Toys 'R' Us to Issue $650 Million in Lease Backed Notes

Fitch Ratings - November 9, 2009

Fitch Ratings has assigned an Issuer Default Rating (IDR) of 'B-' to Toys 'R' Us Property Co. II, LLC (previously known as Giraffe Holdings, LLC) and rates Toys 'R' Us Property Co. II, LLC's new $650 million senior secured notes 'B+/RR2'. The notes are secured by first-priority liens on 129 properties held in a bankruptcy-remote entity with a Master Lease covering all the properties, which requires Toys Delaware to pay all costs and expenses related to the ownership, operation, leasing and maintenance of the properties. In addition, while the property company currently does not have any subsidiaries, the notes will benefit from guarantees by any future subsidiary of the property company. Proceeds from the offering, an intercompany loan and a cash contribution from Toys 'R' Us, Inc. (TOY), as well as the release of restricted cash and cash on hand will be used to repay the existing $600 million Giraffe Holdings CMBS facility and $200 million MPO Holdings CMBS facility.

Fitch has also affirmed the following ratings:

Toys 'R' Us, Inc.
--IDR 'B-'
--Senior Unsecured Notes 'C/RR6'

Toys 'R' Us - Delaware, Inc.
--IDR 'B-'
--Secured Revolver 'B/RR3'
--Secured Term Loan 'CC/RR6'
--Unsecured Term Loan 'CC/RR6'
--Senior Unsecured Notes 'CC/RR6'

Toys 'R' Us Property Co. I, LLC (previously known as TRU 2005 RE Holding Co.)
--IDR 'B-'
--Senior Unsecured Notes 'B+/RR2'

Toys 'R' Us Europe, LLC (previously known as Toys 'R' Us (UK) Ltd.)
--IDR 'B-'
--Secured Revolver 'B/RR3'

The Rating Outlook is Stable. TOY had $5.6 billion in debt outstanding on Aug. 1, 2009. Sphere: Related Content