KB Toys expects to emerge from Chapter 11 by Aug. 29

By Caroline Salls

Pittsburgh, Aug. 19 - KB Toys, Inc. expects to emerge from Chapter 11 bankruptcy by Aug. 29 following Thursday's confirmation of its plan of reorganization, according to a company news release.

Upon emergence, Gregory R. Staley, former president of Toys "R" Us USA and its international divisions, is expected to become KB Toys' new president and chief executive officer, according to the release.

In addition to Staley's role, Roger V. Goddu, formerly chairman and chief executive officer of Montgomery Ward and also a former president of Toys "R" Us USA, will serve as a director and consultant to KB Toys.

As previously reported, the plan provides for PKBT Funding LLC, an affiliate of Prentice Capital Management, LP, to invest $20 million in the reorganized KB Toys and provide the company and its subsidiaries with a seasonal overadvance credit facility of up to $25 million.

In exchange, PKBT will receive 100% of the preferred stock and, together with Goddu, Staley and members of the KB Toys management team, 90% of the common stock of the reorganized company.

The remaining common stock will be held in a trust for the benefit of the unsecured creditors of KB Toys and some of its subsidiaries.

KB Toys, a Pittsfield, Mass.-based toy retailer, filed for bankruptcy on Jan. 14, 2004 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 04-10120.

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