As reported by Bloomberg, senior lenders to Toys R Us (TRU) are set to make a credit bid of US$760 million for the Asian arm of the retailer in an auction in New York next month.
The lenders - York Capital Management Global Advisors LLC, Barclays Bank Plc and Cerberus Capital Management LP - will use their senior secured notes in the Asian business as currency for the bid, rather than cash.
Fung Retailing Ltd. has a 15 per cent stake in TRU Asia, but TRU wants a US federal judge to strip it of its first-right-of-refusal purchase option. TRU also wants the court to force Fung to sell its 15 per cent stake of the business, before the auction is scheduled.
In April, bids for the Asian division of the business were reportedly over US$1 billion however the business failed to secure a buyer who will commit to the offer and TRU believes that is due to Fung interference, according to the court documents.
The lender group are now posed as a 'stalking-horse bidder' which sets the minimum for the proposed September auction.
Meanwhile, the bankruptcy court has agreed to a compromise agreement between TRU, its lenders and creditors in the US.
Creditors and vendors are set to receive a 22 cents of the dollar cash payment, with the potential for higher recoveries. In exchange, the creditors and vendors will give up their right to sue the lenders for deciding to liquidate the retailer.
US creditors and vendors are owed approximately US$800 million.