First Meeting of Creditors 31 May 2018 Toys R Us Australia Agenda - PowerPoint PPT Presentation

DRAFT Toys “R” Us (Australia) Pty. Ltd. (“TRU”) Babies “R” Us (Australia) Pty. Ltd. (“BRU”) (Both Administrators Appointed) (collectively “Toys "R" Us Australia”) First Meeting of Creditors 31 May 2018 Toys “R” Us Australia

Agenda Opening Meeting formalities  Resolution (concurrent meetings)  Purpose of meeting  Declaration of Independence, Relevant Relationships and Indemnities (DIRRI)  Role of the Voluntary Administrators  Voluntary Administrators timeline and extension of the convening period  Toys "R" Us Australia and events leading to the appointment of Voluntary Administrators Background, timeline and structure  Financial performance and position  Administration Administrators’ actions since appointment  Strategy going forward  Deed of Company Arrangement v Liquidation  Questions  Resolutions (Committee and replacement of Voluntary Administrators ) Toys “R” Us Australia 2

Meeting formalities Open meeting  Administrator Chairperson: Insolvency Practice Rules 75-50  Introductions:  Jason Preston (Administrator)  Jason Ireland (Partner)  Peter Bowden (Gilbert + Tobin)  Quorum: Insolvency Practice Rules 75-105 for TRU  Quorum: Insolvency Practice Rules 75-105 for BRU  Attendance register  Voting (on the voices & using voting slips)  Time and place convenient: Insolvency Practice Rules 75-30  Proofs of debt and proxies  Toys “R” Us Australia 3

Resolution – meetings to be held concurrently T RU: “ That the meetings of creditors of each of the Toys "R" Us Australia companies, being: Toys “R” Us (Australia) Pty. Ltd.  Babies “R” Us (Australia) Pty. Ltd.  (Both Administrators appointed) be held concurrently.” B RU: “ That the meetings of creditors of each of the Toys "R" Us Australia companies, being: Toys “R” Us (Australia) Pty. Ltd.  Babies “R” Us (Australia) Pty. Ltd.  (Both Administrators appointed) be held concurrently.” Toys “R” Us Australia 4

Purpose of meeting Convened under Section 436E of the Corporations Act to:  determine whether to appoint a Committee of Inspection to each Company,  and, if so, who are to be the Committee members; and consider the removal of the Administrators and appoint an alternative  Administrator who has consented to act This meeting has no authority to consider any other business  At the second statutory meeting, a decision is made regarding Toys "R" Us  Australia’s future Toys “R” Us Australia 5

Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) and remuneration DIRRI DIRRI dated 21 May 2018 - distributed with notice of meeting  DIRRI tabled is available for inspection  Assessment identified no real or potential risks to our independence  Undertook contingency planning in relation to solvency and the alternative  options available following Toys “R” Us Australia’s ultimate parent company filing for Chapter 11 bankruptcy protection in the United States No work undertaken for BRU  Remuneration Schedule of rates provided with meeting information  Comprehensive remuneration report will be provided prior to the second meeting  of creditors Toys “R” Us Australia 6

Role of the Voluntary Administrators Appointed by directors, and represent the interests of all stakeholders  Directors’ powers are suspended and Administrators are in control of the  companies Responsible for the ongoing trading of the business  Running a sale campaign for all or part of the business or its assets  Holding meetings of creditors  Investigating the reasons for failure of the business  Making recommendations about the future of the companies  Toys “R” Us Australia 7

Voluntary Administration timeline Application likely to be made to extend the convening period Today’s meeting Appointment Within 8 business days Within 20 business days Within 25 business days (or longer if extended) (or longer if extended) 21 May 2018 19 June 2018 Administrators Written notice of take control of 31 May 2018 26 June 2018 second meeting company and its ADMINISTRATION 1 st meeting of mailed to creditors 2 nd meeting of assets and employees creditors held creditors held Purpose: Options: (i) Replace VA - DOCA 23 May 2018 19 June 2018 (ii) Consider the - Liquidation Written notice of Administrators appointment of first meeting - Return to Report issued with a Committee of mailed to creditors directors recommendations Inspection and employees The June public holiday impacts the Voluntary Administration timeline Toys “R” Us Australia 8

Extension of the convening period Process Administrators will likely make an application to Court to extend the convening  period Purpose Application to extend the convening period allows time for the sale campaign to  be completed and sufficient time for interested party/parties to submit a Deed of Company Arrangement proposal Alternatively, allows sufficient time to maximize value achieved from a stock  liquidation Toys “R” Us Australia 9

Background As at our appointment Toys "R" Us Australia had 44 stores in Australia  Toys "R" Us Australia is part of the global Toys "R" Us group based in the United  States The global group was founded in 1948  Toys "R" Us opened its first Australian store in 1993  In 2005, the global Toys "R" Us group was bought by three private equity firms  and taken private The global group has reportedly not made an annual profit since 2013  In 2017 the United States parent and related entities filed for Chapter 11  bankruptcy protection in the United States. Following this, some global entities have been sold and others have been wound down through insolvency processes and stores closed Toys “R” Us Australia 10

Timeline 2005 September December February March 2018 April 2018 2017 Leveraged 2017 2018 United States Canadian UK group private equity Toys "R" Us UK group business business sold proposes a buy out to Inc and appoints announces delist and related Creditors administrators closing all US take the entities file for Voluntary and stores April 2018 Arrangement company Chapter 11 announces German, to restructure private bankruptcy closing all UK Austrian, its store protection in stores Swiss business the United portfolio sold States FY17 Late 2017 and 21 May 21 May Toys "R" Us early 2018 2018 2018 Australia – Sales process Remaining Voluntary Prelim results run Toys ‘R’ Us bidder Administrators EBITDA loss Australia as a withdraws appointed to $5.5m standalone from sales Toys ‘R’ Us business and process Australia as part of an Asia/Pacific sales campaign Toys “R” Us Australia 11

Corporate structure Toys ‘R’ Us Inc (US registered parent) European North American Global support service OBLIGOR GROUP operations operations operations (multiple entities) (multiple entities) (multiple entities) Wilmington Trust, National Association & Wilmington Savings Fund Society, FSB as trustee and TRU Australia Holdings, Geoffrey LLC collateral trustee for the Taj DIP (US owner of Toys “R” Us & LLC noteholders and Taj noteholders (US registered entity) Babies “R” Us trademarks) Toys “R” Us (Australia) Pty. Ltd. Licence agreement for use of trademarks Babies “R” Us (Australia) Pty. Ltd (dormant) Toys “R” Us Australia 12

Operations Operations and assets Creditors  44 stores, head office and  Trade and other creditors distribution centre (excluding landlords): c.$3m TRU  c.2,000 employees  Employee creditors (excluding (including casual) redundancy): c.$3m  Inventory of c.$60m (bv)  Intercompany creditors: c.$90m  Fixed assets of c.$16m (bv)  Secured creditors: guarantee claim  Ceased trading some time ago  Trade creditors: $0m BRU  Understood to hold no assets  Employee creditors: $0m  Secured creditors: guarantee claim Toys “R” Us Australia 13

Financial performance - TRU Summary of financial performance $'million FY15 FY16 FY17 Number of Stores 36 38 44 Store revenue 247.0 254.8 249.2 Online revenue 18.3 22.0 39.1 Total revenue 265.3 276.8 288.3 Direct costs (166.2) (172.0) (181.3) Gross profit 99.1 104.8 107.0 Gross margin 37% 41% 43% Overheads (95.0) (97.2) (104.3) EBITDA (before intercompany) 4.1 7.6 2.7 Royalty and intercompany (5.7) (5.6) (8.2) EBITDA (after intercompany) (1.6) 2.0 (5.5) Source: FY15, FY16, FY17 accounts. FY ending January Figures are preliminary / unaudited Toys “R” Us Australia 14

Financial position – TRU Summary of financial position $'million FY16 FY17 Cash & cash equivalents 8.0 22.2 Trade & other receivables 2.4 2.0 Inventory 50.3 56.3 PP&E 14.5 16.5 Other assets 4.1 7.1 Total assets 79.4 104.1 Trade & other payables 36.8 29.3 Borrowings 29.5 79.3 Provisions 16.6 16.7 Other liabilities 2.5 1.8 Total liabilities 85.4 127.2 Net assets (6.0) (23.1) Source: FY16, FY17 accounts (FY ending January) Figures are in draft, preliminary and unaudited The figures above do not include debt secured by guarantee Toys “R” Us Australia 15