FAO Says Filing Depends on Lender

FAO Inc., the owner of FAO Schwarz and Zany Brainy toy stores, said it will file for bankruptcy protection if its lender doesn’t relax borrowing restrictions.

FAO asked Wells Fargo Retail Finance, the company’s lender, to relax recently imposed conditions, the toy retailer said. Rapid deterioration of its ability to get financing from alternative sources prompted the request, the company said.

Shares of the King of Prussia, Pa.-based company tumbled 81 cents, or 42%, to $1.10 on Nasdaq.