Posted by madcityradio.com on February 10, 2009 at 18:08:29:
Muzak, Elevator-Music Creator, Files for Bankruptcy
By Michael Bathon and Dawn McCarty
Feb. 10 (Bloomberg) -- Muzak Holdings LLC, the company that made "elevator music" famous, sought bankruptcy protection from creditors to restructure its debt.
The company, based in Fort Mill, South Carolina, listed debt of as much as $500 million and assets of less than $50,000 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Fourteen affiliates also filed. A unit, Muzak LLC, said it has assets of as much as $500 million.
"We believe Chapter 11 will provide us with the opportunity to right-size our capital structure and gain financial flexibility," Chief Executive Officer Stephen Villa said in a statement. Muzak's lenders "have committed to funding this restructuring process," he said.
Closely held Muzak supplies more than 2 million songs and music to retailers to help set the mood in their stores, in hopes of persuading shoppers to become buyers. Muzak was founded in the 1930s by U.S. Army General George Squier, who adapted military messaging technology to pipe music into elevators to drown out the noise they produced, according to its Web site.
Muzak later began marketing to employers, citing research showing that background music could increase employee productivity. By the early 1970s, Muzak was selling its original recordings of songs, performed without lyrics, to retailers.
Today, Muzak delivers music from more than 80 genres via satellite or by producing custom mixes. Customers have included McDonald�s Corp., Ann Taylor Stores Corp. and AT&T Inc., Muzak said on its Web site.
Bond Debt
Muzak's $220 million of 10 percent callable bonds due in 2009 traded at 75 cents on the dollar today, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities traded at about 91 cents on Jan. 8, Trace data show.
The 30 largest consolidated creditors without collateral backing their claims are owed a total of $375 million, court papers show. U.S. Bank NA is the largest unsecured creditor as indenture trustee for Muzak's 10 percent callable bonds due in 2009, 9.875 percent callable bonds due in 2009 and 13 percent callable bonds due in 2010. The total due under the bonds is $371.3 million, according to court papers.
The bankruptcy petition was filed by Domenic E. Pacitti, a partner at Klehr Harrison Harvey Branzburg & Ellers LLP in Wilmington.
The case is In re Muzak Holdings LLC, 09-10422, U.S. Bankruptcy Court, District of Delaware (Wilmington).