Muzak Files For Chapter 11
February 10, 2009 at 2:23 PM (PT)
MUZAK HOLDINGS LLC has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for DELAWARE. The company says that it has previously "reached an agreement with its lenders to access all cash on hand and cash generated from ongoing operations" and is "confident that it has sufficient means to support the business during the Chapter 11 process."
The company has filed motions to allow it to pay employees and provide benefits without interruption, and has asked for permission to honor all outstanding client and promotional programs. KIRKLAND AND ELLIS LLP is serving as legal advisor and MOELIS AND CO. is serving as financial advisor to MUZAK.
"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 CEO STEPHEN P. VILLA.
"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," he continued. "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."
VILLA added, "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."