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May 28, 2010 1:46 PM

Toys "R" Us Going Public...Again

Posted by Zach Lowe

 Remember 2005, when Kohlberg Kravis Roberts, Bain Capital, and Vornado Realty Trust took Toys "R" Us private in a $6.6 billion leveraged buyout that, at the time, was among the largest buyouts ever in the retailing industry?

Five years later, those private equity firms are set to cash in on that investment (sort of) by offering $800 million of Toys shares to the public in an initial public offering scheduled for later this year, according to The New York Times and Bloomberg. The PE firms, who will almost certainly remain major shareholders of "Toys," will use the proceeds to pay down some of the $5.2 billion in debt "Toys" is carrying now, according to a filing the company made Thursday with the Securities and Exchange ComToysRUsLogomission. The IPO would be one of the largest this year, though the market for IPOs has been chilly because of continuing worries about the global debt crisis, Bloomberg and the AP remind us. On the 12 major IPOs so far this year, share prices have fallen 5 percent on average after the initial offering, the AP reports. That means picking the correct initial offering price will be key, analysts told the AP. The banks managing the IPO will include Goldman Sachs, JPMorgan Chase, Deutsche Bank, Bank of America and Credit Suisse, Bloomberg says. Cahill Gordon & Reindel is serving as underwriters counsel. Simpson Thacher & Bartlett is serving as lead counsel for Toys, according to the SEC filing. A Simpson spokeswoman and Michael Nathan, the lead partner on the matter, refused to comment when we reached out to them Friday morning.

Simpson has a long history with Toys and advised the company on the 2005 leveraged buyout, according to a report in sibling publication The Recorder at that time. Latham & Watkins advised KKR on the LBO, while Bain Capital turned to Kirkland & Ellis, Clifford Chance, and Stikeman Elliott, and Vornado retained Sullivan & Cromwell

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