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MTS Seeks a Buyer for Tower Records

Deep-discounting rivals and declining sales of recorded music have weighed on the firm.

May 12, 2003|From Times Wire Services

SACRAMENTO — Tower Records, the storied music chain that made its name in the 1960s and launched the music megastore, reportedly is up for sale.

Tower has asked a Los Angeles investment banker to find a buyer, according to a published report.

The decision to sell family-owned Tower, which is laboring under an industrywide slump, comes 10 days after executives said they would delay a $5.2-million interest payment on bonds sold in 1998.

The delay, revealed by Tower and its parent company, MTS Inc., in a regulatory filing, indicated that the music retailer's restructuring over the last two years has brought only partial relief.

In that restructuring, Tower lowered its bank debt and obtained new bank loans.

MTS has had net losses of $172.2 million since August 1998 because of declining sales of recorded music.

The Sacramento-based retailer has been closing stores and selling operations. In October it sold its 52 stores in Japan for $129 million.

Tower Records, founded in 1960 by Russ Solomon, who was the company's chairman, had 105 stores at the end of its second quarter in January.

Solomon and his family have hired Greif & Co. to broker the sale, according to a report published Saturday in the Sacramento Bee. Lloyd Greif said he expected a quick sale.

Bondholders and other creditors have agreed to the proposed sale, said Greif, who is president of Greif & Co.

"Everybody to my knowledge is on board," he told the newspaper.

Tower's problems reflect troubles throughout the recording industry, which is struggling to attract fans who download from the Internet rather than buy from stores. Deep-discounting rivals haven't helped either.

The company's debt totals $358 million.

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