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Toys 'R' Us Founder Charles Lazarus Dies at 94

bloomberg.com

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Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#31

Post by icebraining »

beojan wrote: post #22
adventured wrote: post #21

Earlier quoted context omitted.

The morality of it depends on what you believe owners owe employees. There's clearly no objective basis there, it's down to a given person's moral beliefs. In my observation, you'll get a very different response to that from one business owner to the next. Some owners/operators take it as an intense matter of morality to safeguard their employees, others could care less and believe they owe their employees between no…

The difference here is that it's the acquired company that owes the debt, as opposed to the acquiring company owing a debt with the acquired company as collateral.

What's the difference in practice?

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#32

Post by Marazan »

icebraining wrote: post #31
beojan wrote: post #22

Earlier quoted context omitted.

The difference here is that it's the acquired company that owes the debt, as opposed to the acquiring company owing a debt with the acquired company as collateral.

What's the difference in practice?

There is no* risk for the acquiring company.

*Obvious simplification is obvious. The risk is they can't keep acquirred company alive long enough to extract a profit before the husk of a company finally implodes.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#33

Post by mseebach »

kaycebasques wrote: post #30
beojan wrote: post #22

Earlier quoted context omitted.

The difference here is that it's the acquired company that owes the debt, as opposed to the acquiring company owing a debt with the acquired company as collateral.

This is bizarre. I did not know that leveraged buyouts could work like this.

It's just like a mortgage. Even though it's you buying the house, it's in a way the house that ends up owning the mortgage (in many jurisdictions, you can walk away from the house and mortgage, and the bank had no leverage against your person, they can only repossess the house).

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#34

Post by icebraining »

Marazan wrote: post #32
icebraining wrote: post #31

Earlier quoted context omitted.

What's the difference in practice?

There is no* risk for the acquiring company. *Obvious simplification is obvious. The risk is they can't keep acquirred company alive long enough to extract a profit before the husk of a company finally implodes.

But is there risk when using the company as collateral? Isn't that the point of collateral? Or do they still have to put up the difference between the current value of the company and the debt?

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#35

Post by mseebach »

Marazan wrote: post #32
icebraining wrote: post #31

Earlier quoted context omitted.

What's the difference in practice?

There is no* risk for the acquiring company. *Obvious simplification is obvious. The risk is they can't keep acquirred company alive long enough to extract a profit before the husk of a company finally implodes.

Unless the acquired company is obviously healthy enough to service the debt through to maturity, or the bank is really stupid, the acquiring company has to put up non-trivial collateral.

Or put another way, if the acquiring company has no risk, then the bank putting up the leverage has it. The risk doesn't just disappear.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#36

Post by taneq »

erickhill wrote: post #6
jessaustin wrote: post #3

Earlier quoted context omitted.

That is a nice article. What a strange maneuver from his second wife! He must have been desperately in love, to sign a prenup like that. ...their only regrets were employees who would be losing their jobs, suppliers who would be losing their best customer and all the kids who won’t grow up with Toys “R” Us. Ugh, if my nieces and nephews are any indication, kids will still get way too many toys even without this store…

I'll never forget going to Toys R Us and walking down the computer/video game aisle. It was vast. Wall-to-wall Atari, Commodore, Vectrex (!!) ... walls of just game boxes you could look over. Then pull a slip of paper out and walk to a literal Cage where you could get the real deal. That place was magical to me as a kid. (1980s, if it isn't obvious.)

That feeling of grabbing a Sega game box off the shelf (after agonizing about which game for what felt like forever!) and taking it up to the counter, where they'd take the box, turn around to a filing cabinet behind them, and pull out the actual cartridge and put it in the box. It felt like dreams coming true.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#38

Post by DigitalSea »

dmix wrote: post #14

What poor timing, oh well he had a great life and great accomplishments during his prime. > saddled with more than $5 billion in debt Wow, I haven't yet followed the story of Toys R Us but that is a huge amount of debt. I can't imagine what severe mismanagement happened at the company to allow this. Must have had some ex-government workers managing finances (/s)... > Since Lazarus stepped down as chief executive offi…

>I'd be curious to read more about how they messed it up so badly.

They failed to embrace online, that was their downfall. They didn't take it seriously, opting to let someone else handle online for them, one of the largest players in the ecommerce space: Amazon.

It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon. So what happened was when you would click on toysrus.com it would send customers to their page on Amazon.

The deal started to fall apart when Amazon started allowing other toy retailers to sell through its site, because they complained Toys R Us didn't carry enough stock. So, they sued in 2004 and terminated the contract, then did its own online thing in 2006.

Coincidentally, the same thing happened with Borders (the large book store chain) which had a similar partnership with Amazon, lost out on embracing online and owning the entire workflow of selling online. Essentially Amazon was the site customers would see when ordering from these retailers.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#39

Post by yrro »

mseebach wrote: post #33
kaycebasques wrote: post #30

Earlier quoted context omitted.

This is bizarre. I did not know that leveraged buyouts could work like this.

It's just like a mortgage. Even though it's you buying the house, it's in a way the house that ends up owning the mortgage (in many jurisdictions, you can walk away from the house and mortgage, and the bank had no leverage against your person, they can only repossess the house).

(FYI this isn't the case in at least the UK...)

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#40

Post by damon_c »

bartread wrote: post #20
gedy wrote: post #11

Earlier quoted context omitted.

Man, the Vectrex, I bought one on clearance from Toys R Us when they were discontinued in 83/84. Such a fun console

I've recently got back into retro gaming, having somewhat tired of the cost and constant updates to modern titles, and looked into picking up a Vectrex because I never had one as a kid: working examples are now going for £900+ in the UK so I dropped the idea. EDIT: Having said that, I just checked eBay again, and it seems like availability is up and prices are down. A bunch of auctions under £100, and some Buy It Now…

If you get one, there is a multi game cartridge available. Highly recommended!

Pole Position on Vectrex is always fun at parties.

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