Tower Draws A Dozen Suitors7 Sep, 2006 By: Erik Gruenwedel
The number of potential bidders for bankrupt retail chain Tower Records and Video has narrowed from more than 40 to a dozen, according to a Sept. 1 filing with the U.S. Bankruptcy Court for the district of Delaware.
The original Aug. 20 bankruptcy filing listed West Sacramento, Calif.-based Tower's debts and assets in excess of $100 million each.
A meeting — held Sept. 6 regarding bidding procedures, notice of auction and the sale of Tower's assets — was to include objections from numerous unsolicited creditors, mainly landlords, who were concerned about the limited time available to examine the bids.
Christopher DiMauro, managing director with Houlihan Lokey Howard & Zukin, the Los Angeles-based investment banker Tower hired in March to sell the company, reiterated in the filing that three unidentified interested parties submitted letters of intent, conducted due diligence and had meetings with Tower's management.
Other unidentified interested parties have apparently opted for an auction of Tower's assets.
Entertainment retail conglomerate Trans World Entertainment, which earlier this year acquired bankrupt Musicland Holding Corp., is reportedly a frontrunner for the troubled music chain.
“It is my opinion that Tower has been adequately marketed to potential purchasers,” DiMauro wrote in the filing.
DiMauro said it was “imperative” Tower be sold quickly so the potential purchaser could take advantage of the fourth-quarter “critical seasonal sales period” in which Tower “realizes 32% of its income.”
The filing stated any sale of Tower after Oct. 9 would diminish the value of Tower's depleted assets and inventory and would require the purchaser to invest substantially in the short term in building up the chain's inventory.
“Extended payment terms with trade creditors … are essential, and uncertainty concerning the direction of this [case] will hamper a prospective purchaser's ability to obtain appropriate payment terms,” DiMauro wrote.
A spokesperson for Tower was not available for comment.