TOY 12 08/15/2021

Toys R Us Inc

Credit, Consumer, Event Driven/Special Sit


Publicly traded companies mentioned herein: Toys R Us Inc (private co w/ public debt)

Highlights

Toys R Us (TRU) refinanced its 2017 and 2018 debt via a private exchange announced in July 2014, and the presenter is long the TRU Taj 12% bonds in the mid-to-high 80s (recent price = 88) because he believes they are misunderstood and undervalued. He cautioned, “We haven’t cracked the code here and I’m not saying the toy business is good right now, but within a complicated, ‘convoluted’ capital structure the 12% notes appear to be materially mispriced” and represent a solid total return vehicle for the next 12-24 months. The bonds sold-off following the exchange, but TRU’s ability to grow units and EBITDA in international markets should limit downside risk because cash flow from these operations - as well as cash flow from the better US real estate assets - flows up to the Taj box and is sufficient to service the debt. Even in a restructuring scenario, he believes these bonds are worth par. And, there is the potential for pay downs or the bond to be taken out if TRU were to IPO its Asian operations.

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Idea Discussion

Commentor 1 - 2 weeks ago

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