Trans World Makes Play For Musicland21 Feb, 2006 By: Holly J. Wagner
Trans World Entertainment Corp. has made a $104 million cash bid for ailing Musicland's assets in a deal that would also see Trans World assuming $17.1 million in Musicland liabilities.
Musicland, which operates stores and Web sites under the names Sam Goody (SamGoody.com), Suncoast Motion Picture Co. (Suncoast.com) and MediaPlay.com, sought bankruptcy protection Jan. 12 and within days won court permission to liquidate 341 mostly mall-based stores by April 30.
Trans World would acquire the remaining 400 stores if its bid is approved, converting 345 Sam Goody and Suncoast stores to Trans World brands and shuttering the rest, according to court documents. Musicland wants to hold the auction by March 21, followed by a hearing seeking court approval March 22.
Until then, Musicland requested bid protections for Trans World, including a $3.1 million breakup fee to be paid to Trans World if its bid falls out and a $500,000 payment for expenses associated with the acquisition. Musicland is losing $4 million to $6 million a month in restructuring costs, according to court papers.
A Trans World spokesperson was not immediately available for comment.
“We believe that the acquisition of Musicland's assets will allow us to leverage their store locations, strategically increase Trans World's national footprint, and will provide further growth opportunities,” Trans World chairman and CEO Robert J. Higgins said in a prepared announcement.
The agreement with Trans World is subject to a competitive bidding process and approval by the United States Bankruptcy Court for the Southern District of New York.
“We are committed to maximizing the value of our assets and believe that a sale to Trans World is in the best interests of our associates, creditors, suppliers and customers,” said Musicland president and CEO Michael J. Madden.
Trans Word was previously expected to host its fourth-quarter and year-end 2005 financial call Thursday, but has postponed the call to March 9 because of the transaction.