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|Tower Records Going out of Business||(Posted by Fiki of Atlanta, GA - October 22, 2006 11:08)|
|After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved the sale of Sacramento-based Tower Records to Great American Group, which plans to liquidate the music retailer.
After almost 30 hours of what attorneys described as ``robust'' and ``vigorous'' bidding, Great American won with a bid of $134.3 million, beating Trans World Entertainment, which had hoped to continue operating at least some Tower stores, by a single bid increment of $500,000.
Peter Gurfein, an attorney representing the record superstore pioneer, said the company will be sold for an aggregate of $150 million, including the sale of various leases and properties.
Although Gurfein said Great American plans to begin the liquidation process and going-out-of-business sales today, it was business as usual Friday afternoon at the store in Campbell. No signs were up yet announcing the upcoming liquidation, which eventually will result in the loss of jobs of about 3,000 Tower employees.
After hearing the news, Sunnyvale security guard Chris Watt said he'll ``definitely'' miss Tower. He has been a customer for 10 years, and was leaving the Campbell store holding ``Veronica Mars'' and ``Seven Samurai'' DVDs.
Tower Records, which has about 90 stores and franchise stores worldwide and owes creditors about $200 million, filed for Chapter 11 reorganization in August. In its filing, the company said it has been hurt by an industrywide decline in music sales, downloading of online music and competition from big-box stores such as Wal-Mart Stores.
Twentysomething Sunnyvale resident Brett Kelly is an example of the type of music fan who has hurt Tower's chances for a comeback. ``I download a lot. But if there's a band I really like, I'll get the CD.'' Still, he said, Tower's closing ``will kind of suck.''
Tower's Chapter 11 filing came two years after an initial reorganization that resulted in bondholders forgiving millions of dollars in debt but taking an 85 percent stake in the company, leaving founder Russ Solomon and his family with 15 percent.
Solomon founded Tower in Sacramento in 1960, starting by selling records out of his father's drug store and eventually opening the company's landmark store on Hollywood's Sunset Boulevard in 1969. As part of the bankruptcy auction, the Sunset property will be sold for $12 million.
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