Lexpert Magazine

September/October 2018

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

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14 LEXPERT MAGAZINE | SEPTEMBER / OCTOBER 2018 BIG DEALS DEALS ANALYSIS 22 22 Total Deals Published 10 Corporate Finance 21 13 Mergers and Acquisitions 21 10 Cross-border Transactions 21 BIG DEALS TRANSACTION VITALS ANNOUNCED: 4/19/2018 CLOSED: 5/31/2018 TECHNIQUE: SHARE PURCHASE TRANSACTION ATTITUDE: FRIENDLY DOMESTIC ACQUIRER SOUGHT: 100% VALUE: $300 MILLION DAVID CHAIKOF TORYS LLP (FOR FAIRFAX HOLDINGS LTD.) BRIAN EMPEY GOODMANS LLP (FOR TOYS "R" US (CANADA) LTD. / TOYS "R" US (CANADA) LTEE) COMPILED BY GENA SMITH Consumer Goods TOYS "R" US CANADA ACQUIRED BY AFFILIATE OF FAIRFAX AND EMERGES FROM RESTRUCTURING PROCEEDINGS creditor claims and preserved Toys Canada's position as Canada's leading toy and baby retailer. Toys Canada was the Canadian operating entity in the Toys "R" Us corporate group (the Company). On September 19, 2017, Toys Canada commenced CCAA proceedings in response to liquidity and supply challenges affecting the global Toys "R" Us business. e previous day, Toys "R" Us, Inc., certain of its US subsidiaries and Toys Canada filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. e plenary CCAA and Chapter 11 proceedings and the inte- grated nature of the Company's financing arrangements necessitated significant cross-border cooperation in the restructuring proceed- ings. e Canadian business of Toys Canada continued its strong performance and operated without significant disruption during the CCAA proceedings. However, the Company's efforts to complete a global going-con- cern restructuring to address its overleveraged capital structure were hampered by the significant underperformance of its US business. As a result, in March 2018, the Company decided to commence an or- derly wind-down and liquidation of its US business while simultane- ously pursuing a going-concern sale of the Canadian business. e Company's sale process resulted in Fairfax and Toys "R" Us – Delaware, Inc. entering into a Share Purchase Agreement dated as of April 19, 2018, under which it was agreed that an affiliate of Fairfax would purchase all of the share capital of Toys Canada. e trans- action required approvals from both the US bankruptcy court and the CCAA court, which approvals were received on April 25, 2018, and April 27, 2018, respectively. On May 9, 2018, the Canadian court issued an order authorizing the termination of the CCAA proceed- ings upon completion of the Toys Canada transaction, which subse- quently closed on May 31, 2018. As a result of the completion of the transaction, Toys Canada has emerged from creditor protection un- der the ownership of a leading Canadian asset management firm with significant investments and experience in the Canadian retail sector. Toys Canada's in-house counsel was Jennifer Sernaker-Tytel. Toys Canada was represented in Canada by Goodmans LLP, with a team that included Brian Empey, Melaney Wagner, Chris Armstrong, Bradley Wiffen and Andrew Harmes (restructuring), Celia Rhea and Geoff Cowper-Smith (cor- porate), Dan Dedic and Karen Vadasz (banking), Carrie Smit and Glenn Ernst (tax), Richard Annan (competition), Joe Con- forti (employment) and Ken Herlin (real estate). On May 31, 2018, an affiliate of Fairfax Financial Holdings Ltd. (Fairfax) acquired all of the share capital and business of Toys "R" Us (Canada) Ltd. Toys "R" Us (Canada) Ltee (Toys Canada) for a purchase price of $300 million subject to certain working capital adjustments. e share transaction, which was completed in connec- tion with Toys Canada's emergence from restructuring proceedings under the Companies' Credi- tors Arrangement Act (the CCAA) and Chapter 11 of the U.S. Bankruptcy Code, has enabled Toys Canada to continue as a going con- cern without compromising

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