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Interest rises in buying Tower

Music chain that filed Chapter 11 has 12 potential bidders.

By Dale Kasler -- Bee Staff Writer
Published 12:01 am PDT Wednesday, September 6, 2006

Three likely bidders have submitted letters of intent expressing their interest in Tower, while nine others have made preliminary overtures, Tower's investment banker said Tuesday.

When Tower filed for bankruptcy protection Aug. 20, it had nine potential bidders, including two that had submitted letters of intent.

Of the three that have submitted letters of intent, all have already met with Tower's management and pored over the retailer's books, according to a filing in U.S. Bankruptcy Court by Christopher DiMauro, a managing partner with investment banker Houlihan Lokey Howard & Zukin.

Nine other parties also have contacted the West Sacramento music retailer, leaving "at least 12 prospective purchasers who have expressed to me an interest in making a bid," DiMauro said in a filing in U.S. Bankruptcy Court in Wilmington, Del.

DiMauro didn't identify any of the 12 bidders. But in earlier court papers, Tower said potential bidders include Tower founder Russ Solomon and Trans World Entertainment Corp., a retailing conglomerate based in Albany, N.Y., known for buying struggling music retailers.

It wasn't known if either are among the three that have submitted letters of intent.

Tower is attempting to use the bankruptcy laws to generate a quick sale that will enable the purchaser to take over and ramp up inventories in time for the December holidays.

DiMauro made the filing in response to objections by some of Tower's store landlords over the proposed sale procedures. Among other things, the landlords said the procedure wouldn't allow enough time for them to review the bids or make protests.

It's believed that any buyer would cancel some of Tower's leases in order to close some of its 89 stores.

The matter will be argued in court today in Delaware.

Tower's bankruptcy filing, its second in two years, came after Tower's vendors cut off shipments of new CDs and DVDs following a refusal by Tower to pay its bills. Tower says it owes record and DVD companies $74 million, while those vendors say the bill comes to $82.8 million.

Shipments to Tower's stores have resumed, but the company is struggling with a weak climate for music retailing in an era increasingly dominated by Internet downloading.

About the writer:

• The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com.

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