Venerable Western Canadian music and consumer electronics retailer A&B Sound filed for bankruptcy protection yesterday (Jan. 19) under Canada's Companies Creditors Arrangement Act.
Venerable Western Canadian music and consumer electronics retailer A&B Sound filed for bankruptcy protection yesterday (Jan. 19) under Canada's Companies Creditors Arrangement Act. The company has announced that it plans to sell the 21-store chain to the U.S-based private investment firm Sun Capital Partners Group. The financial firm, based in Boca Raton, Fla., owns a wide array of retailers, including the Musicland Group.
While A&B Sound plans to present a restructuring proposal to creditors within 30 days, all Canadian major labels immediately put shipments to the retailer on hold. A&B owes creditors approximently $50 million Canadian ($40.5 million), according to A&B president Tim Howley. The chain has increasingly lacked the financial resources to stay competitive in the Canadian market against such U.S. players as Best Buy and Wal-Mart. Sources indicate that annual sales at A&B have dipped from $300 million Canadian ($243.2 million) in 2001 to $200 million Canadian ($162 million) in 2004.
The transition to proposed new ownership is expected to be completed within 60 days. The proposed purchase price for A&B Sound has not been disclosed. Under a revitalization plan, Sun Capital Partners Group apparently plans to keep all 800 A&B Sound employees, including senior executives, under similar terms and conditions. It will also retain virtually all of its outlets in British Columbia, Alberta, Saskatchewan and Manitoba.
A&B and Sun Capital did not return calls for comment.