Moody's Investors Service assigned ratings to four debtor-in-possession ("DIP") credit facilities of affiliated entities of Toys 'R' Us, Inc. Ratings are outlined below:

Toys 'R' Us-Delaware, Inc. (DIP)

• $1.85 billion DIP ABL revolving credit facility at Baa3=
• $450 million DIP ABL FILO credit facility at Baa3
• $450 million DIP Term Loan at Ba2

TRU Taj LLC (DIP)

• $375 million DIP Notes at Ba3

Proceeds of the facilities will be used to refinance certain pre-petition debt at various affiliated entities of Toys "R" Us, Inc., (total pre-petition debt is approximately $5.625 billion) as well as fund the company through the Chapter 11 process. Toys "R" Us, Inc. and various subsidiaries and affiliates filed for Chapter 11 bankruptcy on September 18, 2017. Moody's withdrew all ratings of Toys "R" Us, Inc. following the Chapter 11 filing.

Ratings Rationale

The Baa3 rating assigned to the Toys "R" Us Delaware DIP ABL/FILO focuses on the collateral package consisting primarily of inventory and Canadian real estate assets, guarantor structure, and the proportion of pre-petition debt it represents, which Moody's estimates is around 33%.

The Ba2 rating assigned to the Toys "R" Us Delaware DIP Term Loan considers the real estate as its primary collateral, relying on unencumbered real estate that includes a mix of owned, ground leased, and leased stores, and distribution centers, as well as pledged equity value from the parents of Propco I and Propco II. Other collateral includes, but is not limited to, the intellectual property, a second lien in the assets securing the ABL/FILO, a pledge of the equity of Wayne Real Estate Holding Company, which is the direct parent of Propco I, and a pledge of 65% of Canada equity. The guarantor structure also adds value. An additional rating factor is the percentage of pre-petition debt this facility represents, which Moody's estimates is around 9%.

The Ba3 rating assigned to the TRU Taj LLC (DIP) Notes is based on the heavy collateral reliance on European real estate and the equity interest in the Asia joint venture. A favorable feature is the $120 million in escrowed cash. Upstream and downstream guarantees add value to the structure as well. Moody's estimates this facility as representing around 7% of pre-petition debt.

The Chapter 11 filing occurred following a "vendor squeeze" that resulted from a loss of confidence in Toys "R" Us. Toys has been hampered by a persistently high debt load following its 2006 leveraged buy-out by affiliates of Kohlberg, Kravis, Roberts, Vornado, and Bain Capital, with around $6 billion in debt funding the transaction. In addition to the high debt load, Toys has struggled with an almost steady cadence of refinancings, culminating in 2016's exchange, which was deemed a distressed exchange, and left Toys with "stub" maturities due in 2018. It was the attempt at refinancing these "stub" facilities that triggered the issues with vendors and trade creditors.

The principal methodology used in these ratings was Debtor-In-Possession Lending published in March 2009. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Toys "R" Us, Inc. is the world's largest dedicated toy retailer, with annual revenues of around $11 billion. Pre-petition, it was owned by affiliates of Kohlberg, Kravis, & Roberts, Vornado, and Bain Capital. This rating is assigned on a point-in-time basis and will be withdrawn as soon as practicable, before which it is subject to monitoring.

This rating is assigned on a point-in-time basis and will be withdrawn as soon as practicable, before which it is subject to monitoring.