3 ms·

According to my calculations in this comment they are at least close to net zero: https://news.ycombinator.com/item?id=16906549 https://news.ycombinator.com/ite

According to my calculations in this comment they are at least close to net zero: https://news.ycombinator.com/item?id=16906549 https://news.ycombinator.com/item?id=16906549 Which is pretty good outcome for them given TRU has failed completely.

JumpCrisscross 9y ago
You overestimate interest and fees, paid by Toys 'R' Us to the PE firms, by over 100%. We know the actual numbers from SEC and bankruptcy filings [1]. [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-...
- bhouston 9y ago
  So either the interest amount of $435M per year (which is roughly 15% interest on 6.6B) is incorrect from the original article or they receives less than 20% of that interest? Strange. $270M over 13 years from $1.1B in loans? ($270M = $470M - the $200M in fees.) That seems incredibly low interest. I am suspicious. LBO firms do not give low interest loans to their targets. If we assume an interest rate of 5%, you get 50M in interest a year on 1B. 13 years will yeild $750M in interest. Did these LBO firms really offer loads at something like 1.5%? Something isn't adding up.
  - JumpCrisscross 9y ago
    > they receives less than 20% of that interest? They hold less than 20% of the debt. Most of their investment went in as equity. That's wiped out. > LBO firms do not give low interest loans to their targets PE buys equity and subordinated debt. Sub debt has high rates and wonky structures. In this case, I believe it was pay in kind, "a type of high-risk loan or bond that allows borrowers to pay interest with additional debt rather than cash" [1]. Nice feature if the debt is repaid. Less fun when it's wiped out. [1] https://en.wikipedia.org/wiki/PIK_loan https://en.wikipedia.org/wiki/PIK_loan
    - bhouston 9y ago
      So basically, I can not reserve engineer what happened without the full details.

JumpCrisscross 9y ago

You overestimate interest and fees, paid by Toys 'R' Us to the PE firms, by over 100%. We know the actual numbers from SEC and bankruptcy filings [1]. [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-...

bhouston 9y ago
So either the interest amount of $435M per year (which is roughly 15% interest on 6.6B) is incorrect from the original article or they receives less than 20% of that interest? Strange. $270M over 13 years from $1.1B in loans? ($270M = $470M - the $200M in fees.) That seems incredibly low interest. I am suspicious. LBO firms do not give low interest loans to their targets. If we assume an interest rate of 5%, you get 50M in interest a year on 1B. 13 years will yeild $750M in interest. Did these LBO firms really offer loads at something like 1.5%? Something isn't adding up.
- JumpCrisscross 9y ago
  > they receives less than 20% of that interest? They hold less than 20% of the debt. Most of their investment went in as equity. That's wiped out. > LBO firms do not give low interest loans to their targets PE buys equity and subordinated debt. Sub debt has high rates and wonky structures. In this case, I believe it was pay in kind, "a type of high-risk loan or bond that allows borrowers to pay interest with additional debt rather than cash" [1]. Nice feature if the debt is repaid. Less fun when it's wiped out. [1] https://en.wikipedia.org/wiki/PIK_loan https://en.wikipedia.org/wiki/PIK_loan
  - bhouston 9y ago
    So basically, I can not reserve engineer what happened without the full details.