Friday, April 18, 2003 | 10:08 a.m.
PHILADELPHIA -- Toy retailer FAO Inc. said Thursday it has secured the financing it needs to emerge from bankruptcy and hopes to do so early next week.
A reorganization plan approved by U.S. Bankruptcy Judge Lloyd King at a hearing in Wilmington, Del., satisfies concerns raised by FAO's lenders and investors and preserves millions of dollars in new funding, company spokeswoman Renee Hollinger said.
"We worked through the concerns the equity group had and we will hopefully emerge" from Chapter 11 bankruptcy on Tuesday, Hollinger said.
FAO owns the FAO Schwarz chain of toy stores, including a store at the Forum Shops at Caesars on the Las Vegas Strip.
FAO has obtained $77 million in financing from a consortium led by Fleet. A group of investors led by Kayne Anderson Capital Advisors has also agreed to buy $30 million in preferred stock.
The company, based in the Philadelphia suburb of King of Prussia, also said Thursday it had obtained a one-week extension to use its cash collateral to fund operations.
If FAO fails to emerge from bankruptcy protection, the judge authorized the company to liquidate its assets at auction next week. But Hollinger called that a standard provision and said the company expects to stay afloat.
FAO stock rose 6 cents to close at 20 cents a share Thursday on the Nasdaq Stock Market.
The company filed for bankruptcy protection in January after struggling to compete with discount chains such as Wal-Mart that sold some of the same toys at lower prices. FAO listed assets of $257.4 million and liabilities of $238.4 million.
FAO also owns Zany Brainy and The Right Start chains.