Fitch: Action unlikely for Toys 'R' Us

Fitch Ratings said it does not anticipate taking any immediate rating action following Toys 'R' Us - Delaware, Inc.'s receipt of a notice of default from an investment adviser to holders of more than 25% of its $200 million of 8¾% debt due 2021.

The outlook is negative.

Fitch said Toys Delaware has paid all amounts due on this debt and it believes the notice of default is without merit.

As such, the outcome of this action is uncertain, though it could be resolved through a proceeding by a majority of the holders of the debentures or through the courts. Toys Delaware could also resolve the notice of default by repaying the debt with proceeds from its revolving credit facility.

Fitch noted that the company's $2 billion revolver is estimated to have more than enough capacity to repay the debt even at the company's seasonal borrowing peak this fall.

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