Tweeter Home Entertainment Group, Inc. and Affiliates Seek Chapter 11 Protection
The affiliates filing along with Tweeter are Sound Advice of Arizona, Inc., New England Audio Co., Inc., NEA Delaware, Inc., Hillcrest High Fidelity, Inc., Sound Advice, Inc., Sumarc Electronics, Inc. and THEG USA, L.P.
On June 12, the Delaware Bankruptcy Court entered an interim DIP order authorizing the Debtors to request credit extensions up to a total committed amount of $60 million, of which $33 million shall be authorized during the Interim Period (until entry of a final DIP order). A final hearing has been scheduled for June 29, 2007 at 9:30 a.m.
According to the Declaration of Gregory W. Hunt, Senior VP and CFO of Tweeter Home Entertainment Group, Inc. filed in support of the petitions, the Debtors have experienced operational losses for the last 6 years. The most significant factor in the losses "has been the continuing decline in margins for video products, particularly projection televisions and plasma and LCD televisions. The large format stores such as Best Buy and Wal-Mart are continuing to expand their geographic markets. This expansion has, in turn, increased price competition within those markets dramatically." The Debtors have also faced increased in-home design and installation services from Best Buy and Circuit City.
To improve operating performance, the Debtors began the process of closing 49 of their least profitable stores and vacating two regional distribution facilities.
Leading up to the bankruptcy filing, the Debtors and their advisors have agressively pursued an equity investment, a refinancing of their existing senior credit facility or a sale of some or all of the Debtors' assets. According to Mr. Hunt's declaration, "the Debtors commenced these bankruptcy proceedings to use the Section 363 sale process, including the solicitation through such process of interests in refinancings and/or funding of a plan or plans of reorganization, as a means to maximize value and provide themselves with a vehicle to explore any and all of their restructuring alternatives."
