spread, shares of Mattel and Hasbro, two of the world's largest toymakers, fell in after-hours trading.

The company announced earlier this month they planned on closing stores in the United Kingdom, but it's not clear how many.

Toys "R" Us has had a hard task on its hands, seeking to figure a way out of $4.9 billion in debt, particularly $400 million due in 2018 and $1.7 billion more due in 2019. Toys "R" Us may be running out of time, if it hasn't already.

The company was trying to re-negotiate its $5 billion debt load.

But a weaker-than-expected holiday season forced Toys R Us to rethink its strategy, and the chain plans to move ahead with these closures once they're approved by the court.

"The worst case scenario is that about 10 percent of the sales of each of the toy companies goes away in 2018, with an associated roughly 10 percent hit to earnings", D.A. Davidson analyst Linda Weiser said.

Related news: