Trans World To Buy Wherehouse15 Sep, 2003 By: Holly J. Wagner
Wherehouse Entertainment, Inc. will sell its assets to Trans World Entertainment Corp. in a $41 million transaction under an agreement in principle announced today.
Wherehouse, which is operating in Chapter 11 bankruptcy, owns and operates 148 stores primarily in the western United States. Upon completion of the sale, Trans World expects to shutter 35 of Wherehouse's lowest-performing stores and operate the remaining 113.
"The terms and timing of this deal are particularly attractive as we head into the all-important holiday season. Most importantly, we expect this acquisition to be immediately accretive, adding to our earnings in the fourth quarter and for the year," Trans World Entertainment chairman and CEO Robert J. Higgins said.
A joint venture comprising Hilco Merchant Resources, LLC, Gordon Brothers Retail Partners, LLC and The Ozer Group LLC will handle liquidation of the 35 stores.
The transaction represents total consideration of $41 million in cash and assumed liabilities and is subject to the approval of the U.S. Bankruptcy Court for the District of Delaware. The deal is expected to close early next month.
"These stores represent an excellent fit both strategically and operationally with our freestanding format and provide us with a unique opportunity to expand our presence on the west coast and gain significant market share in Los Angeles," Higgins said. "This acquisition further validates our strategic plan of using our strong balance sheet to find financially attractive opportunities as our industry continues to consolidate."
Trans World Entertainment operates 831 stores in 46 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and an e-commerce site, www.fye.com. In addition to 209 freestanding locations under the names Coconuts Music and Movies, Strawberries Music, Spec's, Planet Music and Second Spin, the company also operates 622 mall locations, primarily under the FYE (For Your Entertainment) brand.