After exploring strategic alternatives, the board of Trans World Entertainment Corporation (NASDAQ: TWMC) announced Thursday an agreement to sell most of the assets of its Record Town subsidiary to Sunrise Records and Entertainment. Among the assets is retail store FYE.
The $10 million cash transaction includes the transfer of certain liabilities, and Sunrise expects to retain nearly all of the employees of FYE’s 270 stores.
The Trans World board of directors unanimously approved the deal and will seek stockholder approval in an upcoming meeting. Given recent underperformance, investors may not hesitate to bid the struggling subsidiary farewell.
In a late 10-Q filing last month, Trans World management reported an accumulated deficit of $89.3 million, two years of negative cash flows, and a “substantial doubt about the company's ability to continue.” Quarterly revenue declined 24.5%, and quarterly net loss expanded.
Trans World plans to focus on its etailz brand after divesting of FYE. The deal is slated to close in the first quarter, subject to the receipt of third-party consent.
Trans World Entertainment's stock traded higher by 250% to $8 per share at time of publication.
Photo credit: Michael Rivera, Wikimedia