The nation's biggest chain of music stores agreed Tuesday to acquire the third-largest out of its recently filed Chapter 11 bankruptcy proceeding in a reported $104-million deal.
Trans World Entertainment Corp., which operates six FYE stores in the Tampa Bay area, will acquire Musicland Group Inc. and 345 of its Sam Goody and Suncoast Motion Picture Company stores.
Musicland, which is owned by Sun Capital Partners of Boca Raton, runs two Suncoast stores in the Tampa Bay area, and it closed its last Sam Goody store in Tampa in January.
Musicland will use proceeds from the sale to repay creditors owed $485.6-million at the time of its Jan. 12 bankruptcy, according to a filing in U.S. Bankruptcy Court in New York.
"We believe that the acquisition of Musicland's assets will allow us to leverage their store locations, strategically increase Trans World's national footprint and will provide further growth opportunities," Robert Higgins, chairman and chief executive officer of Trans World, said in a statement.
The agreement, which needs court approval, would increase the number of stores operated by Trans World of Albany, N.Y., to about 1,100. Trans World also operates the Coconuts, Wherehouse and Planet Music chains.
"We still have to determine how many of the stores will be renamed F.Y.E. and how many will remain as Sam Goody and Suncoast," said John Sullivan, chief financial officer of Trans World.
Musicland will hold an auction in March to try to get a better deal, as is typical in Chapter 11 bankruptcy sales. Trans World can increase its offer at the auction.
Musicland sales in 2005 plunged to $1.1-billion, down from $1.9-billion in 2004.
Trans World shares rose 5 percent to close at $5.99 on Tuesday.
Times staff writer Mark Albright contributed to this report, which used information from Bloomberg News.