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