* 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 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
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
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
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)