- So far, 76% of 2017 notes signed up for offer’s 12% interest
- Less than half of 2018 series are tendered as holders balk
Toys “R” Us Inc., beset by rivals and still burdened by debt tied to its leveraged buyout from a decade ago, is extending a deadline for a debt swap designed to buy more time for its turnaround plan.
The retailer pushed out the early tender date for investors to exchange their notes until Aug. 9, the Wayne, New Jersey-based company said Wednesday in a statement. Seventy-six percent of the outstanding 10.375 percent notes due in 2017 and 47 percent of the 7.375 percent notes maturing in 2018 were tendered by the original early deadline of July 26, the company said.
Toys “R” Us announced the bond swap this month, offering 12 percent interest to holders of notes due in 2017 and 2018 for new senior secured notes that mature in 2021. The company also will pay as much as $150 million in cash for the 2017 notes.
“Holders of the 2018 notes may be holding out for better consideration, given the tender envisions a below-par recovery and does not include a cash component,” said Noel Hebert, a Bloomberg Intelligence credit analyst. “Tenders for the 2017 notes look pretty healthy for this stage.”
Toys “R” Us is using cash to upgrade its stores, website and the overall experience for shoppers. It’s looking for ways to win back customers from discounters including Wal-Mart Stores Inc. and Target Corp. that attract a steady stream of shoppers with groceries and other basics, as well as online vendors such as Amazon.com Inc. The company said in June that it would refinance 89 percent of its existing notes.
“We remain committed to executing on our refinancing plan to position our company for long-term growth and are pleased with the progress to date,” Elizabeth Gaerlan, a company spokeswoman, said in an e-mail.
The company’s 2017 notes were little changed at 100.448 cents on the dollar in New York. The 2018 notes traded at 87.375 cents as of 11:59 a.m., down 4.225 cents.