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Struggling Toy Maker Slashes Work Force

December 05, 1987|Associated Press

FREMONT, Calif. — Ailing toy maker Worlds of Wonder Inc., struggling to meet creditor demands three weeks before Christmas, said Friday that it has laid off nearly half the company work force.

Officials of the once prosperous maker of Lazer Tag toy guns and Teddy Ruxpin talking bears also confirmed that the company has not paid $3.4 million in interest due last Tuesday on its convertible subordinated debentures, a type of debt security that can be converted into common stock.

Worlds of Wonder executives met Thursday with 150 of the company's largest creditors to discuss its financial crisis. They subsequently released a press statement confirming the layoffs and delinquent interest payment.

The 197 layoffs reduce the company's worldwide staff to 211 employees, down from a high of more than 600.

Spokeswoman Leslie Wat declined to comment on whether Worlds of Wonder may further pare down its operations through selloffs. She said the layoffs "will help" in recovery efforts, although the company remains unable to make the interest payments.

Expects Restructuring

"What we're saying is we need some time to come up with a reorganization plan," she said, adding that Worlds of Wonder is not contemplating bankruptcy.

An analyst said a restructuring is inevitable.

The Thursday meeting at a hotel near San Francisco International Airport involved creditors representing about 90% of Worlds of Wonder's outstanding foreign and domestic trade debt. Among them were several dozen Asian businessmen representing five Hong Kong toy manufacturers that are owed a total of $40 million.

Worlds of Wonder said the creditors formed a committee of nine representatives to "facilitate communications with the company" and to work with it and banks to develop a debt-repayment program.

The creditors, who had to sign two-page non-disclosure agreements before being allowed into the meeting, declined to comment. They could force the cash-poor company to seek protection under federal bankruptcy law.

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