Tower Gets Extended Source of Cash

The music will play at Tower Records for at least a while longer.

Tower, one of the oldest and largest U.S. music retailers, said its parent, MTS Inc., has amended a credit line with a group of 11 banks, giving it access to cash it needs to run through April.

The privately held, 41-year-old West Sacramento-based company said it can now borrow up to $205 million through Dec. 31, and an additional $195 million through April 2002.

“We are delighted with our new bank deal, which provides our company with good financial flexibility to maintain operations,” said Michael Solomon, Tower’s chief executive, in a statement.

Tower, like other music retailers, has recently suffered from a decline in album sales and competition from discount retailers and Internet-based vendors. It has 173 stores, down from 187 at the end of April.

Earlier this year, Moody’s Investors Service and Standard & Poor’s downgraded Tower’s credit and debt ratings to low junk grades. Both questioned whether Tower could make debt payments absent new financing, and Moody’s warned that bankruptcy was likely if Tower couldn’t find new cash or pay off its banks.

J.P. Morgan Chase & Co. led the group of banks, Tower said.