UPDATED PRESS RELEASE: Trans World Entertainment Corporation Announces Agreement to Sell FYE Segment
January 23 2020 - 10:40AM
Trans World Entertainment (Nasdaq – TWMC, “TWEC” or the “Company”)
a leading specialty retailer of entertainment and pop culture
merchandise with stores in the United States and Puerto Rico,
primarily under the name fye, for your entertainment, and on
the web at www.fye.com and www.secondspin.com,
announced today that it has entered into a definitive Asset
Purchase Agreement with a subsidiary of Sunrise Records and
Entertainment Ltd. (“Sunrise”), the parent of Sunrise Records in
Canada and HMV Records in the United Kingdom, to sell substantially
all of the assets of the Company’s wholly owned subsidiary, Record
Town, Inc. (the retail, music, film, video and popular business
constituting the For Your Entertainment (“FYE”) segment of the
Company’s business), for $10 million in cash, subject to a net
inventory and other adjustments, plus the assumption of certain
liabilities (the “Transaction”).
The Transaction follows a process in which the Company’s board
of directors explored strategic alternatives available to the
Company. The Transaction was unanimously approved by the
Company’s board of directors.
The Transaction is expected to close in the first quarter of
2020, subject to the satisfaction or waiver of customary closing
conditions set forth in the purchase agreement, including the
receipt of certain third party consents and the approval by at
least two-thirds of the Company’s stockholders. The Company will
call and hold a stockholders’ meeting seeking to obtain this
approval. The Company will use all of the proceeds from the
Transaction to repay outstanding indebtedness and satisfy other
unassumed liabilities.
The Company will continue to operate its business in the
ordinary course until the Transaction closes, and thereafter
Sunrise anticipates keeping substantially all of the current FYE
employees. Following the closing, the Company plans to focus
on the operation of its wholly owned subsidiary, etailz,
Inc.
The description of the Transaction contained herein is only a
summary; further details on the Transaction are contained in the
Company’s report on Form 8-K filed on or about the date of this
press release. More information on the Transaction will be
included in a proxy statement that the Company intends to file with
the Securities and Exchange Commission (the “SEC”) and distribute
to stockholders. Such proxy statement will include
information regarding the timing of the stockholders’ meeting to
consider approval of the Transaction.
Additional Information and Where to Find It
In connection with its Transaction, the Company
expects to file with the SEC and furnish to its stockholders a
proxy statement on Schedule 14A, as well as other relevant
materials concerning the Transaction. This communication is not a
substitute for the proxy statement or for any other document that
the Company may file with the SEC and send to its stockholders in
connection with the Transaction. STOCKHOLDERS OF THE COMPANY ARE
ADVISED TO READ THE PROXY STATEMENT FOR THE TRANSACTION WHEN IT IS
FILED, AND ANY AMENDMENT OR SUPPLEMENT THERETO THAT MAY BE FILED,
WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE COMPANY AND THE TRANSACTION. All such documents, when filed,
are available without charge at the SEC’s website
(http://www.sec.gov), at the Company’s website at
http://www.twec.com/investors or by sending a written request to
the Company’s Corporate Secretary, 38 Corporate Circle, Albany, NY
12203.
Participants in the Solicitation
The Company and certain of its directors,
executive officers, and employees may be deemed to be participants
in the solicitation of proxies in respect of the Transaction.
Information regarding the interests of the Company’s participants
is set forth in the Company’s Annual Report on Form 10-K for the
fiscal year ended February 2, 2019 and the Company’s proxy
statement, filed with the SEC on May 29, 2019 (as supplemented),
for its 2019 annual meeting of stockholders. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests in the
Transaction, by security holdings or otherwise, will be contained
in the proxy statement and other relevant materials to be filed
with the SEC in connection with the Transaction.
Cautionary Statement Regarding Forward-Looking
Statements
This document includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Certain statements in this communication are
forward-looking statements, including, without limitation, the
statements made concerning the Transaction. The statements
contained in this document that are not statements of historical
fact may include forward-looking statements that involve a number
of risks and uncertainties.
We have used the words “anticipate”, “believe”,
“could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“project”, and similar terms and phrases, including references to
assumptions, in this document to identify forward-looking
statements. Examples of forward-looking statements include, but are
not limited to, those regarding the transactions contemplated by
the Asset Purchase Agreement. These forward-looking statements are
made based on management’s expectations and beliefs concerning
future events and are subject to uncertainties and factors that
could cause actual results to differ materially from the results
expressed in the statements. The following factors are among those
that may cause actual results to differ materially from the
Company’s forward-looking statements:
- the risk that the Transaction may not be completed in a timely
manner or at all, which may adversely affect the Company’s business
and the price of the Company’s common stock;
- the failure to satisfy any of the conditions to the
consummation of the Transaction, including the adoption of the
purchase agreement by the Company’s stockholders and the receipt of
third party consents;
- the occurrence of any event, change or other circumstance or
condition that could give rise to the termination of the Asset
Purchase Agreement;
- the effect of the announcement or pendency of the Transaction
on the Company’s business relationships, operating results and
business generally;
- risks that the Transaction disrupts current plans and
operations and the potential difficulties in employee retention as
a result of the Transaction;
- risks related to diverting management’s attention from the
Company’s ongoing business operations;
- the outcome of any legal proceedings that may be instituted
against the Company related to the Transaction,
- unexpected costs, charges, expenses, liabilities or delays in
the consummation of the Transaction;
- the Company’s ability to operate as a going-concern following
the closing of the Transaction; and
- other risks described in the Company’s filings with the SEC,
such as its Quarterly Reports on Form 10-Q and Annual Reports on
Form 10-K.
The reader should keep in mind that any
forward-looking statement made by us in this document, or
elsewhere, pertains only as of the date on which we make it. New
risks and uncertainties come up from time-to-time and it’s
impossible for us to predict these events or how they may affect
us. In light of these risks and uncertainties, you should keep in
mind that any forward-looking statements made in this report or
elsewhere might not occur.
Contact: Trans World
Entertainment Ed Sapienza Chief
Financial Officer (518) 452-1242 |
Financial Relations Board Marilynn
Meek (mmeek@frbir.com) (212)
827-3773 |
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