FAO Again Expects to Merge from Chapter 11

Now you see the financing, now you don’t–and now you do again. Multititle mailer FAO once again expects to emerge from chapter 11 bankruptcy protection this week.

The King of Prussia, PA-based parent company of toys retailer Zany Brainy, children’s products cataloger/retailer The Right Start, and toys cataloger/retailer FAO Schwarz, expects to close a transaction with an investor group, including Kayne Anderson Capital Advisors LP, which will buy $30 million in equity. The group is led by Hancock Partners and Kayne Anderson Capital Advisors and includes FAO chairman Fred Kayne and retailers Saks. Earlier this year, Saks said it would open FAO Schwarz shops in most of its department stores.

On April 7, FAO said it had arranged for $77 million to fund its emergence from bankruptcy, which had been set for Friday, April 18. But last week, the company said it lost the financing and its right to use cash that is collateral for its loans was set to expire, unless extended by the lenders.

FAO filed for Chapter 11 on Jan. 13. The toy retailer listed assets of $257 million and liabilities of $238 million.

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