Toys"R"Us ANZ : Convertible Securities Prospectus

Prospectus

Toys'R'Us ANZ Limited ACN 063 886 199

Issue of up to 863,500 Convertible Notes to Mercer with a face value of

$1 per Convertible Note (the Offer)

This is an important document and should be read in its entirety. If, after reading this document, you have any questions about the securities being offered for issue under it or any other matter, you should contact your stockbroker, solicitor, accountant or other professional adviser.

This is a transaction-specific prospectus issued in accordance with section 713 of the Corporations Act 2001 (Cth) and ASIC Corporations (Offers of Convertibles) Instrument 2016/83.

Legal Adviser

Table of contents

IMPORTANT NOTICES --------------------------------------------------------------------------------------	1
Letter from the Chairman ----------------------------------------------------------------------------------	1
1	Investment overview-------------------------------------------------------------------------------	2
2	Details and effect of the Offer---------------------------------------------------------------------	6
3	How to apply ----------------------------------------------------------------------------------------	8
4	Financial information------------------------------------------------------------------------------	10
5	Risk factors-----------------------------------------------------------------------------------------	13
6	Material agreements ------------------------------------------------------------------------------	18
7	Additional information ----------------------------------------------------------------------------	22
Glossary -----------------------------------------------------------------------------------------------------	27
Corporate directory ----------------------------------------------------------------------------------------	29

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IMPORTANT NOTICES

General

This Prospectus is dated 9 July 2024. A copy of this Prospectus was lodged with ASIC on that date. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus or the merits of any investment under this Prospectus. No Convertible Notes will be allotted or transferred on the basis of this Prospectus after the expiry date. This Prospectus expires on XJuly 2025.

No person may give any information or make a representation about the Offer, which is not in this Prospectus. Information or representations not in this Prospectus must not be relied on as authorised by the Company, or any other person, in connection with the Offer.

This Prospectus provides information for Mercer to decide if it wishes to invest in TOY. Read this document in its entirety. Examine the assumptions underlying the risk factors that could affect the financial performance of TOY. Consider these factors carefully in light of your personal financial circumstances. Seek professional advice from your accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest. The Offer does not take into account the investment objectives, financial situation or the needs of Mercer.

Transaction Specific Prospectus

This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities and has been prepared in accordance with section 713 of the Corporations Act and ASIC Corporations (Offers of Convertibles) Instrument 2016/83. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to Mercer and professional advisers that Mercer may consult.

Risk Factors

Mercer should be aware that subscribing for Convertible Notes involves a number of risks. The key risk factors of which Mercer should be aware of are set out in section 5. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Shares in the future. Accordingly, an investment in the Company should be considered highly speculative. Mercer should consider consulting their professional advisers before deciding whether to apply for Convertible Notes pursuant to this Prospectus.

Electronic prospectus

This Prospectus is available electronically at www.toysrus.com.au. Electronic versions of this Prospectus should be downloaded and read in their entirety. Obtain a paper copy of the Prospectus (free of charge) by telephoning 07 3010 9393. Applications for Convertible Notes may only be made on the Application Form attached to this Prospectus or in its paper copy form downloaded in its entirety from www.toysrus.com.au.

Foreign selling restrictions

No action has been taken to register or qualify the Shares or the Offer in any jurisdiction outside Australia, or otherwise to permit a public offering of the Convertible Notes outside Australia.

The Prospectus does not constitute an offer or invitation in any jurisdiction where, or to any person to whom, the offer or invitation would be unlawful. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of those restrictions. Any failure to comply with the restrictions may constitute a violation of applicable securities laws.

Mercer warrants and represents that they will not offer or sell the Convertible Notes in the United States or in any other jurisdiction outside Australia, or to a United States person, except in transactions exempt from registration under the US Securities Act 1933 as amended, and in compliance with all applicable laws in the jurisdiction in which the Convertible Notes are offered and sold.

Forward-looking statements

Statements in this Prospectus may be forward looking statements.

Forward looking statements can be identified by the use of forward-looking terminology such as, but not limited to, 'may', 'will', 'expect', 'anticipate', 'estimate', 'would be', 'believe', or 'continue' or the negative or other variations of comparable terminology. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

The Directors' expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis. They are based on, among other sources, the examination of historical operating trends, data in the Company's records and other data available from third parties. There can be no assurance, however, that the Directors' expectations, beliefs or projections will give the results projected in the forward-looking statements. Mercer should not place undue reliance on these forward-looking statements.

Additional risk factors that could cause actual results to differ materially from those indicated in the forward-looking statements are set out in section 5.

Exposure period

The Company must not process Application Forms during the seven day period after the date of lodgement of this Prospectus with ASIC, in accordance with s727(3) of the Corporations Act. This period may be extended by ASIC for up to a further seven days. This exposure period enables the Prospectus to be examined by ASIC and market participants. Application Forms accepting offers for Convertible Notes which are received during the exposure period will not be processed until after the expiry of that period. No preference will be given to Application Forms received during the exposure period.

Disclosure of sale offer for convertible notes

The on-sale of Shares issued on exercise of the Convertible Notes which are issued under this Prospectus do not breach Part 6D.2 of the Corporations Act by relying on the relief provided under ASIC Corporations (Sale Offers That Do Not Need Disclosure) Instrument 2016/80.

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Privacy

The Company and the Share Registry collect, hold and use personal information received from you to communicate and provide services to Shareholders. The Company may disclose information to its agents, service providers (such as the Share Registry) and government bodies. The Company's privacy policy sets out how you may access, correct and update the personal information that the Company holds about you (by contacting the Share Registry), how you can complain about privacy related matters and how the Company responds to complaints.

Defined terms

Capitalised terms used in this Prospectus are defined in the Glossary.

Currency

Monetary amounts shown in this Prospectus are expressed in Australian dollars unless otherwise stated.

Photographs and diagrams

Photographs used in this Prospectus without descriptions are only for illustration. The people shown are not endorsing this Prospectus or its contents. Diagrams used in this Prospectus may not be drawn to scale. The assets depicted in photographs in this Prospectus are not assets of the Company unless otherwise stated.

THIS DOCUMENT IS IMPORTANT AND SHOULD BE READ IN ITS ENTIRETY

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Letter from the Chairman

9 July 2024

Dear Shareholder

This Prospectus relates to the redeemable, unsecured convertible notes (Convertible Notes) to be issued to Mercer Street Global Opportunity Fund II LP (Mercer) pursuant to a convertible securities agreement between TOY and Mercer dated 15 March 2024 (Convertible Securities Agreement).

Under the Convertible Securities Agreement, Mercer has agreed to advance to the Company an amount to be agreed in writing by the Company and Mercer of between $500,000 and not more than $3,500,000 (Subsequent Investment Amount). In consideration of this advance, the Company has agreed to issue to Mercer the Convertible Notes with an aggregate face value equal to 110% of the relevant Subsequent Investment Amount.

Mercer proposes to invest a further $785,000. Accordingly, the Company will issue up to 863,500 Convertible Notes with a face value of $1, being an aggregate face value of $863,500, to Mercer in accordance with the terms of the Convertible Securities Agreement.

Given the suspension of the Company's Shares in July 2023, this Prospectus has been prepared primarily for the purpose of the Offer being made in accordance with 713 of the Corporations Act to ensure that there are no trading restrictions on any subsequent sale of any shares issued on conversion of the Convertible Notes.

The Offer is only available to Mercer. An Application Form will be provided to Mercer only.

I encourage you to read this Prospectus in its entirety before making an investment decision.

Yours faithfully

Kelly Humphreys

Non-Executive Director

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1 Investment overview

1.1 Summary offer details

		Terms of Offer	Details
		Face value per Convertible Note	$1
		Conversion price per Convertible Note	As set out in the Mercer Convertible
			Securities Agreement
		Total number of Convertible Notes offered under this	863,500
		Prospectus
		Total face value for all Convertible Notes offered under	$863,500
		this Prospectus
1.2	Important dates
		Event		Date
		Prospectus date		9 July 2024
		Opening date		16 July 2024
		Anticipated date of allotment of Convertible Notes		17 July 2024
		Closing Date (5:00pm, Sydney time)		18 July 2024

All dates and times are subject to change and are indicative only. All times are to Sydney time. The Company reserves the right to vary these dates and times without notice.

Opening and closing dates are subject to the exposure period. ASIC may extend the exposure period by up to seven calendar days in which case the opening date for the offer and other dates may be varied accordingly without notice.

1.3 Use of funds

Proceeds from the issue of the Convertible Notes will be applied principally to support the investment in inventory, launch and acquisition of new brands to support House of Brands strategy, delivery of growth and investment in technology to support operational infrastructure.

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1.4 Shareholding structure

The following table shows the shareholding structure of TOY on completion of the Offer:

	Existing Convertible Notes on issue as		793,000
	at	9	July 2024 (the date of this
		Prospectus)
	Approximate Convertible Notes to be		863,500
	issued under the Offer
	Approximate total number of	1,656,500
	Convertible Notes after the Offer
	Ordinary Shares	115,690,728
	Options	6,105,290
	Service Rights	1,686,364
	Share Appreciation Rights	1,467,546
	Warrants	1

1.5 Potential questions and answers

Question	Answer	Section
Who is the issuer of	Toys'R'Us ANZ Limited ACN 063 886 199	Not applicable
this Prospectus?
What is the Offer?	The Offer is an issue of up to 863,500 Convertible	section 2.1
	Notes in TOY to Mercer with a face value of $1 per	and 2.2
	Convertible Note on the terms set out in the
	Convertible Securities Agreement.
What is the price of	The Convertible Notes have a face value of $1, with	section 2.1
the Convertible	an investment amount of $0.9091 each	and 2.2
Notes under the	(representing a total investment amount of
Offer?	$785,000 with a total face value of $863,500) and
	are convertible as set out in the Convertible
	Securities Agreement.

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Question	Answer	Section
What rights and	The key terms of the Convertible Notes include:	section 2.2
liabilities attach to	(a)	Convertible Notes are issued to Mercer in
the Convertible		accordance with the Convertible Securities
Notes?		Agreement;
	(b)	the face value of the Convertible Notes are $1
		each; and
	(c)	each Convertible Note will have a maturity
		date that is 15 months after the date of issue
		under this Prospectus (Maturity Date).
	The rights and liabilities attaching to all Convertible
	Notes are set out in the Convertible Securities
	Agreement.
What is the	The Company's financial position is set out in detail	section 4
Company's financial	in section 4 of this Prospectus.
position?
What risks are	An investment in TOY is subject to both general and	section 5
involved with an	specific risks which you should consider before
investment in the	making a decision to apply for Convertible Notes.
Company?	Key specific risks include:
	(a)	if TOY is unable to manage its indebtedness
		and the restrictions applicable to it as a result
		of this indebtedness, its ability to implement
		its business strategy may be impaired and the
		results of its operations and financial
		condition may be adversely affected;
	(b)	TOY may require additional funds to satisfy its
		existing and future debt facilities and to invest
		in its other activities and future projects;
	(c)	TOY is exposed to a range of operational risks
		including equipment failures and other
		accidents, industrial action or disputes, lease
		renewals, damage by third parties, floods,
		fire, major cyclone, earthquake, terrorist
		attack or other disaster which may have a
		material adverse impact on TOY's financial
		performance and cash flows;
	(d)	the sustainability and growth in the level of
		TOY's revenue and profit margins is
		dependent on its continued ability to secure
		and maintain relationships with customers
		and suppliers;
	(e)	disruption to any aspect of TOY's supply chain
		could have a material adverse impact on
		TOY's operational and financial performance;
	(f)	the failure of any of TOY's or its customers' IT
		systems, including inventory management
		systems, could have a significant impact on
		TOY's ability to trade;
	(g)	third parties, such as customers, suppliers
		and other counterparties to contracts may not

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Question	Answer	Section
		be willing or able to perform their obligations
		to TOY;
	(h)	any adverse change in TOY's existing
		relationships with key distributors and
		retailers could have a material adverse impact
		on its operations and financial performance;
	(i)	TOY relies on a range of parties for its
		product sourcing and licensing strategy. Any
		change in existing relationships (including
		termination of any key supply arrangements)
		or any change in terms or conditions of
		overseas suppliers and any change in the
		international political or economic
		environment may lead to material adverse
		changes to TOY's operational and financial
		performance; and
	(j)	the Company has a wide range of competitors
		including major international companies, and
		a large number of smaller companies. The
		actions of these competitors or changes in
		consumer preferences may adversely affect
		TOY's financial performance.
Is the Offer	The Offer is not underwritten.	section 2.1
underwritten?
Further questions	If you have questions about the Offer, please	section 2.10
	contact the Company Secretary on 07 3010 9393.

1.6 Important notice

This section is not intended to provide full details of the investment opportunity. Mercer must read this Prospectus in full to make an informed investment decision. The Convertible Notes under this Prospectus carry no guarantee of return of capital, return on investment, payment of dividends or on the future value of the Shares.

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2 Details and effect of the Offer

1. Purpose of prospectus
   The Company has been suspended from trading on the ASX for more than 5 days in the last 12 months and as a result was precluded from issuing a 'cleansing' notice in accordance with section 708A(5) of the Corporations Act to ensure the Convertible Notes (and Shares issued on conversion of the Convertible Notes) are not subject to on-sale restrictions. This Prospectus will remove the on-sale restrictions.
2. Overview
   The Offer is an issue of up to 863,500 Convertible Notes with a face value of $1 per Convertible Note to Mercer (before direct offer costs including fees paid to advisers and to providers of specific services to cover Share Registry, printing and postage costs).
   The Board intends to use the proceeds of the Offer to support the investment in inventory, launch and acquisition of new brands to support House of Brands strategy, delivery of growth and investment in technology to support operational infrastructure.
   The Offer is only available to Mercer and an Application Form will be provided to Mercer only.
   Mercer should be aware that an investment in TOY involves risks. The key risks identified by TOY are set out in section 5 of this Prospectus.
3. Underwriting
   The Offer is not underwritten.
4. Purpose of the Prospectus
   This Prospectus has been prepared primarily to facilitate the secondary trading of Shares issued on conversion of the Convertible Notes.
   Only Mercer is eligible to receive Convertible Notes under this Prospectus.
5. Impact on control
   The issue of the Convertible Notes under this Prospectus is not expected to have any material effect on the control of the Company.
6. Financial position
   The effect of the Offer on the financial position of the Company is set out in section 4.
7. Taxation considerations
   The taxation consequences of an investment in the Company depend upon your particular circumstances. You should make your own enquiries about the taxation consequences of an investment in the Company. If you are in doubt about the course you should follow, you should consult your accountant, stockbroker, lawyer or other professional adviser.

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