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Tower Records Out of Chapter 11

Most of the 93-store chain is now owned by a group of creditors. Sun Capital is said to be among the suitors.

March 16, 2004|From Associated Press

WEST SACRAMENTO — Music retailer Tower Records emerged from bankruptcy proceedings Monday with its creditors owning 85% of the company, its debt newly trimmed by $80 million and a last hurdle cleared on the way to selling itself.

The 93-store chain, which got its start in 1960 during the "Twist" dance craze, completed the process in near-record time, resurrecting itself only 35 days after filing for a Chapter 11 reorganization in U.S. Bankruptcy Court in Wilmington, Del.

Monday's action means a group of creditors led by London-based Barclays Bank, and including Highland Capital Management of Dallas, AIG Global Investment Corp. of New York and MW Post Advisory Group in Los Angeles now runs West Sacramento-based Tower Records.

Under terms of the restructuring, Tower's founder Russ Solomon, 78, and other family members who started and ran the privately held company will retain 15% ownership.

Los Angeles investment banker Lloyd Greif, meanwhile, has declined to name Tower's possible suitors, saying only that many firms are interested.

But a source close to the Tower situation said one possibility was Florida-based Sun Capital Partners Inc., which last year bought Best Buy Co.'s Musicland chain, the owner of the Sam Goody stores. Others include Yucaipa Cos. of Los Angeles and Hicks, Muse, Tate & Furst Inc. of Dallas. The Florida firm did not return a telephone call, while spokesmen for the Los Angeles and Dallas firms declined to comment.

Monday's court action marks the latest chapter for the Tower chain, which launched the music megastore and became an international cultural icon only to stumble from changes in recent years that plunged the music industry into turmoil.

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