Muzak Owner Heads Back to Bankruptcy for New Debt-Cutting Effort
Muzak Owner Heads Back to Bankruptcy for New Debt-Cutting Effort
(Bloomberg) -- Mood Media Corp., which provides shopping music to businesses, plans to file for bankruptcy by the end of July in an effort to tame its debt for the second time since 2017.
Under the new deal, Mood Media will cut debt by $404 million, according to a statement Friday. Votes from creditors to support the plan will be solicited in the coming weeks to speed the company’s trip through bankruptcy court.
More than 90% of the senior lenders, more than 70% of its second-lien PIK noteholders, and more than 60% of Mood Media’s equity sponsors have already signed on to the plan, the company said.
The company bought the Muzak brand, which made “elevator music” famous, in a 2011 deal valued at $345 million, but has since switched to Mood Media as its brand name. The company says it has the industry’s largest library of licensed music and reaches 150 million consumers every day through more than 400,000 subscribers, including hotels, restaurants and banks, which pipe in music and other background media.
Prior Bankruptcy
Mood Media went bankrupt once before in 2017 when it was based in Toronto, filing a Chapter 15 bankruptcy in the U.S. to protect its assets while it restructured debt in a Canadian court. Affiliates of Apollo Global Management Inc. and Blackstone Group Inc.’s GSO credit unit were among sponsors of that deal, which swapped debt for equity.
The company switched its headquarters to Austin, Texas, but its finances continued to deteriorate, and a debt swap plan last year drew criticism from credit raters who said it wouldn’t do enough to improve performance or liquidity.
Under U.S. bankruptcy rules, if Mood Media can collect enough binding votes in favor of its plan before filing for Chapter 11 protection, the company can speed its way through the process. In some cases, companies have been able to enter and exit bankruptcy within days.
The company expects to file its case in bankruptcy court for the Southern District of Texas, and the case won’t include its international affiliates. It has already lined up about $240 million in new financing, with $40 million of fresh capital from HPS Investment Partners LLC and other first-lien senior lenders, the company said.
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