(Adds details on non-payment risk for Mattel and Hasbro)
Sept 18 (Reuters) - Shares of Mattel Inc and Hasbro Inc, the two largest U.S. toy makers, fell on Monday on concerns that retailer Toys "R" Us, a major customer, could be filing for bankruptcy protection before the holiday sales season.
In the latest sign of distress that has ripped through traditional brick-and-mortar retailers, sources said late on Friday that Toys "R" Us was working to put together a loan to fund its operations in a potential Chapter 11 filing.
Reorg Research, which provides news and analysis on the distressed debt market, said on its website that a bankruptcy filing could be made in Virginia as soon as Monday.
Toys "R" Us declined to comment. Mattel and Hasbro did not respond to requests for comment.
Toys "R" Us is one of the three largest customers for both Mattel and Hasbro, according to the companies' most recent annual reports. The other two are Wal-Mart Stores Inc and Target Corp.
Mattel, the world's largest toymaker, said in its annual report that it typically makes sales on credit, without collateral, and it warned that a bankruptcy filing by any major customer could significantly affect revenue and profitability.
"If there is any kind of bankruptcy filing, it will have a major disruption for all of the toy suppliers," said Lutz Muller, chief executive of toy retail consultancy Klosters Trading Corp. "Toys 'R' Us needs to have money in place to get merchandise on the shelves ahead of the holiday season."
The retailer's cost of sales for the fourth quarter is estimated at $3 billion, he said. Toys "R" Us is the second-largest U.S. toy retailer behind Amazon.com Inc, according to data compiled by Muller.
Shares of Barbie maker Mattel closed down 6.2 percent at $14.87, extending recent losses after disappointing results and a slashed dividend payout to fund a turnaround strategy.
Shares of No. 2 U.S. toymaker Hasbro, which sells Nerf and Transformers and has outperformed Mattel this year, ended down 1.7 percent at $93.24.
"Mattel and Hasbro are in the same boat in terms of the amount of inventory that goes to Toy 'R' Us, but a filing by Toys could potentially delay Mattel's turnaround," said Morningstar analyst Jaime Katz.
Both Mattel and Hasbro get roughly 10 percent of their revenue from Toys "R" Us. In their 2016 annual reports, Mattel said payments on only 1.4 percent of its total receivables was in doubt, while Hasbro cited 1.3 percent.
Suppliers of other retailers that have filed for bankruptcy this year, such as Payless ShoeSource, have received only pennies on the dollar. (Reporting by Tracy Rucinski in Chicago; Additional reporting by Tom Hals in Wilmington, Delaware, and Jessica DiNapoli in New York; Editing by Leslie Adler and Richard Chang)