FAO Inc.’s efforts to emerge from Chapter 11 bankruptcy protection on April 18 hit a substantial obstacle when investors withdrew their proposed funding. The company had filed for protection on Jan. 13.
In early April, the King of Prussia, PA-based toy marketer received confirmation of $77 million in financing: $67 million was to come from a group of banks led by Fleet Retail Finance Inc., with another $10 million promised from Back Bay Capital Funding LLC.
Or so it thought. FAO Inc. said that “unexpected complications” in completing its exit funding caused these financiers to withdraw their offers. FAO was anticipating using the cash infusion to pay off loans that come due on April 18.
FAO is exploring other options, including obtaining replacement equity funding in order to complete its confirmed plan, a sale of all or portions of its operations and liquidation.
FAO operates three toy catalogs as well as retail outlets for its three brands: the FAO Schwarz Ultimate Toy Catalog, Right Start and Zany Brainy.
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