Toys R' Us - Bain, KKR, Vornado
Can anyone speak to what you think KKR, Bain and Vornado will do with their Toys R' Us position? Whats the outlook for the company? Any insight would be great.
They'll trim the fat, close some stores, and more aggressively push its online retail counterpart. Short term won't look great, but they'll come out of it looking leaner than ever in the long run.
You the man. Great input. Thanks.
I don't know what they will do, but they should push to liquidate the company instead of filing for Ch 11 / restructuring out of court multiple times in the future. Toys R Us, Best Buy, Radio Shack, etc. -- these types of retailers are dead already.
Haha, are you an idiot? The sponsors, who will get zero in a liquidation, should throw away their equity option because you think the effort of a turnaround is too much hassle?
I still can't get over this comment, it's embarrassing. When you're finished with your IB stint and you're interviewing at a fund who has made a poor investment, bring it up, recommend that they liquidate the business, see if you get any offers.
Or talk to your LPs: "hi yea, we thought we'd throw your money away because we're lazy - so how about making it 3 and 20? you're redeeming your investment, what!?"
Not an idiot, just got my ideas mixed up. I meant whoever holds the 1st lien should push to liquidate now.
What?! You guys haven't bought HY RSH bonds. It's a lock (kidding).
AMZN is affecting everyone. Hell, WMT is expanding into financial processing. If that doesn't say something I don't know what does.
Does Toys r Us own a lot of the real estate its stores are sitting on? If so that could be the deal angle. I remember when Eddie Lampbert bought into K-Mart even thou he had no interest in its retail business whatsoever. It was all about the massive RE holdings and it paid off very well for him, at least for a well. Seeing that Vornado is involved in this one, perhaps something similar is going on.
Does Toys r Us own a lot of the real estate its stores are sitting on? If so that could be the deal angle. I remember when Eddie Lampbert bought into K-Mart even thou he had no interest in its retail business whatsoever. It was all about the massive RE holdings and it paid off very well for him, at least for a while. Seeing that Vornado is involved in this one, perhaps something similar is going on.
No no and no.
Toys R Us BK Question (Originally Posted: 09/22/2017)
Judging from a quick look through Toys R Us' historical filings, it looks like Bain, KKR and Vornado paid themselves an $81 million "success" (hahaha) fee when they acquired the company, then $6 million a quarter in advisory or monitoring fees for each of the 12 years since. Am I correct that a) for running a company into bankruptcy, the PE firms behind this deal made more than $300 million, and b) every dollar of that went to the GP, and none to the LPs? And if a disproportionate share of that money went to the handful of partners who sourced the deal, didn't they get rich off this disaster?
Management fees at the fund level are usually offset by monitoring fees. This was a boom-era deal, so not sure what the offset % was (maybe 50%?), but these days, management fees are offset 100% by monitoring fees.
It's a more efficient use of LP capital to take fees from the company vs. the fund (no capital call).
EDIT: Good question though
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