{"version":"1.0","scenario":"TRU-2006","title":"Toys\"R\"Us — The LBO Trap","brief":"You are about to assume the role of CEO of Toys\"R\"Us in February 2006.\n\nSITUATION: Toys\"R\"Us was taken private in a leveraged buyout in July 2005 by KKR, Bain Capital, and Vornado Realty. The LBO loaded $5.3 billion of debt onto the company. Annual debt service is approximately $400M, consuming most free cash flow.\n\nCOMPANY AT HANDOVER (Feb 2006):\n- Revenue: $11.2B | EBITDA: ~$780M | Cash: ~$1.0B\n- Net Debt/EBITDA: 7.2x — covenant breach triggers at 8.5x\n- Babies'R'Us: ~75% of EBITDA from ~15% of sales — underinvested jewel asset\n- E-commerce: Amazon exclusivity deal expires Q1 2006. No proprietary digital platform exists.\n- 585 US stores | PE owners want an IPO exit — board approval required for major decisions\n\nCOMPETITIVE CONTEXT: Walmart is #1 US toy seller. Amazon Prime launched Feb 2005. E-commerce is accelerating. Digital capability is zero.\n\nSIMULATION WINDOW: Q1 2006 – Q3 2017. You face 17 major decision points. You do not know the future. From 2010 onwards you may choose to resign as a strategic decision.","companyAtHandover":{"date":"2006-Q1","revenue":11200,"ebitda":780,"cash":1000,"totalDebt":5300,"annualDebtService":400,"netDebtToEbitda":7.2,"covenantBreachAt":8.5,"ecomRevShare":1.5,"storeCount":585},"simulationWindow":{"start":"2006-Q1","end":"2017-Q3"},"decisionCount":17,"bankruptcyDate":"2017-Q3","rules":["You do not know the future. You operate only on information available at each decision point.","From 2010 onwards you may choose to resign as a strategic decision.","Mandate is self-declared based on this brief. No archetype is assigned.","Bankruptcy triggers when ND/EBITDA > 8.5x AND cash < annual debt service simultaneously."],"mode":"blind"}