Tower Records to Sell Company Under Chapter 11 Sale Process

Tower Records to Sell Company Under Chapter 11 Sale Process

Enters into $85 million in Debtor in Possession Financing; Negotiates Delivery Terms with Key Vendor Partners; Stores Remain Open ... Business as Usual

SACRAMENTO, Calif., Aug. 20 /PRNewswire/ -- MTS Incorporated and its subsidiaries (Tower Records), America's leading independent music and entertainment retailer which owns and operates 89 Tower Records stores in 20 states nationwide, tonight announced its intent to sell the Company through a process (Section 363) under Chapter 11 of the Bankruptcy Code. This process, which is subject to court approval, sets in motion a timeline of events that will ultimately insure a sale of the Company within approximately 60 days of the filing date.

According to Joseph D'Amico, Tower's recently named CEO, the filing is a necessary vehicle to execute his commitment to sell the Company. "Tower Records has conducted an extensive sale process and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders." In March of 2006, the Company retained Houlihan Lokey Howard & Zukin as its marketing and sales agent. The Company is evaluating Letters of Intent from parties interested in acquiring the Company. Mr. D'Amico stated, "Potential parties seeking to acquire Tower Records recognize the strength of the brand and its unique position within the marketplace, making it a very attractive opportunity."

The Company also announced that it has entered into an $85 million Debtor in Possession financing with its current bank group led by CIT as agent. This financing will fund its operations and purchases of new product while the Company completes the sale. Tower has also been able to renegotiate delivery terms for product with the trade. D'Amico commented, "The trade has always supported Tower through difficult times and we recognize that their support is imperative to the consummation of a transaction."

Last week, Tower was voted 'Retailer of the Year' (Large Division) at the 48th annual National Association of Recording Merchandisers (NARM) convention for the third consecutive year. "Tower Records is a great brand that has a unique place in the market. I am confident that the brand will continue to endure for many years to come," added D'Amico.

Visit http://www.omnimgt.com/ to view filing documentation by clicking "Real Time Data" and Tower Records 2006.

About Tower Records

Since 1960, Tower Records has been recognized and respected throughout the world for its unique brand of retailing. Founded in Sacramento, California, with the singular vision to have a music store with unparalleled selection and fair prices, Tower forges ahead with the development of exciting shopping environments, espousing diverse product ranges, artist performances, and technological advances in merchandising. Tower maintains its commitment to providing the deepest selection of entertainment merchandise in stores that celebrate the unique interests and needs of the local community. For the third year in a row, the music industry has voted Tower Records "Retailer of the Year."

Tower owns and operates 89 stores in the U.S. with 144 additional stores run by licensees in nine different countries. The Company opened one of the first Internet music stores on America Online in June 1995 and followed a year later with the launch of Tower.com.

Source: Tower Records

CONTACT: Media: Lisa Amore of AMORE MARKETING + PUBLIC RELATIONS,
+1-916-375-5241, lisa@amorepr.com; or Legal Representation: Steve Warren of
O'MELVENY & MYERS, +1-213-430-7875; or for inquires regarding the sale of the
Company: Christopher DiMauro of HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL,
+1-310-712-6507, cdimauro@hlhz.com, all for Tower Records

Web site: http://www.tower.com/
http://www.omnimgt.com/

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