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KB Toys inks agreement to sell internet business to D.E. Shaw for $6.5 million
By Jeff Pines
Washington, April 2 - KB Toys, Inc. has a stalking horse bidder for its internet operations - D.E. Shaw Laminar Portfolios, LLC. The bidder is offering $6.5 million in cash plus liabilities, according to an April 1 motion filed with the U.S. Bankruptcy Court for the District of Delaware. The agreement also calls for KB Toys to get at least another $1.5 million in license royalties payable over three years.
In January, D.E. Shaw & Co. LP acquired FAO, Inc.'s flagship toy store in New York, another in Las Vegas and its catalog and internet businesses.
KB Toys' Internet operation, with about 150 employees, is run on a stand-alone basis, is headquartered in Denver and has a 438,500-square foot warehouse in Blairs, Va.
The Pittsfield, Mass.-based toy retailer proposes that bids will start at $7.25 million for all of the internet assets and must be submitted by April 26. It plans to hold the auction the next day.
Bids for less than all of the internet assets should start at $2 million, or be the lesser of $2 million or 10% of the cash portion of the proposed purchase price contained in the written offer.
In addition, it wants the break-up fee set at $200,000.
A hearing to approve the auction procedure is scheduled for April 29.
KB Toys filed for Chapter 11 on Jan. 14. Its Chapter 11 case number is 04-10120.
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