"FIRST WHEREHOUSE NOW TOWER"
- Thread starter YAYKILLASMOKE
- Start date
here's the most recent story about the ordeal....
By Dale Kasler -- Bee Staff Writer
Published 2:15 a.m. PST Friday, February 6, 2004
Tower Records, the troubled retailer that's been on the auction block since last spring, is considering filing for bankruptcy protection in order to smooth the path toward a sale.
One source familiar with the thinking of Tower's creditors said they expect Tower to make a so-called "pre-packaged" bankruptcy protection filing in which most of the details of Tower's financial restructuring have already been approved by the major creditors. This source said the filing "is imminent."
A bankruptcy protection filing would make it easier for Tower to conclude a debt-for-equity swap that most bondholders endorsed months ago. The source said the swap would leave the bondholders in control of the company. In return, Tower's debt load, which forced the company into default last spring, would be greatly reduced, making the retailer a far more attractive acquisition prospect, this source said.
A source close to Tower confirmed that a pre-packaged filing could be made soon under Chapter 11 of the bankruptcy laws. This source said the filing would have no impact on store operations, employees or vendors.
It wasn't clear, however, whether a buyer would be disclosed when and if the filing is made, as is often the case in a pre-packaged bankruptcy.
West Sacramento-based Tower, a legend in the music business, has been in a financial free fall for years because of a massive slump that has afflicted many record store chains. Tower's plight has been the subject of industry speculation for months, and rumors went into high gear Thursday when the Reuters news service reported that Tower had failed to find a buyer and was preparing a bankruptcy protection filing.
Lloyd Greif, the investment banker hired to sell Tower, denied that report, saying talks with bidders are ongoing.
"We're continuing to work with several buyers with respect to putting together a sale transaction," said Greif, president of Greif & Co. of Los Angeles. "These discussions are at an advanced stage. I am certainly optimistic in that regard."
Members of Sacramento's Solomon family, the owners and founders of Tower, couldn't be reached for comment, nor could Tower's president and chief executive, E. Allen Rodriguez.
Tower's financial problems reached the crisis stage last spring, when it defaulted on a $110 million bond debt by missing a regularly scheduled $5.2 million interest payment. However, major bondholders held off on forcing Tower into bankruptcy protection or taking other action. Instead, they agreed in principle to a restructuring that would erase much of the debt burden and leave them with a controlling interest in the company.
Greif, in an earlier interview, said bondholders have been patient because they have faith the business will be sold and because Tower's day-to-day operations have shown improvement.
But even with support of the main bondholders, experts say Tower could find it necessary to go through the bankruptcy protection process in order to overcome any objections from those bondholders who might want to hold out for a better deal.
Without a bankruptcy protection filing, these dissidents could hold up any sale, said Victor Sahn, a Los Angeles bankruptcy lawyer who isn't involved in the Tower case. In bankruptcy court, however, the matter is put to a vote and the majority bondholders could get the deal done over the objections of the dissidents, he said.
"It's pre-packaged in the sense that the sale is kind of wired, and can get approved," Sahn said.
A pre-packaged filing also can remove some of the uncertainty surrounding the company and put a potential buyer at ease, said John Rizzardi, a Seattle bankruptcy lawyer and chairman of a group called the Turnaround Management Association.
While a conventional bankruptcy protection filing can languish in court for years, a pre-packaged case usually gets wrapped up in a couple of months, experts said.
Identifying Tower's buyer has become a parlor game in the music business. Sun Capital Partners Inc., a Florida-based investment firm that bought the Sam Goody record chain, has confirmed an interest in Tower.
An industry source said Yucaipa Cos., the Southern California conglomerate controlled by supermarket tycoon Ron Burkle, had been in the running, but its interest has diminished. Yucaipa owns Alliance Entertainment Corp., a major music wholesale distributor.
By Dale Kasler -- Bee Staff Writer
Published 2:15 a.m. PST Friday, February 6, 2004
Tower Records, the troubled retailer that's been on the auction block since last spring, is considering filing for bankruptcy protection in order to smooth the path toward a sale.
One source familiar with the thinking of Tower's creditors said they expect Tower to make a so-called "pre-packaged" bankruptcy protection filing in which most of the details of Tower's financial restructuring have already been approved by the major creditors. This source said the filing "is imminent."
A bankruptcy protection filing would make it easier for Tower to conclude a debt-for-equity swap that most bondholders endorsed months ago. The source said the swap would leave the bondholders in control of the company. In return, Tower's debt load, which forced the company into default last spring, would be greatly reduced, making the retailer a far more attractive acquisition prospect, this source said.
A source close to Tower confirmed that a pre-packaged filing could be made soon under Chapter 11 of the bankruptcy laws. This source said the filing would have no impact on store operations, employees or vendors.
It wasn't clear, however, whether a buyer would be disclosed when and if the filing is made, as is often the case in a pre-packaged bankruptcy.
West Sacramento-based Tower, a legend in the music business, has been in a financial free fall for years because of a massive slump that has afflicted many record store chains. Tower's plight has been the subject of industry speculation for months, and rumors went into high gear Thursday when the Reuters news service reported that Tower had failed to find a buyer and was preparing a bankruptcy protection filing.
Lloyd Greif, the investment banker hired to sell Tower, denied that report, saying talks with bidders are ongoing.
"We're continuing to work with several buyers with respect to putting together a sale transaction," said Greif, president of Greif & Co. of Los Angeles. "These discussions are at an advanced stage. I am certainly optimistic in that regard."
Members of Sacramento's Solomon family, the owners and founders of Tower, couldn't be reached for comment, nor could Tower's president and chief executive, E. Allen Rodriguez.
Tower's financial problems reached the crisis stage last spring, when it defaulted on a $110 million bond debt by missing a regularly scheduled $5.2 million interest payment. However, major bondholders held off on forcing Tower into bankruptcy protection or taking other action. Instead, they agreed in principle to a restructuring that would erase much of the debt burden and leave them with a controlling interest in the company.
Greif, in an earlier interview, said bondholders have been patient because they have faith the business will be sold and because Tower's day-to-day operations have shown improvement.
But even with support of the main bondholders, experts say Tower could find it necessary to go through the bankruptcy protection process in order to overcome any objections from those bondholders who might want to hold out for a better deal.
Without a bankruptcy protection filing, these dissidents could hold up any sale, said Victor Sahn, a Los Angeles bankruptcy lawyer who isn't involved in the Tower case. In bankruptcy court, however, the matter is put to a vote and the majority bondholders could get the deal done over the objections of the dissidents, he said.
"It's pre-packaged in the sense that the sale is kind of wired, and can get approved," Sahn said.
A pre-packaged filing also can remove some of the uncertainty surrounding the company and put a potential buyer at ease, said John Rizzardi, a Seattle bankruptcy lawyer and chairman of a group called the Turnaround Management Association.
While a conventional bankruptcy protection filing can languish in court for years, a pre-packaged case usually gets wrapped up in a couple of months, experts said.
Identifying Tower's buyer has become a parlor game in the music business. Sun Capital Partners Inc., a Florida-based investment firm that bought the Sam Goody record chain, has confirmed an interest in Tower.
An industry source said Yucaipa Cos., the Southern California conglomerate controlled by supermarket tycoon Ron Burkle, had been in the running, but its interest has diminished. Yucaipa owns Alliance Entertainment Corp., a major music wholesale distributor.
they filed and then were bought out by Transworld. I assume their bills were too much to pay so they opted to file for bankruptcy protection and then sell to TW
Transworld then started closing down underperforming stores... or stores in highly competitive markets such as the Merced location which was next to newly built Best Buy & Barnes & Noble stores along with an existing Wal-Mart location.
Transworld then started closing down underperforming stores... or stores in highly competitive markets such as the Merced location which was next to newly built Best Buy & Barnes & Noble stores along with an existing Wal-Mart location.