Muzak Files Voluntary Chapter 11 Petitions to Facilitate a Balance Sheet Restructuring

Muzak Files Voluntary Chapter 11 Petitions to Facilitate a Balance Sheet Restructuring

Operations to Continue as Normal

FORT MILL, S.C., Feb. 10 /PRNewswire/ -- Muzak Holdings LLC and certain of its subsidiaries (together, the "Company"), today announced the filing of voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Court") to facilitate a restructuring of the Company's debt obligations. Muzak previously reached an agreement with its lenders to access all cash on hand and cash generated from ongoing operations. The Company is confident that it has sufficient means to support the business during the Chapter 11 process.

As reported on January 19, 2009, the Company reached an agreement with its secured lenders to extend the maturity date under the Company's $105 million Credit Agreement, dated as of April 15, 2005, for a period of 22 days through and including February 10, 2009. The maturity extension served as a catalyst for constructive negotiations with each of the Company's major creditor constituencies concerning a comprehensive financial restructuring that will maximize value for all interested parties. Muzak and its major creditor constituencies are committed to building upon the momentum gained over the past 22 days in an effort to continue, and ultimately complete, restructuring negotiations, which can be implemented on an expedited basis in Chapter 11.

"Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago. Muzak has nearly doubled its cash flows while investing in its operations over the last three years, a period in which Muzak has also not had the need to seek additional financing, demonstrating that our business continues to perform well even in today's challenging environment," said Stephen P. Villa, Chief Executive Officer of Muzak. "We believe Chapter 11 will provide us with the opportunity to right size our capital structure and gain financial flexibility, while continuing to operate our business and serve our clients without interruption. Our lenders have shown a tremendous amount of support and have committed to funding this restructuring process. We intend to move through this process as quickly as possible, and we firmly believe that this course of action will better position Muzak for long-term success."

The Company has filed a series of motions with the Court to ensure the continuation of normal operations, including paying employee wages and salaries and to provide employee benefits without interruption. The Company also has asked for authority to honor all of its outstanding client programs, including promotional programs. During the Chapter 11 process vendors will be paid by the Company for post-petition purchases of goods and services in the ordinary course of business. In addition, the Company will continue its business arrangements and agreements with Independent Affiliates and the Company has asked for authority to honor any amounts owed to Independent Affiliates.

Mr. Villa concluded, "This process will provide us with the ability to address our outstanding debt position and to continue 'business as usual' at Muzak -- providing high quality music and messaging products, innovative technologies and superior client service. Muzak has a strong foundation in place and we are fully committed to making this financial restructuring successful and positioning the Company for sustainable profitability. I would like to thank all of our team members, and I am confident that with their talent, commitment and professionalism, we will emerge from this process as a stronger and more competitive company. I would like to thank all of our loyal clients, independent affiliates and vendors for their continuing support."

Kirkland & Ellis LLP is serving as legal advisor and Moelis & Company is serving as financial advisor to the Company.

Additional information about Muzak's restructuring is available at the Company's website, www.muzak.com/restructuring. For access to Court documents and other general information about Chapter 11 cases, please visit http://chapter11.epiqsystems.com/muzak.

About Muzak

Muzak creates sensory experiences that reach more than 100 million people daily. Some of the largest brands in business trust Muzak to enhance their brand image. Muzak creates an endless variety of music programming from a catalog of over 2.6 million songs and produces targeted custom in-store and on-hold messaging. Through its national service and support network, Muzak designs and installs professional sound systems, digital signage, drive-thru systems, commercial television and more. For more information, visit www.muzak.com.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor provisions created by that Act. In addition, forward-looking statements may be made orally in the future by or on behalf of the Company. Forward-looking statements can be identified by the use of terms such as "expects", "should", "may", "believes", "anticipates", "will", and other future tense and forward-looking terminology. The Company cannot assure how long the chapter 11 case will last or that an overall restructuring agreement will in fact be reached.

Readers are cautioned that actual results may differ materially from those projected as a result of certain risks and uncertainties including those contained in the risk factor and safe harbor disclosures found in our most recent financial reports and releases available at http://info.muzak.com/investor/. These forward-looking statements are made only as of the date of this report, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

MEDIA CONTACTS:
Meaghan Repko or Nicholas Lamplough
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

Source: Muzak Holdings LLC

CONTACT: Meaghan Repko or Nicholas Lamplough, Joele Frank, Wilkinson
Brimmer Katcher, +1-212-355-4449, for Muzak

Web Site: http://www.muzak.com/

-------
Profile: intent