KB Toys bidding procedures for sale of company approved

By Caroline Salls

Pittsburgh, June 2 - KB Toys, Inc. obtained approval of bidding procedures setting up an auction for the right to acquire either substantially all of the company's assets or the equity interests in the reorganized company, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

Under its proposed plan of reorganization, KB Toys has an agreement with Prentice Capital Management, LP that will sell the stalking horse bidder, Prentice's affiliate PKBT Funding LLC, 90% of the common stock and 100% of the preferred stock of the reorganized company for $20 million, subject to the auction process.

In Thursday's order, the court also approved a $600,000 termination fee and $700,000 expense reimbursement fee for the auction.

The auction will be held July 11, if necessary. An approval hearing will be held July 14.

The Pittsfield, Mass.-based toy retailer filed for bankruptcy on Jan. 14, 2004. Its Chapter 11 case number is 04-10120.

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