Well, an article from the Financial Post confirms how healthy Toysrus Canada is.
The profitable Toys Canada “operates as a relatively autonomous business unit and has achieved strong financial and operational performance in recent years,” the company said in court filings. It is cash-flow positive, has had compounded annual revenue growth of 5 per cent in the past three years and has almost doubled net earnings in that time, the filings said, and it wants to keep all of its stores open and operating.
However, and here is the kicker, the article also confirms how it is linked to its US parent:
Indeed, the Canadian unit has been sending surplus cash from its operations to support its U.S. parent’s cash flow needs, making $101 million in unsecured inter-company loans to the troubled U.S. division since 2016.
So yes, while Toysrus Canada has been doing so well that it has surplus, this $101M loan is unsecured and due to Toysrus declaring bankruptcy, there is no indication that the Canadian operations will ever see that money again. Just to give any reader an idea of how massive this amount is for Toysrus Canada, this $101M unsecured loan is a quarter the size of the $400M debt coming to term soon for TRU USA which caused the later to file for Chapter 11. And this massive $101M amount was given from a subsidiary that only has 10% of the market the US has. This explains how a company which would have been autonomous is instead very much linked financially and how Toysrus going down is dragging the subsidiary down with it.
If you are interested in legal talk, the full article has you covered and you can find it here.
I conclude my thesis by saying that Batman rules. Oh wait, thats not at all what we were talking about.
But you know, its not just my TRU. While I do preffer showing pics of TRU since it look more vast and impressive, my local walmarts arent shabby either to the point where all is not lost if I only have Walmart to rely on in the future.
