The Agreement contemplates that Grant Thornton Limited, as the CCAA Court-appointed Monitor in Toys Canada’s proceedings under the Companies’ Creditors Arrangement Act, would receive and hold the net proceeds that would otherwise be available to the Toys-Delaware pursuant to the sale of the Shares (the “Equity Reserve Amount”). The Equity Reserve amount will be held by the Monitor for 75 days post-closing following which it will be distributed to Toys Delaware, subject to a creditor objection process.

If the Agreement is terminated by Toys Delaware for any reason, other than certain specified termination rights, the Buyer is entitled to (i) an expense reimbursement amount of up to CDN$500,000, and (ii) a break-up fee equal to three percent of the base purchase price (i.e. CDN$9 million) less the expense reimbursement amount, payable only upon the consummation of an alternative transaction.


The Company is providing (i) certain cleansing information previously shared with third parties regarding the business of the Company and certain of its subsidiaries as set forth below and (ii) certain cleansing materials previously shared with third parties regarding liquidity forecasts with respect to certain of its foreign subsidiaries as set forth in Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein (collectively, the “Cleansing Material”). The Company cautions the reader that the information in the Cleansing Material is being provided subject to a forward-looking statements disclaimer provided therein.

Private Label

Delaware currently budgets approximately $22 million in overhead cost per year to run its private label business. Pro forma for the US wind-down, the private label business is estimated to have an overhead cost of $11 million. Pro forma private label sales at Asia, Central Europe and Poland are estimated to represent 73% of total private label revenue (assuming Central Europe and Poland maintain their proportionate ratio of FY 2017 Europe Excluding UK private label sales). In general, private label products generate margins of approximately 50% compared to margins for other products in the mid-30% range. As a consequence of the US wind-down, aggregate private label sales in remaining geographies are estimated to decline by approximately 10% and margins are estimated to decline by approximately 5 percentage points.

Japan Credit Line

In 2017, the Company drew a maximum of JPY 2.4 billion on its JPY 9.45 billion committed line of credit in Japan.

German Real Estate

In 2018, the Company’s owned and ground-leased properties in Germany were collectively valued at €8.41 million to €10.71 million on a dark basis, and €22.1 million to €25.0 million on a market basis.

1Net of €0.6mm of vacancy costs for the two distribution centers.