Moody's may lower Toys "R" Us

Moody's Investors Service said it placed the long-term ratings of Toys "R" Us Inc. on review for possible downgrade.

Ratings placed on review for possible downgrade include the senior implied rating at Ba1; the senior unsecured issuer rating at Ba2; the senior unsecured notes rating at Ba2; and the speculative grade liquidity rating of SGL-1.

This review action results from Thursday's announcement that Toys "R" Us Inc. has agreed to be acquired for $6.6 billion plus the assumption of all debt by a consortium consisting of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC and Vornado Realty Trust.

Moody's said its review of Toys' long-term ratings will focus on (1) the resulting capital structure for the company based on the new ownership, (2) overall performance of Toys for 2004 and the first quarter of 2005, as well as expectations for the intermediate term, (3) the company's strategic plan, including real estate, and (4) likely financial policy. Moody's expects to conclude the rating review when the transaction closes, which is anticipated to occur by July.

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