Tower Records Files for Chapter 11 [duplicate]
02-09-04, 10:34 AM
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Tower Records Files for Chapter 11
In this morning's news:
http://news.yahoo.com/news?tmpl=stor...ankruptcy_dc_4
Tower Records Files for Chapter 11
2 hours, 25 minutes ago Add Business - Reuters to My Yahoo!
NEW YORK (Reuters) - Tower Records Inc. on Monday filed for Chapter 11 bankruptcy protection, after the music and entertainment chain has so far proven unable to cope with competition from large retailers, digital downloading and file copying.
The pre-packaged bankruptcy filings for Tower and its parent, privately-held MTS Inc., cap a long period of distress for the money-losing chain of 93 stores, which sources say was unable to find a suitable buyer. MTS said Tower's employees, customers and vendors will not notice operating changes because of the filing.
"Our issues are financial, not operational," Tower Chief Executive E. Allen Rodriguez said in a statement. He said the filing will "provide the greatest recovery for our bondholders" and give Tower a viable capital structure.
Tower, which opened its first store in 1960, has been hurt from stiff competition from retailers as Wal-Mart Stores Inc. (NYSE:WMT - news) and Best Buy Co. (NYSE:BBY - news), and high lease costs. Digital downloading and file copying crimped sales and led to rising losses, the company has said.
MTS, which is based in West Sacramento, California, and 15 affiliates sought protection from creditors from the U.S. Bankruptcy Court in Wilmington, Delaware. MTS listed more than $100 million of assets and more than $100 million of debts in its filing.
MTS expects to emerge from Chapter 11 within 45 to 60 days. It plans to swap $110 million of senior debt for $30 million of new senior notes and an 85 percent equity stake. Existing equity holders would retain a 15 percent stake.
The CIT Group/Business Credit Inc. and other lenders are providing up to $100 million of debtor-in-possession financing to keep MTS operating as it reorganizes.
FOUNDING FAMILY
The swap would switch control of MTS to creditors from the founding Solomon family, which individually or through trusts owns nearly all of MTS, a court filing shows.
All shareholders and holders of more than 97 percent of the company's subordinated bonds have approved the bond restructuring plan, MTS said.
MTS last June defaulted on a $110 million bond when it decided not to pay $5.2 million of interest. The company hired investment bank Jefferies & Co. (NYSE:JEF - news) to negotiate with bondholders, and Los Angeles-based Greif & Co. to help find a buyer for Tower. A year earlier, the company sold its strong-performing Japanese division for $129 million.
In a regulatory filing last June, MTS reported $442 million of debt, including $194.5 million of long-term bond debt and $247.4 million in operating leases. The company posted a net loss of $39.8 million for the nine months ending April 2003, as sales fell 9 percent from a year earlier to $428.9 million.
http://news.yahoo.com/news?tmpl=stor...ankruptcy_dc_4
Tower Records Files for Chapter 11
2 hours, 25 minutes ago Add Business - Reuters to My Yahoo!
NEW YORK (Reuters) - Tower Records Inc. on Monday filed for Chapter 11 bankruptcy protection, after the music and entertainment chain has so far proven unable to cope with competition from large retailers, digital downloading and file copying.
The pre-packaged bankruptcy filings for Tower and its parent, privately-held MTS Inc., cap a long period of distress for the money-losing chain of 93 stores, which sources say was unable to find a suitable buyer. MTS said Tower's employees, customers and vendors will not notice operating changes because of the filing.
"Our issues are financial, not operational," Tower Chief Executive E. Allen Rodriguez said in a statement. He said the filing will "provide the greatest recovery for our bondholders" and give Tower a viable capital structure.
Tower, which opened its first store in 1960, has been hurt from stiff competition from retailers as Wal-Mart Stores Inc. (NYSE:WMT - news) and Best Buy Co. (NYSE:BBY - news), and high lease costs. Digital downloading and file copying crimped sales and led to rising losses, the company has said.
MTS, which is based in West Sacramento, California, and 15 affiliates sought protection from creditors from the U.S. Bankruptcy Court in Wilmington, Delaware. MTS listed more than $100 million of assets and more than $100 million of debts in its filing.
MTS expects to emerge from Chapter 11 within 45 to 60 days. It plans to swap $110 million of senior debt for $30 million of new senior notes and an 85 percent equity stake. Existing equity holders would retain a 15 percent stake.
The CIT Group/Business Credit Inc. and other lenders are providing up to $100 million of debtor-in-possession financing to keep MTS operating as it reorganizes.
FOUNDING FAMILY
The swap would switch control of MTS to creditors from the founding Solomon family, which individually or through trusts owns nearly all of MTS, a court filing shows.
All shareholders and holders of more than 97 percent of the company's subordinated bonds have approved the bond restructuring plan, MTS said.
MTS last June defaulted on a $110 million bond when it decided not to pay $5.2 million of interest. The company hired investment bank Jefferies & Co. (NYSE:JEF - news) to negotiate with bondholders, and Los Angeles-based Greif & Co. to help find a buyer for Tower. A year earlier, the company sold its strong-performing Japanese division for $129 million.
In a regulatory filing last June, MTS reported $442 million of debt, including $194.5 million of long-term bond debt and $247.4 million in operating leases. The company posted a net loss of $39.8 million for the nine months ending April 2003, as sales fell 9 percent from a year earlier to $428.9 million.
02-09-04, 11:17 AM
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Originally posted by Josh Hinkle
Hopefully FYE will be the next price gouging chain to go bankrupt.
Hopefully FYE will be the next price gouging chain to go bankrupt.
02-09-04, 11:25 AM
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Retired
I really don't get how these places stay in business. I mean I was killing time in FYE the other week, and Coldplay's first CD was $18.99! I bought it a week later for $9.99 at Target.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
02-09-04, 11:30 AM
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Originally posted by Josh Hinkle
I really don't get how these places stay in business. I mean I was killing time in FYE the other week, and Coldplay's first CD was $18.99! I bought it a week later for $9.99 at Target.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
I really don't get how these places stay in business. I mean I was killing time in FYE the other week, and Coldplay's first CD was $18.99! I bought it a week later for $9.99 at Target.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
02-09-04, 12:16 PM
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Originally posted by Josh Hinkle
I really don't get how these places stay in business. I mean I was killing time in FYE the other week, and Coldplay's first CD was $18.99! I bought it a week later for $9.99 at Target.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
I really don't get how these places stay in business. I mean I was killing time in FYE the other week, and Coldplay's first CD was $18.99! I bought it a week later for $9.99 at Target.
They do have a very good selection, but hell if you want something obscure that you can't find at Target, Best Buy etc. you can generally still order it online cheaper than in one of these stores, even after shipping.
The labels need to change the way they do business all the way down to the retail end of the industry . But they are too arogant to see the writing on the wall. They keep saying "you're going to over pay and you're going to like it". Sorry, I'm not paying at all. I'll keep buying movies and video games. Unlike the record industry they are giving me a better VALUE for me money.
