Author Topic: Toys R Us  (Read 7690 times)

ourkid8

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1046
Re: Toys R Us
« Reply #10 on: April 23, 2018, 11:37:16 AM »
Now the question is, did we overpay? 

https://www.bnn.ca/toys-r-us-ends-canadian-stores-auction-with-fairfax-as-the-only-bidder-1.1065324

Toys "R" Us's Canadian operations have found a safety net months after the retailer's demise in the U.S. and overseas.
Documents filed in a Richmond, Va. bankruptcy court on Monday revealed the retailer will be cancelling an auction for its 82 Canadian stores and seeking approval on Tuesday to sell them to Toronto-based Fairfax Financial Holdings Ltd., which is involved in property and casualty insurance and reinsurance and investment management.

« Last Edit: April 23, 2018, 11:38:49 AM by ourkid8 »


FairFacts

  • Newbie
  • *
  • Posts: 46
Re: Toys R Us
« Reply #11 on: April 23, 2018, 01:13:27 PM »
Now the question is, did we overpay? 

https://www.bnn.ca/toys-r-us-ends-canadian-stores-auction-with-fairfax-as-the-only-bidder-1.1065324

Toys "R" Us's Canadian operations have found a safety net months after the retailer's demise in the U.S. and overseas.
Documents filed in a Richmond, Va. bankruptcy court on Monday revealed the retailer will be cancelling an auction for its 82 Canadian stores and seeking approval on Tuesday to sell them to Toronto-based Fairfax Financial Holdings Ltd., which is involved in property and casualty insurance and reinsurance and investment management.


According to the Financial Post today....
'The unit has generated positive free cash flow since filing in September amid higher than projected sales and lower than expected disbursements, according to the most recent court monitor report. It reported $69 million of cash flow since filing for creditor protection, with a $36.7 million cash balance at March 31.'

So if it can do $69mil annual cash flow and get some synergies with the Performance Sports business it looks like a pretty good price to me.

ourkid8

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1046
Re: Toys R Us
« Reply #12 on: April 26, 2018, 05:02:38 AM »
Thanks Sanjeev for hosting a lovely evening last night.  As per Prem and team, here is what they saw in Toys R us:

-$220-225m in real estate
-1 billion in sales
-The company can run in standalone not needing its parent entity
-$100m of edbitda/year
-Online sales have doubled in the last 5 years
-They are pleased with the current management

Now let's see how this company performs out of bankruptcy as there is a lot of stink around the company going under.  We all know it is the US parent but ppl may not shop there until they feel comfortable it will be around. 
« Last Edit: April 26, 2018, 05:05:45 AM by ourkid8 »

petec

  • Hero Member
  • *****
  • Posts: 1813
Re: Toys R Us
« Reply #13 on: April 26, 2018, 05:12:21 AM »
I really dont get why FFH thinks they need to do something at every chance possible??  Toys R Us??  Are you kidding me? 

How about focus on improving underwriting standards across the business lines/Allied?  Allied has been a big time mistake in the short-term, particularly 1) Given all of the losses 2) The fact that we used UNDERVALUED FFH shares, which were trading right at BV to 3) Acquire a business basically at the top of the reinsurance market (note: most reinsurance stocks outside of XL are down -20% or more)...

really wish FFH diversified out of all of these small/crappy/POS businesses and tried to focus on improving underlying earnings...

I dont get it

Why does the investing side detract from the management attention that can be given to the insurance side? The guy who can improve results at Allied is Andy Barnard; he *is* focussed on that, not on Toys R Us.

petec

  • Hero Member
  • *****
  • Posts: 1813
Re: Toys R Us
« Reply #14 on: April 26, 2018, 05:17:14 AM »
Thanks Sanjeev for hosting a lovely evening last night.  As per Prem and team, here is what they saw in Toys R us:

-$220-225m in real estate
-1 billion in sales
-The company can run in standalone not needing its parent entity
-$100m of edbitda/year
-Online sales have doubled in the last 5 years
-They are pleased with the current management

Now let's see how this company performs out of bankruptcy as there is a lot of stink around the company going under.  We all know it is the US parent but ppl may not shop there until they feel comfortable it will be around.

I thought the RE might be a key part of it. Am I right that it is debt free? Because if so they've basically paid 3x ebitda, or 1x after RE, which suggests kinda limited downside even if Amazon does come along and eat their lunch.

Not so sure about Bill Gregson though - isn't he kinda busy? ;)

ourkid8

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1046
Re: Toys R Us
« Reply #15 on: April 26, 2018, 06:31:46 AM »
Sanjeev confirmed it is a clean balance sheet so yes, it was a steal of a deal  :)  Now the concern is the risks coming out of bankruptcy while the parent is under liquidation...

Thanks Sanjeev for hosting a lovely evening last night.  As per Prem and team, here is what they saw in Toys R us:

-$220-225m in real estate
-1 billion in sales
-The company can run in standalone not needing its parent entity
-$100m of edbitda/year
-Online sales have doubled in the last 5 years
-They are pleased with the current management

Now let's see how this company performs out of bankruptcy as there is a lot of stink around the company going under.  We all know it is the US parent but ppl may not shop there until they feel comfortable it will be around.

I thought the RE might be a key part of it. Am I right that it is debt free? Because if so they've basically paid 3x ebitda, or 1x after RE, which suggests kinda limited downside even if Amazon does come along and eat their lunch.

Not so sure about Bill Gregson though - isn't he kinda busy? ;)

ourkid8

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1046
Re: Toys R Us
« Reply #16 on: April 26, 2018, 02:40:55 PM »
https://www.bnn.ca/fairfax-eyeing-some-u-s-stores-after-toys-r-us-canada-purchase-1.1067704

I am a bit confused in how the value of the real estate today is worth ~$300M and yesterday $220-225... lol  Nonetheless, buying pods of profitable stores in the US is great news! 




chrispy

  • Sr. Member
  • ****
  • Posts: 268
Re: Toys R Us
« Reply #17 on: April 27, 2018, 04:59:08 AM »
So after seeing the books they must have liked SOME of what they saw in the US?

TwoCitiesCapital

  • Hero Member
  • *****
  • Posts: 2157
Re: Toys R Us
« Reply #18 on: April 27, 2018, 08:16:31 AM »
https://www.bnn.ca/fairfax-eyeing-some-u-s-stores-after-toys-r-us-canada-purchase-1.1067704

I am a bit confused in how the value of the real estate today is worth ~$300M and yesterday $220-225... lol  Nonetheless, buying pods of profitable stores in the US is great news!

$225M is their conservative estimate of the worth. $300M is the realistic/optimistic view given real estate markets and the global economy humming along.

petec

  • Hero Member
  • *****
  • Posts: 1813
Re: Toys R Us
« Reply #19 on: April 28, 2018, 12:27:27 AM »
https://www.bnn.ca/fairfax-eyeing-some-u-s-stores-after-toys-r-us-canada-purchase-1.1067704

I am a bit confused in how the value of the real estate today is worth ~$300M and yesterday $220-225... lol  Nonetheless, buying pods of profitable stores in the US is great news!

$225M is their conservative estimate of the worth. $300M is the realistic/optimistic view given real estate markets and the global economy humming along.

Wow. This is a steal. I believe KW had a hand in checking the RE valuation.