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Huh? Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. The losers were Toys R Us emplo

Huh? Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. The losers were Toys R Us employees and customers and the banks who provided the loans.

JumpCrisscross 9y ago
> Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. Bain et al lost over a billion dollars. Not only did they invest the equity, they also loaned some of the debt out of their own funds.
- metabagel 9y ago
  They also charged exorbitant management fees. It seems at least possible that they didn't actually lose money on the deal. Being a private company, it might be hard to find out how much cash they extracted from Toys 'R' Us.
  - justherefortart 9y ago
    Exactly, where'd that 5 billion in loans go? Poof!
    - metabagel 9y ago
      The bulk of that was not KKR or Bain's money. They were loans that Toys 'R' Us took on as part of the LBO.
    - JumpCrisscross 9y ago
      > where'd that 5 billion in loans go? As in where did the proceeds go? To the previous investors. From whom KKR et al bought Toys 'R' Us. There's a "B" in LBO.
  - JumpCrisscross 9y ago
    > Being a private company, it might be hard to find out how much cash they extracted from Toys 'R' Us The firms got $470 million in fees and interest against their $1.3 billion investment [1]. Bain et al lost money. These numbers were disclosed in SEC and bankruptcy filings. [1] https://www.bloomberg.com/news/articles/2017-09-19/bain-kkr-vornado-suffer-wipeout-in-toys-r-us-bankruptcy https://www.bloomberg.com/news/articles/2017-09-19/bain-kkr-...
dkural 9y ago
Yes, it used it's own money - the buyout companies came up with 20% of the purchase price (think of the 20% like a downpayment on a house; they borrowed the other 80%; like getting a mortgage). They lost a lot of $. They couldn't "flip" it and resell / IPO the company in this case, hence no profit.

JumpCrisscross 9y ago

> Did Bain use its own money to buy Toys R Us? No, it was a leveraged buyout. They already made a profit on the transaction. Bain et al lost over a billion dollars. Not only did they invest the equity, they also loaned some of the debt out of their own funds.

metabagel 9y ago
They also charged exorbitant management fees. It seems at least possible that they didn't actually lose money on the deal. Being a private company, it might be hard to find out how much cash they extracted from Toys 'R' Us.
- justherefortart 9y ago
  Exactly, where'd that 5 billion in loans go? Poof!
  - metabagel 9y ago
    The bulk of that was not KKR or Bain's money. They were loans that Toys 'R' Us took on as part of the LBO.
  - JumpCrisscross 9y ago
    > where'd that 5 billion in loans go? As in where did the proceeds go? To the previous investors. From whom KKR et al bought Toys 'R' Us. There's a "B" in LBO.
- JumpCrisscross 9y ago
  > Being a private company, it might be hard to find out how much cash they extracted from Toys 'R' Us The firms got $470 million in fees and interest against their $1.3 billion investment [1]. Bain et al lost money. These numbers were disclosed in SEC and bankruptcy filings. [1] https://www.bloomberg.com/news/articles/2017-09-19/bain-kkr-vornado-suffer-wipeout-in-toys-r-us-bankruptcy https://www.bloomberg.com/news/articles/2017-09-19/bain-kkr-...

dkural 9y ago

Yes, it used it's own money - the buyout companies came up with 20% of the purchase price (think of the 20% like a downpayment on a house; they borrowed the other 80%; like getting a mortgage). They lost a lot of $. They couldn't "flip" it and resell / IPO the company in this case, hence no profit.