UPDATE 2-U.S. judge approves Muzak bankruptcy exit plan
* Muzak gets approval to exit bankruptcy protection
* Company sees emergence later this month
* CEO says to accelerate new offerings
(Adds comments from CEO, background, byline)
By Emily Chasan
NEW YORK, Jan 12 (Reuters) - Music and entertainment company Muzak Holdings LLC [MUZKH.UL] said on Tuesday a U.S. judge approved its bankruptcy reorganization plan, paving the way for it to emerge from court protection later this month.
Muzak, which is known for providing background music in stores, hotels and elevators, filed for bankruptcy protection in February to restructure maturing debt.
Under the company's reorganization plan, its lenders are swapping debt in the company for equity, cutting Muzak's outstanding debt to just $230 million. The company had more than double that when it filed for bankruptcy last year.
A U.S. bankruptcy judge in Delaware also approved on Tuesday the company's $108.75 million senior secured exit financing facility from GE Capital, Silver Point Finance and MFC Global Investment Management, Muzak said in a statement.
"We are essentially 12 months further down the road on new offerings and new innovations and coming out of bankruptcy with a properly capitalized company, now we're in a position to accelerate these," chief executive Steve Villa said in an interview with Reuters.
Muzak said it expects to exit court protection by the end of January.
Muzak, which can trace its roots back to the 1930s when it sold re-recorded music for factories, elevators and passenger ships, was owned by private equity fund ABRY Partners LLC when it filed for bankruptcy.
In April 2007, the company had expected to merge with rival DMX Inc, partially as a way to deal with $436 million in maturing debt, but the deal fell apart as the global economy worsened, forcing it to eventually deal with the debt in bankruptcy court.
The company has said its Chapter 11 filing, from an operational standpoint was "largely unnecessary," and that even as the global economic crisis caused cutbacks in business spending in 2008, the company continued to generate positive cash flow from operations.
Villa said Muzak's client retention rates were down "marginally" throughout 2009 amid a flood of retail store closures in the past year, but that clients say Muzak is a "cost effective" way to build their brand with customers.
Muzak, which also competes with companies like PlayNetworks, In-Store Broadcasting and Sirius XM Radio Inc (SIRI.O), said it has been expanding to provide video programming for its clients. The company also provides music programming through the DISH Network Corp (DISH.O), and Villa said Muzak plans to continue to find new ways to build on its relationships with the music industry.
"We were very careful to make sure that we continued to move this company forward while we were in bankruptcy," Villa said.
The case is In re: Muzak Holdings LLC, U.S. Bankruptcy Court, District of Delaware, No. 09-10422. (Reporting by Emily Chasan; editing by Andrew Hay)
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