EQT's Top-Toy files for restructuring

According to a statement, the executive management, board of directors and auditors were not able to approve continued operations without a guarantee of further capital. Meanwhile, Top-Toy's owners, who had previously injected additional capital into the company, decided not to further invest or increase financing in the current structure.

The company's restructuring plan includes closing down unprofitable stores and focusing on fewer and more modern stores, as well as developing a more competitive and efficient online shopping platform.

Top-Toy also intends to simplify its value chain and adjust fixed costs, including support functions at the head office in Vallensbæk in Denmark and in Hong Kong. In addition, the restructuring plan could result in job losses for 450 full-time employees across the business.

EQT will wait for the restructuring plan to be approved and concentrate on supporting Top-Toy through the process, the GP told Unquote.

EQT acquired a 75% stake in Top-Toy in a DKK 2.325bn deal from the founding Gjørup family in November 2015. The majority stake acquired by the GP was valued at around DKK 1.7bn and was the first investment made through its 2015-vintage €6.75bn EQT VII vehicle.

Established in 1963 and headquartered in Vallensbæk, near Copenhagen, Top-Toy is a toys retailer operating across the Nordic countries and Germany. The company operates the Fætter BR toy shop chain, Toys'R'Us outlets in the Nordic region, toy buyer Top-Toy Hong Kong, and the Norstar toy wholesaler, which sells to other toy retailers.

In total, the business runs 300 stores and an online shopping platform, and employs 6,000 staff across Denmark, Sweden, Norway, Finland, Iceland, Germany and Hong Kong. The company generated revenues of DKK 3bn, but reported negative operating profit of DKK -149m and a net loss of DKK -2bn in 2017.

According to a statement, the operating profit was negatively impacted by very disappointing Christmas sales in 2017 caused by the implementation of a new enterprise resource planning (ERP) system. Meanwhile, the net loss for the year was affected by a considerable write-down of goodwill of DKK 1.7bn, as well as a number of one-off expenses in relation to ERP implementation and organisational restructuring.

Last spring, the board of directors appointed a new executive management team led by CEO Per Sigvardsson and CFO Christian Jakobsen. They will now be in charge of leading the company's restructuring strategy.

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