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TWEETER HOME: Seeks Court Approval for July 10 Auction

Troubled Company Reporter, June 25, 2007 

Tweeter Home Entertainment Group Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to pursue a sale process under which they will solicit a stalking horse bidder or bidders for all or a part of their business, or a potential refinancing or equity investment in support of a plan of reorganization.

For the past several months, the Debtors and their advisors have aggressively pursued an equity investment, a refinancing of their existing senior secured credit facility or a sale of some or all of their assets.  The Debtors received expressions of interest from several interested third parties for certain of their assets or businesses.  Because of their liquidity situation, however, the Debtors were unable to enter into definitive agreements with any party.

The Debtors believe that it is in the best interest of their estates and creditors to seek offers to sell:

  1. their inventory through a store closing liquidation sale;

  2. some or all of their assets as a going concern; or

  3. assets like their 18.75% equity interest in Tivoli Audio
     LLC, a privately held designer and maker of consumer
     electronics; their intellectual property rights; leases; or
     lease designation rights.

The Debtors believe conducting an auction with respect to each sale, and a final auction among bidders submitting the highest or otherwise best offers will enable them to best assess their restructuring alternatives, maximize value and minimize expenses incurred.

The Debtors also seek permission to enter into a stalking horse agreement with a bidder to establish a minimum acceptable bid at which to begin the Store Closing, Going Concern or Miscellaneous Asset Auctions.

The Debtors intend to provide a Stalking Horse Bidder with a
termination fee of up to, but not greater than:

  -- 3%, of the cash purchase price set forth in the Stalking
     Horse Agreement, with respect to any Stalking Horse
     Agreement that they enter into by June 22, 2007; and

  -- 2%, of the cash purchase price set forth in the Stalking
     Horse Agreement, with respect to any Stalking Horse
     Agreement that they enter into after June 22 and before
     July 9, 2007, at 9:00 a.m.

The Termination Fee will not be payable if the Stalking Horse Agreement contains a "due diligence" or financing contingency.  The Termination Fee will be paid in the event the Stalking Horse Bidder is not the successful bidder at the Final Auction.  The Debtors will not offer two Termination Fees with respect to any bid covering the same assets.

The Debtors ask the Court to schedule the Store Closing Auction on July 10, 2007, and the sale hearing on July 13.

Bids are due July 9, 2007, at 11:00 a.m.  The Debtors prefer bids that are unconditional and contemplate sales that may be consummated on or soon after the July 13 hearing.

Bidders are required to submit a good faith deposit equal to 10% of the cash purchase price.

The Store Closing Auction will remain open until both the Going Concern Auction and the Miscellaneous Asset Auction are closed.

The Debtors will consult with representatives of General Electric Capital Corporation and any official committee of unsecured creditors appointed in their cases with regard to offers received.

The Court will convene a hearing on June 26, 2007, at 3:00 p.m. to consider the Debtors' request.  Objections, if any, are due June 25.

Simon Property Group Objects

Simon Property Group, Inc., manages retail shopping centers, including community shopping centers.  The Debtors lease premises on the shopping centers under five non-residential real property leases.

Simon Property Group wants the Debtors to clarify (i) whether adequate assurance of future performance will be provided by an assignee of the Debtors' leases; (ii) details of any going out of business sales to be conducted; and (iii) their ability to promptly cure defaults under the leases.

The Debtors are in default under the leases, Simon Property Group relates.  The Debtors have yet to pay certain prepetition and postpetition rent.

All prospective purchases should have accomplished their due diligence and should take the leases, subject to any and all limitations, covenants and restrictions, Simon Property Group asserts.

About Tweeter Home

Based in Canton, Mass., Tweeter Home Entertainment Group Inc. -- -- retails mid-to high-end audio and video consumer electronics products.  Tweeter and seven of its affiliates filed for chapter 11 Protection on June 11, 2007 (Bankr. D. Del. Case No: 07-10787 through 07-10796).  Gregg M. Galardi, Esq. and Mark L. Desgrosseilliers, Esq. at Skadden, Arps, Slate, Meagher & Flom, L.L.P. represent the Debtors in their restructuring efforts.  As of Dec. 21, 2006, Tweeter had total assets of $258,573,353 and total debts of
$190,417,285.  The Debtors' exclusive period to file a plan expires on Oct. 9, 2007.  Tweeter Bankruptcy News, Issue No. 3, Bankruptcy Creditors' Service, Inc., or 215/945-7000).  

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