Tower Records, the worldwide music, book and video retailer that began in a family drug store, is downplaying the possibility it may have to file for bankruptcy because of tightening credit.
“We have no present intention to file bankruptcy,” company spokeswoman Louise Solomon said Friday, two days after Moody’s Investors Service downgraded Tower’s debt ratings.
Moody’s said it was likely that Tower would file for bankruptcy protection if it could not find additional sources of capital or pay off its current loans in the next few months. In a recent Securities and Exchange Commission report, Tower said its revolving credit facility had been extended for a year, but that the amount the company could borrow had dropped from $275 million to about $225 million.
That’s enough to cover the company’s current needs, Moody’s said, but under the new agreement with lenders the amount of credit available to Tower will drop to $210 million in July, to $195 million in October and to $100 million by December.
Tower said in a statement that it was “actively seeking further external financing.” Solomon stressed that there was no mention in the SEC report about filing for bankruptcy.