Its been coming for a few weeks now… In early August the LA Times reported (here or reg free here) that at least 3 labels had cut off Tower’s supply of overpriced plastic discs as a result of its failure to keep the checks flowing. Now, recently hired Tower CEO, Joseph D’Amico is making good on his promise to sell the company by declaring it bust and begging anyone with a checkbook and masochistic tendencies to take it off his hands. But dont worry the stores arent going to close since NARM thinks their swell and their bankers were willing to spot them $85 million. The full press release is here, my take on snippets of it are below. Check out the PDF’s of the various and sundry chapter 11 related fillings here.
Tower Records to Sell Company Under Chapter 11 Sale
FIRE Sale! Fire Sale! The Private Equity guys are probably all over this one ready to cut staff, shutter stores and do something new with the brand. Personally I suggest condoms, the name is very evocative…
Enters into $85 million in Debtor in Possession Financing; Negotiates
Delivery Terms with Key Vendor Partners; Stores Remain Open … Business as Usual
Nothing to see here folks, Move along, move along. Whenever a company cant pay its bills, signs its life away to a bank and then says its “business as usual” you know something is wrong.
MTS Incorporated and its subsidiaries (Tower Records), America’s leading independent music and entertainment retailer which owns and operates 89 Tower Records stores in 20 states nationwide, tonight announced its intent to sell the Company through a process (Section 363) under Chapter 11 of the Bankruptcy Code. This process, which is subject to court approval, sets in motion a time-line of events that will ultimately insure a sale of the Company within approximately 60 days of the filing date.
Basically they are going to sell as fast as they can to anyone willing to negotiate a deal with the banks. If your a Tower employee and you havent started interviewing for a job with the cool kids manning Apple’s Genius Bar, nows the time. You got 2-3 months before some MBA with a bonus contingent on your redundancy start shuttering stores and passing out pinks.
According to Joseph D’Amico, Tower’s recently named CEO, the filing is a necessary vehicle to execute his commitment to sell the Company. “Tower Records has conducted an extensive sale process and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders.”
Anyone want to wager that someones bonus is contingent on dumping this puppy by the end of the year? Sounds like a Christmas gift not for “Stakeholders” but for whatever “stalking horse” scoops up Tower. Heres a prediction, the number of Tower stores goes from 89 to 50ish and there is a flood of new music available on BitTorrent sites and USENET groups in the following months. Also watch for a rash of pre-releases from ripping groups as disgruntled employees release everything they can into the wild.