Tower Owners Eyeing Sale To Financial Firm

The management of Tower Records and the bond holders who now own the majority of the retailer through a debt-to-equity conversion have been involved in negotiations to sell the chain to Dallas-based company Hicks, Muse, Tate & Furst, sources say.

The financial firm was one of the bidders to participate in the auction that Greif & Co., a Los Angeles-based investment bank, ran for the chain.

When the bids from that auction weren't large enough to satisfy all of Tower's debt, founder Russ Solomon and the company's banks decided to undertake a pre-packaged Chapter 11 to force the few holdouts among the bondholders to accept a debt-to-equity swap.

Now that the balance sheet has been cleaned up, Tower management and the new owners have resumed discussions with the bidder that appears to offer the brightest future for the chain.

Somewhere along the way, Pamlico & Co., one of the other bidders that had been trying to buy Tower, joined forces with Hicks, Muse, Tate & Furst and is now said to be acting as a consultant on the deal. Pamlico consists of former record-industry executives Ralph King and Devandra Mishra; the two are said to be eying a role in the management of Tower if the deal is completed.

Sources say that the suitors would buy Tower with a combination of cash and notes. But since the new owners are working from a position of strength with the cleaned-up balance sheet and are even willing to invest cash to upgrade the chain's stores if need be, negotiations are proving to be more difficult than when the chain was in its weakened state, sources say.

Tower executives declined to comment; representatives of Hicks, Muse, Tate & Furst and Pamlico & Co. were unavailable at deadline.


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