Fitch lowers Toys 'R' Us

Fitch Ratings said it downgraded and removed from Rating Watch negative the rating of Toys "R" Us Inc.'s senior notes to CCC from BB following the completion of the buyout of the company for $6.6 billion by a group consisting of KKR, Bain Capital and Vornado Realty Trust.

The outlook is negative.

Based on public disclosures, the $6.6 billion buyout is being financed with an equity infusion of $1.2 billion, a $2 billion bridge loan, domestic secured borrowings of $1.3 billion, and European secured borrowings of $1 billion, with the balance of $1.1 billion assumed to be financed with the company's existing cash. All of this new debt is at the operating company level, placing it ahead of Toys "R" Us' existing $1.8 billion of senior unsecured notes, which are at the holding company level.

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