The Toys R Us bankruptcy is clobbering 3 giant asset managers

Toys r usShutterstock/NorthfotoA leveraged buyout goes belly up.

A trio of the world’s foremost asset managers have taken a bath on their ill-fated buyout of Toys R Us, which filed for bankruptcy protection Tuesday.

KKR, Bain Capital, and Vornado Realty Trust acquired the toy retailer in a $US7.5 billion leveraged buyout in 2005 and now stand to see their investment wiped out as the beleaguered retailer enters Chapter 11 with $US5 billion in outstanding debt, according to Bloomberg’s David Carey.

The firms plugged $US1.3 billion of equity into their purchase of Toys R Us over a decade ago and financed the remaining $US6.2 billion with debt, including senior loans that they have a stake in.

The asset managers have recouped about $US470 million in interest payments and management fees over the years, according to the report.

Publicly traded KKR and Vornado had previously written their investments in Toys R Us down to nothing.

Check out the full Bloomberg report here.

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